The Fiscal Crisis Gambit in Europe and America
This year's crises in public finance on both sides of the Atlantic invite comparisons, mostly of first-order economic questions—such as, will Standard & Poor's do to France's credit rating what it did to America's? But at a deeper level there are similar political techniques being used, albeit for vastly different purposes.
The driver of crisis in the United States has been an ideology of the right, which has come to dominate the Republican Party and has been boosted by the Tea Party movement—the ideology that holds that it is always better to have less government in domestic affairs, less revenue going into the public purse and less infringement on private wealth, no matter what damage any of this does to the public pursuit of common interests. There was nothing imaginative about the ideologists' perpetration of the debt-ceiling travesty this summer. It was mostly simple coercion; a game of chicken in which the perpetrators used not democratic procedures but instead the threat of harm to the national interest to get their way. They were aided in playing this game by the belief that the principal political damage from economic troubles will be to the incumbent president they are determined to bring down. This belief continues to motivate their stubborn resistance to measures that would alleviate the stubborn unemployment.
However crude all of this is, there is also a slightly more subtle side to the way the ideologists of the right are using the fiscal crisis as a tool. This way is embodied in the concept of “starving the beast.” The more strained are the public finances—strained all the more by an adamant, oath-taking refusal to countenance increased tax revenue—the stronger will be the political basis for shrinking the domestic side of government. It is the use of an economic crisis to achieve a political, ideologically driven goal.
There is nothing substantively comparable to this in Europe. Nor can it fairly be said that any significant element within the eurozone actually wanted the current crisis there. And yet, it is hard to believe that at least some of the more far-sighted creators of the euro couldn't have foreseen what is happening today, given the inherent disconnect involved in creating a monetary union without a corresponding fiscal union. Leaving individual governments to their individual, sometimes profligate, budgetary ways (with nothing more to rein them in than performance standards that even some of the bigger and wealthier members of the eurozone have flouted) without the safety valve of inflating their own currencies seems bound to have caused this kind of trouble eventually. But for confirmed European integrationists, this is not necessarily a bad thing. They hope—and some of them are openly predicting—that the crisis will force participants in the European experiment to move that experiment farther along the road, to get to that missing fiscal union sooner rather than later.
Of course, if this is the game being played, it is a dangerous one. During the current dark days one is hearing many predictions about the experiment moving backward rather than forward. But the integrationists may be right that there already is enough of a shared stake in the European experiment in general and the monetary union in particular that the preponderance of forces will be more forward than backward. Whether or not they are right, the process they see unfolding is, like the one the American rightist ideologists see on their side of the ocean, the use of economic crisis and economic incentives associated with the crisis to achieve a political objective. The objective of the Europeanists—the heirs to Jean Monnet and Robert Schuman—is greater political unity.
So on the eastern side of the Atlantic the political goal behind economic troubles is to achieve greater harmony among peoples of the continent and to drive even farther from the realm of possibility any repetition of the horrendously costly European wars of the first half of the twentieth century. On the western side the political goal is to entrench a narrow ideology that divides rather than unites the peoples of even a single country. This contrast is a reminder that fundamentally similar methods can be used to pursue drastically different objectives, including the noble and the ignoble.