click to enlarge, double click to reduceThere is a structural issue with our economies. And nowhere else is it more plainly presented to us than in Europe. At the outset, let us consider the narrative. For here, the intellectual version of democratic socialism has obtained everything it wanted. Its social nets are generous, it has taken up above all else the Marxian precept that the worker and therefore the government must fight the effects of the bourgeoisie, that we can live a less consumerist, more genteel life without a constant and harrowing scrabble for work and brutish advancement.
Gold mining, New England by Powerhouse Museum Collection, on Flickr
Gold mining, New England by Powerhouse Museum Collection, on Flickr
It is of course curiously hypocritical that its bureaucratic masters are all bourgeoisie themselves, administering their socialist policies from the remarkably narrow doorway of its political ideology just as assuredly as from the throne. Only a moron can not make the sense of that.
And European sensibility is also comforted by its loud and coarse American cousin, where cheap consumerism makes it easier to feel the decision they've made in the last 60 years have been the right ones. For America is a marketing and conformist circus. I'll never forget my American colleagues harassing a German for wearing black socks with his running shoes and shorts, calling him the 'Desert Fox' and jeering him until he left. As he told me later, the irony of the American culture is that these were graduates from elite business schools, a group perhaps more qualified than any other to understand the power of marketing. If they are victims of the their own tools, then there is no hope for the nation who fashions itself a protector of the free individual. But then, conformity is the new world order.
In Europe, the narrative tells us it is possible to work for 35 years, bookended by 25 care-free years of learning and self-exploration and vacation. It is possible to live 50 years of the sedate and tranquil Thoreau dream of music, love, philosophy, alcohol and sex.
But not so much family. About half of European families have decided that theirs is the last generation of their lineage that will walk the earth. They will end the long line of their forbearers that climbed out of the caves and learned to till the earth, that huddled in the rain to herd the sheep, that until recently slept with their own animals to stay warm, that survived the Plague, depressions and world wars, who aspired to own their homes and their destinies and their futures. An outsider might observe that having dragged themselves out of the mud, the culture finally took time to look at itself, and decided none of it was worth it; better to commit suicide.
Tragically, the government that the narrative inspired is in decline. Part of the problem lies in its banking system, which bakes inflation into society and through the mathematical wonder of compounding explicitly transfers wealth from the worker to the capital and the banks, systemically robbing 2-5% a year from any reward of productivity and harder work. The transaction costs alone of redistribution policies at least double that number and can hardly mitigate such systemic prejudice.
Add to that fact that new housing has been abolished, driving the cost of a two room flat to astronomical figures, industries are banned forcing their import, and commerce contained by a warren of country specific regulation that itself doubles transaction cost. But those are the necessary rules of society bent on civility and leisure and the over-population, debasement narrative. At least the guilt of the church only threatened an eternity after death. The post-modern narrative demands an expensive hell on earth. Luckily, government has the answer to that.
The excruciatingly sad and terrible truth is that Europe is bankrupt. And what a cognitive toll that must be on a culture that lives amongst the historical edifices of western civilization, reminded daily of their climb from barbarism through specialization of labor that eventually transformed the world. Do those histories and buildings inspire awe or guilt? In South America, their edifices are mostly reduced to rubble; the only stones that remain are too large to be carted off by a civilization that long ago forgot how to build them. At their rate of decline, Europeans will be long dead before they tear their buildings down.
New age post-modern architecture and art pales against this breath taking back drop; its stark minimalistic lines and the meaninglessness of its images a spastic and soulless smattering of narcissistic soul searching. The bald faced truth is that Europe has contributed nothing of consequence in the last 60 years, but then, that is essentially the post-modern narrative by design.
For the narrative, untroubled by reality, is that western civilization is bankrupt. On the one hand, the attempt to build a leisurely oasis midst the seething and developing world is troubled by the thought that much of its wealth is stolen from their poorer neighbors. On the other, their rejection of the Judeo-Hellenic tradition is so adamant it has developed a religion all its own.
Attempts at a European union has added bureaucracy in the attempt to 'push the problem up the ladder,' but has done nothing to lower the transaction costs on the ground where all business is done. On the contrary, it has only added cost and delayed response times. But isn't that what bureaucracy does?
Europe has made some adjustments to its impending doom. In some countries it has unleashed the market in its own government controlled versions in education and medicine. These are steps, albeit small ones, and they have some significant differences. But they also leave their unsustainable Utopian edifices untouched, and they have in no way changed the narrative which remains firmly entrenched in denial about just how wrong they have been regarding the ideals and comportment of a civilized society.
For the narrative demands not only the guilt of their own success. It demands the story of over-consumption, over-population and a karma of past hyper-violence; there is nothing they can do. They deserve what they get. They are reaping the terrible crop of what they have sown. There is no going forward. There is only reverse. As denial transforms into anger and then to depression, the narrative smoothly guides the way to quiet acceptance and ruin.
Decades ago now, Olsun and then Tainter outlined the practical rewards of central planning. Theories that look so good on paper often yield surprising and dismaying result in practical execution. And perhaps the most harrowing systemic reward of bureaucracy and redistribution is that it does not unwind. It totally and absolutely collapses. It is the story of bankruptcy in private firms unable to adapt. It is the story of governments so entangled, so beholden to special interest, that its tentacles have long ago distorted the circulation of its host so that there is no way to separate the two without causing death.
As America struggles with its own glimpse over the precipice, the trillion dollar question is whether they prefer to jump as well. In most previews of pundit proposed spending cuts, there is no clue at all that the country still understands the power of a yearning spirit freed, that it is the only precept that will save us, and that it is the only narrative that makes life worth living.