What the demise of the EU really means.
This year is looking more and more like one of those “years of decision” that have marked profound crises and changes in American history. I’m speaking not just about the presidential election, or whether or not Barack Obama gets a second term. Obama is merely a symptom of our educational, social, economic, and political dysfunctions that in turn reflect the failing core ideology of modernity expressed by progressive politics. The “decision” that has to be made this year is whether we finally abandon that nexus of ideas that has led us to our current economic troubles.
That ideology is predicated on the belief that advances in scientific knowledge have revealed the truth of human nature and society, and that such knowledge can lead to technical interventions that in turn will substantially improve human life. “The behaviour of human beings,” Isaiah Berlin describes this belief, “both individually and in the aggregate, is in principle intelligible, if the facts are observed patiently and intelligently, hypotheses formulated and verified, laws established” as was occurring in the sciences such as physics, astronomy, or chemistry. With time the “human sciences” such as psychology and sociology, along with new advances in biology and physiology, would achieve knowledge of human beings and their actions equally reliable and certain. “Once appropriate social laws were discovered,” Berlin continues, “rational organization would take the place of blind improvisation, and men’s wishes, within the limits of the uniformities of nature, could in principle all be made to come true.” Contrary to the past, when irrational superstitions, religious beliefs, and traditions limited man’s progress and left him mired in fear, poverty, and violence, the new techno-elites armed with this scientific knowledge and the techniques it has created will shape and transform human nature and thus help the human race progress beyond these miseries.
That, in a nutshell, describes the major political and social movements of the last two centuries, including some of the bloodiest in history. This idea is also the foundation of progressivism, which strives to give power to self-proclaimed “experts” in order to create policies for the centralized, increasingly powerful and intrusive state. Armed with that coercive power and new technologies, the state can impose laws and policies that supposedly will achieve “social justice,” a utopia of economic equality, perpetual happiness, and material comfort. The price? The erosion of political freedom, personal autonomy, and personal responsibility, all sold for a mess of nanny-state pottage.
The current economic crises here and abroad are manifestations of the shipwreck of progressive ideas on the rocks of human nature, the unpredictability of the future, and the complexity of social reality. In Europe, the transnational, top-down-managed E.U. was created to knit traditional enemies together by trade and economic integration, which required a single currency and anti-democratic regulations imposed from above by Brussels and Strasbourg. Ignored were the very real national, ethnic, and cultural differences that give people their identities and partly accounted for their historical conflicts with one another. It is these same differences that are now dividing the monetary union, differences expressed politically by the voters whom the Eurocrats have brushed aside for decades. There are no “Europeans” sharing a common identity after all, but only Germans, Greeks, Italians, Spaniards, Frenchmen, and Englishmen, with conflicting national interests, mores, and ethics.
But the economic crisis was created in part by another, equally dangerous delusion: that each state, abetted by the regulatory coercive powers of the E.U. super-state, would direct and guide its economy in order to finance a network of social welfare entitlements insulating people from the costs, trade-offs, and failures that always have characterized human existence. A revealing letter published in 2003 by two European philosophers, Jacques Derrida and Jürgen Habermas, expressed this vision that underlay the E.U. project. Especially revealing was the philosophers’ emphasis on the need to minimize the “sociopathological consequences of capitalist modernization,” and on a “preference for the protective guarantees of the welfare state and solidaristic solutions” as opposed to “an individualistic performance ethos which accepts crass social inequalities.” The lavish social welfare entitlements designed and controlled by government functionaries and monitored by Eurocrats are the means for achieving these utopian boons.
Those “protective guarantees of the welfare state,” however, required government debt and deficits to keep up with the expanding expectations of people who had become used to getting la dolce vita for nothing. But high taxes, oppressive regulation, and onerous employee rights inhibited the economic growth necessary for creating the wealth the state has to expropriate to fund such entitlements. If that assessment seems exaggerated, consider the recent ruling from the E.U. Court of Justice that grants another vacation for workers who get sick on vacation. Even the liberal New York Times had to admit that such labor practices “make it hard to put more people to work and revive sinking economies.” Europe has now reached the stage that Margaret Thatcher marked as the end of socialism: it has run out of other people’s money.
The crisis of the Eurozone economies makes clear that only by reducing entitlement spending can governments stave off chronic sluggish growth or ultimate collapse. Yet despite that object lesson, here at home the Obama administration for nearly 4 years has doggedly pursued the same failed policies of debt, deficits, and increased spending. He has created a new health-care entitlement projected to cost $1.76 trillion over ten years, squandered nearly a trillion dollars on a failed “stimulus,” doubled spending on food stamps to $80 billion, incurred $5 trillion in debt, raised federal spending by 27.3%, increased the budget deficit to 8.3% of GDP, wasted nearly $10 billion on “clean-energy” boondoggles, multiplied job-killing federal regulations at a cost of $46 billion, and proposed budgets and spending increases that will accelerate the downward spiral of debt and deficits.
Yet in response to the sluggish growth and high unemployment caused by these policies, all Obama can offer is stale class-warfare rhetoric and schemes to raise taxes on those upon whom economic growth and jobs really depend. And like his E.U. counterparts, he disguises this ruinous tax-and-spend economic policy as “growth,” camouflages money given to his public-employee political clients who manage the welfare state as “investment,” and smears spending reductions as social Darwinist “austerity.”
What Obama is up to has nothing to do with an ignorance of simple math or economic facts. He won’t change his mind by reading Frederic Bastiat or Henry Hazlitt on the hidden costs of government spending. Obamanomics is about a progressive ideology that promotes government control and regulation by techno-elites as the way to achieve “social justice,” which is code for radical egalitarianism and the liberation of people from the normal travails of human life. Obama himself said so, back in 2008 during a debate with Hillary Clinton. When ABC’s Charlie Gibson pointed out that historically the government loses revenue when it raises the capital gains tax, Obama answered, “Well, Charlie, what I’ve said is that I would look at raising the capital-gains tax for purposes of fairness.”
In other words, engineering equality of outcome is more important than growing the economy, even if tax revenues suffer. Just borrow more money if you need more revenue. And no matter how big the debt gets, borrow even more money so that the government can expand entitlements and “grow” the economy by giving tax money to politically favored industries and clients. Yet as the Wall Street Journal’s Daniel Henninger points out, such centralized economic planning “often appears in emerging, underdeveloped economies, not in an advanced economy like ours in which the discovery and diffusion of productive new ideas is spontaneous, rapid and unpredictable.” Allowing the market to reward the creativity and hard work of millions of free people is what creates economic growth.
For those, however, enthralled by the progressive vision of techno-elites wielding government power to create the social justice utopia, the “spontaneous” and “unpredictable” behavior of free people is precisely what gets in the way of the progressive agenda. This year and the ones to follow will show whether enough people have understood that failure and its causes, and are willing to pay the necessary price for changing course and rescuing our economy from its current slow-motion collapse. On that decision depends the future of our country.
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