Greece default and the Eurozone

Consider this scenario. What would it matter to the American dollar if Los Angeles (Greece and LA both have about 10m people) went bankrupt? Why then, is the EU so involved in protecting bankers' loans with taxpayer dollars? After all, there is no inherent reason why Greece default should significantly impair the Euro over the long run.

The Eurozone is an interesting case study on European class culture and the ineptness of bureaucrats and bankers without practical sense. It was purportedly established as a response to the large trade zone of the USA, but since each country remains a protected island about the size of a large American city, no economies of scale have evolved. Why then the huge and lumbering unelected EU bureaucracy? One might well ask why the continued existence of the IMF and World Bank. By what measure can we call their existence a continued success?

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Parthenon from the Northwest by Cornell University Library, on Flickr

Most European countries are better visualized as the natural evolution of feudal city states, the king replaced by a rich and permanent upper class bureaucracy. This model extends to their politics, geography and commerce; an outsized capital city which exerts primary control, with a comparatively undeveloped surrounding geography. As an aside, one might ask why social scientists compare these cities, most of which are the size of Miami or New York,with the monstrous and diverse country of USA?

Some pundits claim the challenge of marrying the Mediterranean culture with northern work ethics was always going to end badly. While those comments may be astute, they are irrelevant when it comes to currencies and the discussions going on at the EU.

More enlightening is that pundits consider throwing Greece out of the EU and the Euro as a more practical alternative than defaulting on their debt. Is that the course we would suggest for a bankrupt Los Angeles? What is the difference? Who and what exactly, are the EU bureaucrats protecting with tax payer dollars?

What we are watching is the outsized powers of bureaucracy to resist downsizing and renewal. This instinct is particularly strong in Europe, where free market concepts were never embraced, and class society still remains strong. These countries evolved from feudal states to heavily regulated and controlled city-states. There was never a country in Europe that people fled which readily allowed people to climb the economic ladder or free themselves from the clutches of hierarchical bureaucracy.

Unlike USA, today's socialized Europe is as free as it ever was in its history, its citizens structurally mired in debt to its upper class betters as effectively as to its kings of yore; governments have injected market concepts only as a defensive stop against impending bankruptcy, not as a philosophical ideal. Burke was right; in America the rebellion was for freedom. In France, it was a mob calling for bread. Culture matters.

The only pertinent question is whether USA still retains the cultural memory to unwind their own debt induced bureaucratic dependency. For Europe is already lost for the simple reason that they never believed in freedom in the first place.