Austerity Is for 'Little People'

Economic realities show a Europe marching toward centralization.

As economic uncertainty continues to take its toll on people in Europe, I am reminded of a quote attributed to Leona Helmsley during her 1989 tax evasion trial. According to housekeeper Elizabeth Baum's testimony, she had the following exchange with Helmsley shortly after being hired in September 1983: "You must pay a lot of taxes," said Baum. Helmsley's ostensible reply? "We don't pay taxes," she answered. "Only the little people pay taxes." What does Helmsley's quote have to do with the current economic conditions? It parallels the view of economic, financial and political elites whose economic policies are currently playing themselves out in Europe and America. To wit: Austerity is for "little people."

When one views the latest Greek bailout through this prism, it makes far more sense. The European Union, the transnational entity which orchestrates the parameters by which industrious Germans and French will bailout out profligate Greeks, has no particular concern for the people of the individual countries involved in this drama. In fact, the people subject to the conditions of the bailouts -- on both ends of the equation -- want no part of the deal. On one end, Greek unions are calling for a 48-hour general strike on June 28 and 29, to protest further austerity policies that must be enacted if the government, facing what amounts to a "take it or else" ultimatum from the European Commission, International Monetary Fund and European Central Bank, aka the "troika," is to stave off insolvency. And on the other end, while the French citizenry is taking the bailout in stride, the Germans are furious. On both ends, the citizens of the individual countries involved have virtually no say in the matter.

Why? Because in the world of the transnational elite, countries are an anachronistic construct. This is highlighted by the fact that bailing out the Greeks was an impossibility until two people, Germany's Angela Merkel and France's Nicolas Sarkozy, agreed on a "breakthrough" deal last week. Part of that deal involves the European Union underwriting Greek debt. Another part involves funding by the International Monetary Fund (IMF), whose largest shareholder at 17 percent is the United States -- meaning that American taxpayers will also be on the hook for Greek profligacy, to the tune of billions of dollars.

For whom are these sacrifices being made? Elite bankers, bondholders and bureaucrats. Bondholders who can get more than 25 percent for gambling on Greece's future, but don't want to take a "haircut" for doing so, along with bankers who continue to prop up the socialist nation in order to protect the transnational construct of the European Union, in which the "little people" have far less of a say in their own destiny than the EU bureaucrats in Brussels. Thus, it is no accident that the air is thick with talk of a "Lehman-type moment." As far as the internationalists are concerned, Greece has become "too big to fail."

Yet some people are recognizing the futility of maintaining the EU regardless of the cost. The German Magazine Der Spiegel is calling for a Plan B, noting that the "currency union chains together economies that are simply incompatible." This is no longer a viable option because "the crises of a few euro countries are a crisis for the euro, as well as a crisis for the European Union, its governments and its institutions." Furthermore, "that the countries funding the bailouts are lacking democratic legitimization is now becoming the greatest impediment to joint crisis management" because policy decisions are being made "at the behind-the-scenes meetings of discrete central banks...that are then handed to the [national] parliaments to rubber-stamp, even though hardly any of their members understand them."

American Spectator's Roger Scruton elucidates. The architects of the EU were people who "had little else in common apart from a belief in European civilization and a distrust of the nation-state...part of a broad movement among the postwar (WWll) political class." As time went on, Europe became a continent where "[E]ach increase in central power was to be matched by a diminution of national power," despite the fact that this is "not a direction that the people of Europe have chosen," but one that is "moving always toward centralization, top-down control, dictatorship by unelected bureaucrats and judges, cancellation of laws passed by elected parliaments, constitutional treaties framed without any input whatsoever from the people...moving always toward imperial government."

A blow-back against such centralization is already occurring. Political parties such as the True Finns, who bitterly oppose bailouts, won a fifth of the votes in that country's last election in April. "This was a referendum on EU policy," said Timo Soini, the True Finns leader, following his party's electoral gains. "We will keep our money and our right to make our own decisions." Recent polls show French president Nicolas Sarkozy trailing ultra-nationalist Marine Le Pen, and Socialists in Spain's last election took a drubbing directly related to that country's need to impose Greek-like austerity measures on a populace beset by 22 percent unemployment.

Yet the interests of the wealthy and powerful are hardly confined to Europe. When the Federal Reserve was forced to open its books late last year and show where over $3 trillion in asset relief funds were distributed, it was revealed that foreign banks received billions in aid and that "Deutsche Bank and Credit Suisse were the largest beneficiaries of the Fed's purchase of mortgage-backed securities," with $290 billion and $287 billion of their toxic loans, respectively, purchased by Ben Bernanke and crew. The Fed has also engaged in quantitative easing, which Larry Kudlow explains "has produced inflation" and more to the point, "has served merely to depreciate the dollar. And most of those cheaper dollars are on deposit at the Federal Reserve, where banks are earning 25 basis points for safety and risk aversion." All of it protects the interests of the elite.

What did the American public get? They've gotten higher prices on everything, most notably food and gas, neither of which are counted when inflation is measured. They've gotten 9.1 percent unemployment. They've gotten Federal Reserve Chairman Ben Bernanke in a press conference following Wednesday's Federal Open Market Committee meeting admitting he had “no precise read” on why the American economy remains in the doldrums almost two years into an ostensible recovery. And they've gotten President Barack Obama, who has yet to sit in on a single meeting of critical budget negotiations in the United States -- which broke down on Thursday -- promising to support Greece in the fight against its debt crisis.

Does Scruton's description of the EU's "imperial government" resonate in America? Not in the same manner as it does in Europe, but an increasing number of "little" Americans are beginning to recognize a similar chasm between an out-of-touch, elitist ruling class in Washington, D.C. and themselves. There is little question our country has also been moving towards "centralization" and "top-down" control in response to our own financial crisis, which was "too good to waste" as far as the Obama administration was concerned. Despite euphemistic language designed to obscure reality, banks, car companies and insurance companies have been bailed out using taxpayer funds, which we were told was absolutely necessary to avoid a second Great Depression.

Furthermore, the usurpation of states' rights is proceeding apace with two of the most egregious examples being the enactment of ObamaCare, which forces individuals to buy health insurance, or face a fine using the Commerce Clause as the vehicle of enforcement; and the NLRB's lawsuit against Boeing which, if successful, would give Washington, D.C. the power to pick "winning" and "losing" states with respect to the location of economic activity.

And much like in Europe, there is a similar blow-back to elitist ambitions. Twenty-six state attorneys general have banded together in a lawsuit to get the health-care bill overturned. Some states are enacting illegal immigration control statutes, while others are writing bills challenging the Transportation Security Administration's intrusive airport pat-down policies. All of these actions share a common theme: the defiance of the ruling-class, command-and-control policies.

In Europe, the opinions regarding solutions to the current debt crisis reveal very little in the way of consensus. For every economist who concludes Greece must be bailed out in order to avoid a cataclysm, there is another one who insists that it is better to let them abandon the EU, re-introduce the drachma, and live with the consequences. For every expert who insists the European Union will survive, there is one who contends it is in its death throes. In America, for every economist who insists $3 trillion of Keynesian economic stimulus has been a failure, there is one who insists that that's because $3 trillion of stimulus wasn't big enough.

Who's right? Time will tell. Late Thursday, it was announced a deal had been reached in which Greece "won the consent" of a team of IMF/EU inspectors for their latest austerity plan. The Greek parliament has until July 3rd to enact it. In America, talks on raising the debt ceiling are in limbo. On both sides of the Atlantic, ordinary people are subject to the whims and timetables of the elite.

The only certainty? Elitist politicians, bankers and economists, for whom the phrase "unexpected results" has become an integral part of their economic vocabulary, will never directly bear the brunt of the economic "solutions" they concoct, all of which address problems largely of their own making. In the end, only the "little people" will be subjected to austerity or insolvency. Little people stuck with their quaint notions of fiscal integrity, national sovereignty, and/or states' rights.

Arnold Ahlert is a contributing columnist to the conservative website