Posted by: theoptimisticconservative | September 26, 2011

A memo to Europe on idled resources and the opportunity in meltdown

Mark Steyn wrote over the weekend about the meltdown of the Eurozone and the impending “end of the world as we know it.” Although it’s football season, and there’s plenty of fun stuff to do, it’s worth taking the time to point out some things about this global collapse deal, one more time.

First, the collapse of the Eurozone, which does look likely to happen, is the death of a Big Idea.  It represents more than the collapse of a common currency.  It’s the death of an idea of human life, regulated and directed and comprehensively administered by the state.  The collapse represents a triumph of reality over hallucination.  You can’t, in fact, build a sustainable model for having the state organize most of the investing for the people, and use its resulting power to tell the people what they are allowed to think and say, how much electricity they can use, and what medical services they will be allowed to have recourse to.

It is impossible to maintain a sound currency – much less a sound fiscal policy – when that’s your going-in proposition.  And it’s good news that we are reaching the breaking point.  The collapse of the Eurozone means Europeans cannot keep doing what they have been doing.  They will have to do something else.

There are millions of people in Europe who will all still be there the day after the official collapse, however that ends up being marked.  The collapse represents a gigantic opportunity for them, if they will take it.  Each nation already has a mechanism for choosing new representatives, people with different ideas, to govern it.  I am not convinced that there is no one left in Europe who has the discipline and character to chart a new course, instead of collapsing in the gutter, whimpering.  There is a colossal infrastructure in Europe, and what it needs is not solicitude and life support but a release of the clamps in which it is immobilized by the 20th-century “European idea.”

America is not that far behind Europe.  We have deceived ourselves that we don’t intend to end up overregulated and overspent like Europe, but the Obama presidency has demonstrated with disastrous clarity just how vulnerable we already were – had already made ourselves, long before January 2009 – to Sudden Overregulation and Sudden Overspending.  If we are to recover, politically and economically – not to mention spiritually – this cannot stand.  We, too, like the Europeans, have to do something else.

At the heart of the European idea is ratcheting up the “civilization premium”:  the extra that it costs us to earn our bread and lodging in a complex society, as opposed to foraging for nuts and berries while we wait to be eaten by the local wildlife.

In many ways, civilization and complexity make things more efficient for us.  But paying for civilization pulls against that effect in a perpetual dynamic.  And the very purpose of the Euro-nanny-state is to add a growing premium to every unit of work effort or purchasing power, in order to pay for civilizational goals.

It has been a long time since anyone in Europe, or in the rest of the modern, post-industrial world, has worked almost entirely to pay for his own needs. The most productive are working at least 4 out of 12 months to pay the civilization premium levied directly by the state through taxes. We then work some months after that to pay the premium imposed indirectly by regulation.

Obviously, we have to pay for police and fire services.  We want to; those services create a stable environment for family life, property, and business.  But paying government regulators to withhold water from us, terminate oil-and-gas drilling, and maintain a system of litigation in which we can be made to pay rent to others for exhaling, doesn’t do that.  It doesn’t enhance our well-being or economic prospects; it merely makes the necessities of life cost more.  It makes us work harder to pay for the same things.  Very often, that’s not worth it to us, and one of the costs of civilization becomes a systematic discouragement of our efforts at the margin.

Today, America and Europe are drifting on a sea of resources idled artificially by government policy.  To begin with, we have a combined population that is less well-educated than its ancestors.  That is a huge idled resource.  The same population operates increasingly on a mental attitude of entitlement and resentment, and that idles it further.  Both of these conditions were created by the implementation of the European idea in the public schools.  Our people – the ones walking around right now – would be much more productive without these handicaps.

To me, this is the most important idled resource, but it cannot be unleashed without removing the clamps of regulation and taxation.  Regulation has taken the place of taxation as the worst imposition on our daily economic life.  It is a silent, mostly invisible killer.  I would like to see the American capital gains tax rolled back, but it’s not our capital gains tax that is destroying our economy, it’s regulation.

Don’t forget the words idled resources.  I’m not talking here solely about capital available for investment, although I’m talking about that too.  I’m talking about how much more you could accomplish, and how much more you could save and buy (with cash), if the government didn’t keep driving up your basic costs (and, indeed, the cost of everything else) with regulation, while diverting 30-60% of what you’re worth to your employer in the form of taxes, mandated benefits, and “social investment.”

I’m talking about the natural resources we could be making use of if the state weren’t literally putting them off-limits to us.  I’m talking about what each of us could do to escape the industrial-job straitjacket if the cost of starting a small business weren’t so prohibitive.  Above all, I’m talking about the new lease on life the younger generations could have if their heads weren’t being filled with hate-thoughts about normal human life 24/7.

Imagine how the economies of the Western industrial nations would surge to life if people were allowed to profit from deciding to work however long it took to do profitable things.  A simple proposition, but fewer and fewer of us can do that today.  The idea of profit in any form is demonized; major segments of profitable work are effectively prohibited, either outright or through regulation; “jobs” are defined in terms of what benefits must accrue to them, rather than in terms of what needs doing; and when there is a profit, it gets hunted down and confiscated in one way or another.  If the capital gains tax doesn’t get you, the regulation will.

Government, as Reagan said, is the problem.  There is nothing we can’t do if we will allow the people to put our idled resources back to work.  Those idled resources represent trillions of dollars in wealth and revenues.  And those trillions would pay down an awful lot of debt.  But they can’t be extracted from a controlled, limited, managed citizenry; they can only be produced by people who are free to labor and profit on the basis of their own motivations.

The impending collapse of the Eurozone is proof of the first truth.  It represents the biggest opportunity Europe has had in a century to acknowledge the second, and act accordingly.

Europe, get rid of your failing welfare state, your unsustainable national health systems, your religious belief in regulation, and your “multiculti” hate-management schemes.  Unleash your people.  Get the demons of self-hatred and institutionalized discouragement off your back.  This is the chance of a lifetime.  Go ahead.  Show us the way.

J.E. Dyer’s articles have appeared at Hot Air’s Green Room, Commentary’s “contentions,Patheos, and The Weekly Standard online.

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Responses

  1. I agree with most of what you say is what ails both our nation and Europe; I just don’t have your optimistic outlook.

    The riots in Greece and other parts of Europe do not forebode well for the rest of Europe or, as far as that is concerned, for us either. There have been too many generations of entitlements and the brainwashing has been too deep to expect that the very same people that “expect” the government to be their “big brother” will suddenly shake their shackles and strike out in a wonderful new world to fend for themselves.

    That is the predictable result of a life of comfort and welfare.

    The last two or three generations have grown up assuming that it is the government’s principal function, even its principal duty to care and feed them. They also believe, some might even think this way sincerely, that, in order for government to provide these functions well, it must also be able to tell them what they can and what they cannot do. They believe that the government is well prepared and well suited to decide what and how we are to use even our personal wealth and resources; this is beyond doubt to many. They also think that government can allocate, control and regulate the resources of the country as they see fit; this also is beyond doubt to many.

    In fact, most people think and even argue that government intervention in every aspect of our lives is what’s best for everybody. Otherwise, they think, the “greedy” corporations would take control of everything in order to exploit us like slaves. All of that without stopping for one nanosecond to ponder that this might be, precisely, what government is doing to them already.

    Schools have taught them this. Movies, newspapers, magazines, well edited history books, even comic books have been like a one note song about what you call the “European idea”. I think it must have started even before the Bill of Rights was finally signed into law.

    You said: “the Obama presidency has demonstrated with disastrous clarity just how vulnerable we already were – had already made ourselves, long before January 2009” and this is absolutely correct. The fact that he was elected in the first place as well as the prevailing reasons why he was elected speaks mountains as to how far we have been ridden down this path already. It also speaks mountains of how badly our once terrific system has been high-jacked, prostituted and used by the devout followers of the “European Idea”. And therein lays the rub.

    You have heard me say, often actually, that democracy fuels socialism and that, in return for that enormous favor, socialism, in turn, fuels democracy. If I am correct in this negative evaluation, then what will be required in order to unleash all that idle resource that you mention in your write up will be for a vast majority of Americans, white, red, yellow and black, to realize that it is infinitely better to vote these clowns out of office in order to strike out in search of something better; something that might actually work if not right away or directly for them, then certainly in a few years and for their progeny.

    But the high unemployed school drop outs and single mothers, the uneducated, and unprepared, the lazy, the envious and the addicts to government hand outs will still be there to make their objections felt and to tug at the heart strings of the vulnerable, the weak and the stupid. And I bet you that, like the good soldiers that they have been raised to be, they will eagerly support and back up the political prestidigitators that promise much and deliver nothing and they will do whatever is necessary to re-elect the same clowns that continue to blow that tired, old piped piper tune that keeps on leading them into the European Idea.

    If there is something that a socialist democracy does well is keep their resources controlled, regulated and, for the most part, idle. The more “need” they can create, the more “change” they will promise and the more votes they get.

  2. Well said rafa. I’ll add a point to this comment of yours..

    “If I am correct in this negative evaluation, then what will be required in order to unleash all that idle resource that you mention in your write up will be for a vast majority of Americans, white, red, yellow and black, to realize that it is infinitely better to vote these clowns out of office in order to strike out in search of something better; something that might actually work if not right away or directly for them, then certainly in a few years and for their progeny.”

    I live in Boston. There is an increasing number of MA residents that leave MA and move to southern NH for the cheaper real estate and lower taxes. However, those new NH residents from MA vote Democratic just as they did in MA. They seem not to realize that the very politicians who are responsible for the higher taxes and real estate costs in MA are, for the most part, the Democrats! This doesn’t bode well if we need to “vote these clowns out of office.”

  3. Well played, TOC. Very well played.

    Saw this first over on HotAir. I can’t post there, but felt compelled to find a place where I could express how pleased I am to have read your piece.

  4. If you really look at the whole problem and dig down there is one factor that is glaringly over looked because it is uncomfortable, we have driven God out of our lives and country, Washington warned that this experiment would not work with an immoral people, De Tocqueville warned that “when the public realizes that they can vote themselves a piece of the public largess America is done” , all this is about morality, religion if you will, the modern American versions of Christianity tend to flow with the current, 50 years ago the views of the mainline and fundamentalist groups didn’t differ from the Catholic view on abortion, birth control, divorce, marriage, chastity, charity etc, now they all have gone PC and liberal, and the Catholic church is vilified for being rigid, and not changing with the times. Faith is what drove this country and gave us hope for the future, not consumerism or government, now government has failed as it always does when it grows out of control and there is no foundation left in this country to guide us, it has been driven out of the schools and public square, total faith in government is always a loss,

    quote rafa

    “But the high unemployed school drop outs and single mothers, the uneducated, and unprepared, the lazy, the envious and the addicts to government hand outs will still be there to make their objections felt and to tug at the heart strings of the vulnerable, the weak and the stupid. And I bet you that, like the good soldiers that they have been raised to be, they will eagerly support and back up the political prestidigitators that promise much and deliver nothing and they will do whatever is necessary to re-elect the same clowns that continue to blow that tired, old piped piper tune that keeps on leading them into the European Idea.

    end quote

    Faith in God does not foster these things, until they believe in something bigger than themselves or fallible man there is no hope, you are alone, faith in government leads to Hitler, Mao, Stalin, Pol Pot, Ahmadinejad, or Kim Jong mentally Ill, you name it. all disasters, I pray we don not head down that road and regain our faith, families and tradition

  5. I agree with David. This is what I tried to convey to fuster a few days ago. Without God, government is free to claim that IT is the “supreme authority” in all issues of morality, ethical and civic conduct and anything else that serves their own purpose.

    And because all governments are run by man they will all eventually sucumb to the greed, envy and pride of man therefore inexorably becoming governments “of men” instead of governments “of laws”. This is both quite apparent already as well as a very dangerous road to travel.

    For a long time our government has been reserving for itself the right to determine what is each person’s “fair share” of taxes. This is even more apparent recently since the discussion has centered on that single demagogic utterance by Obama . But, that is not all, government also reserves for itself the right to determine the morality of abortion and the circumstances that might impact that horrible decision. It defines marriage, it defines charity, it is even arrogant enough to define what is religious expression and when this is appropiate or not. In fact, government defines everything that was once a private and personal choice and right.

    I dread the future for America if we don’t realize the enormous danger of this path and if we don’t correct our course dramatically.

  6. What tosh.

    Leaving aside the fact that the last people the Europeans are likely to take a blind bit of heed to are those in the fringe right like JED and Steyn……

    Their analysis is unlikely to impress either because (as usual) it is grounded on ideologically driven imaginings and hatred and resentment of Europe and Europeans rather than the evidence.

    Some of the most socialist nations in Europe are the Netherlands, the Nordic nations, and Germany. These are the very countries that have best weathered the recent economic storms. They managed this feat because, firstly, they are well-organized and have highly productive economies, and secondly, they had much tighter and effective regulation of their financial services sector and much more restrictive mortgage and retail-lending rules. Note, most of these nations are in the EU, some are not (Norway). Some are in the euro-zone (The Netherlands, Finland, and Germany), others are not (Norway, Sweden and Denmark). On the other hand, Ireland, a country hailed by the right-wing Heritage Centre as having one of the most pro-enterprise economies on the planet, was one of the biggest casualties of the crash. Ireland’s problems had little to do with public debt (It was running large exchequer surpluses right up until 2008) and everything to do with regulatory failure of its banking system which left the country exposed to enormous debts incurred by its banks when asset-values collapsed in the wake of the Bush crash and the Lehmans debacle. Greece, of course, is a special case. Economic disorganization and lack of productivity means that Greece (and the Greek part of Cyprus) is beyond redemption within the Euro. Greece cannot repay its debts either by spending cuts or taxation. At the moment it is being forced to reform its economy so that it will be able to stand on its own two feet after it undergoes an ordered default and possibly leaves the Euro-zone. The EU authorities are also using this time to bolster up the banks within the Euro-zone that are most exposed to Greek soverign debt. Incidentally, British and US banks are also heavily exposed to Greek debt and are in for a considerable “haircut” when the Greeks go into structured default. In any case, it is financial deregulation rather than “socialism” or “government” that is the thread that runs through the current economic crisis.

    And no….. The Euro hasn’t collapsed. Nor do the markets expect it to. Throughout this crisis the Single Currency has maintained its exchange-rate value. If the markets thought for a moment that Steyn’s prediction was likely to come to pass the value of the Euro would have reflected this possibility. But then again, have any of Steyn’s predictions about the EU or Europe ever been proved right? I can’t think of one.

  7. To John Pirie and david: welcome to both. My apologies for the initial delay in your comments posting. That’s a one-time thing; all your comments will post automatically from now on (as long as you use the same user name and email address). I appreciate both of your thoughts, so don’t be shy.

  8. Memo to JED:

    Why do you and your ilk hate and despise Europeans?

    Do you and your ilk think for one moment that Europeans aren’t fully aware of the fact that the extreme rightwing fringe in our country hates and despises them?

    What is your motivation for inventing tales of woe and doom which are entirely contrary to the facts and evidence?

    Why do you and your ilk keep repeating lies and inventions about Europe and its demographics, long after they have been exposed as lies and inventions?

    Are you just slow-learners?

    Are you under the illusion that all this hatred is without consequence to our relationship with our Western allies if (God forbid) someone from this “tradition” in US politics ever came to power?


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