What Blocks The Economic Repair Of The Eurozone?

Historical issues may be blocking the economic repair of the Euro-zone. Europe is still, after all, a loose confederation of states much as America was in 1776. America settled its state’s rights issues, but it took about 80 years before that happened. A costly Civil War settled the matter. That war was about economic issues—as all wars may be. But it did settle the matter of a national union prevailing over the rights of individual member states.

Now in America we have a very difficult economy and we clearly have a number of individual states that have far greater difficulties than others, vis a vis housing foreclosures and levels of unemployment as well. The national government organizes and implements an overall response—but not without consultation with individual states (usually through their congressional representatives). Complaints abound, often disagreements are serious, but the issues are worked through and matters are decided. If a collection of states were in very serious trouble (as they are), no other individual state would have veto power over a special assistance package that might reach that state or even have any absolute say in how the federally organized assistance was put forward. Some states could effectively go bankrupt, but they would be assisted by the remaining states and by the federal government just as they might be if they had been victimized by a costly natural disaster.

On the other hand, in the European community, while action has occurred at a collective level, the real decisions may be orchestrated by the most powerful nation states within the Euro-zone. In effect, Germany and France can decide together what the decision will be, and then things will take a natural course from there. This creates a problem as it is doing currently. Even though great efforts are taken to be polite in public, arguments or old wounds may eventually surface and fester in public. The press, of course, will speculate openly about deeper motivations—such as Germany perhaps viewing the actions taken by Greece as irresponsible and as a result of not taking their work or the payment of taxes to run their government seriously. Ideas circulated publicly are often true or have the ring of truth about them, so once they make the headlines all have the potential to be embarrassed—and there is often a need for soul-searching reassessment.

Germans may not all recall or want to recall that they were the beneficiaries of extraordinary assistance through the Marshall Plan after the World War II. Actually there is real evidence that German public remembers those days all too well. One could have passed off their rather desperate circumstances onto Hitler and the National Socialists who were in large measure supported in their goals early on by the German people. Europe was decimated in 1945 and after the air cleared, helping Germany dig out of the hole and rebuild along with the rest of Europe was the only option. Americans for their part had emerged from World War II with its landscape unscathed by the ravages of war. It had given much treasure and blood to the conflict which had brought its citizens out of a terrible depression in the 1930s and for the most part American taxpayers could see value in the long-term rebuilding of the world, including establishing a strong role for its former bitter enemies, Germany and Japan. Few Americans would be inclined to revisit those decisions.

The current problems facing the Euro-zone may constitute a test of sorts for all of us, The Euro-zone has a chance to emerge in the best of health. The strength and organization of its central government may not be up to the task in front of it. Even today, however, conditions have changed in the last year, and one senses that while austerity is still a central theme, efforts are underway to adjust the level of austerity to make it feasible for the more troubled nation states of Europe to recover. The path forward will not be easy, but the present process must intensify. It cannot take 20-30 years with a potential for numerous partial collapses in recovery for the nation states of the Euro-zone to progress forward.

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