Europe Needs to Tackle its Biggest Deficit – Leadership … As the euro zone scrambles to extricate itself once again from a mess of its own making with what appears to be an 11th-hour deal to save Greece from imminent default, the markets should keep their relief in check. At the heart of the euro-zone crisis lie a series of deficits: fiscal deficits, bank capital and liquidity deficits, and productivity deficits. But the biggest deficit of all is the shortage of political leadership. As so often over the past year, politicians have found just enough resolve to avoid immediate disaster. But without far greater bravery from Europe's leaders, the next crisis won't be long averted. – Wall Street Journal
Dominant Social Theme: It is the leadership vacuum that is truly undermining the European experiment. Where are the great men?
Free-Market Analysis: Simon Nixon, the European editor of the Heard on the Street column, has written an interesting editorial about leadership (see excerpt above). Nixon's thoughts mesh with some of ours, as we too have been thinking about leadership. Nixon's ruminations in fact are part of a larger dominant social theme that we have been analyzing lately. But for us, leadership in the 21st century is likely an impossible task. We will explain more toward the end of this article.
First, we want to examine Nixon's perspective. What is it? That the Western world needs great men (and women) to address its great challenges. The "great man" theory of current events is of course part of a major dominant social theme that history is made by bold men (often warriors) seizing the day. We noticed this during the controversy over Dominique Strauss-Kahn. He was the right man at the right time at the head of a vastly important institution. In this sense, his downfall (if that is what it is) was most unfortunate. Minds like DSK's are hard to come by – or so the elites want us to believe.
Nixon's ideas run on a similar track, though with a twist that we will examine as well. For Nixon, the leadership vacuum in Europe is to be decried because Europe is "not facing the hard choices." The biggest leadership deficit lies in Greece, he writes. He then explains the crisis as he sees it. Athens bureaucrats, in revealing "fraudulent accounting and widespread tolerance of tax evasion," were responsible for creating the crisis. Prime Minister George Papandreou and his government refused to do the hard work of cutting social programs, collecting taxes and selling off Greek properties. This aggravated the crisis. From Nixon's point of view, then, Papandreou is not a Great Man.
Nixon sees a general lack of greatness throughout Greece, in fact. Its leaders continue to try for the easy solution of raising and collecting more taxes rather than chopping savagely at government bloat. The opposition party won't engage in a serious conversation either, according to Nixon, and is actually undermining the cost-cutting prescription of the IMF and the ECB.
But Nixon does not merely criticize Greece. He points out ways that EU leaders themselves have enabled the staggering Southern PIGS. EU leaders let Germany and France run deficits and Greece, he writes, "wasn't the only country to reap the benefits of lower borrowing costs while refusing to reform protectionist efforts."
Worse, according to Nixon, euro-leaders knew the currency was flawed from the start in that the bonds were exposed to credit risk. (Not every euro bond was created equal in other words.) This is a very good point! Banks dove straight for the weakest countries, "loading up on higher yielding peripheral country bonds" because they were likely confident that the Eurozone would stand behind them no matter what. The itch to lend to Europe's riskiest countries helped fuel the borrowing binge.
For these reasons and more, both Greece and the Eurozone are in tatters. "The crisis has arrived," Nixon writes, "and where are the statesmen prepared to spell out the hard choices to save monetary union?" In fact, it is obvious what must be done in his view. There can be no default and no debt restricting. Yet, Europe's leaders dither.
Nixon is sure of his solutions. "The logic of the crisis is that banks should be regulated at a European level; until governments recognize this, the pressures on individual states – and the political risks to the euro – will be immense." Not only must Europe's bank report to a centralized facility, the only institution explaining this is the European Central Bank! It is ECB bankers, without a mandate (as he rightly observes) who have been forced to point out that only the IMF's strong remedy of tax hikes, spending cuts and privatization is going to work in the long run, especially since Greece cannot devalue.
And his conclusion? "Europe needs leaders with the courage to spell out the hard choices and the inevitable loss of sovereignty. Few people voted for this kind of Europe, few want it now; people have a right to feel angry. But the option of turning back the clock 20 years doesn't exist. A break-up of the euro zone would be a political and financial calamity that would threaten the survival of the European Union."
This is Nixon's argument as he makes it in the pages of the Wall Street Journal. Regular readers of the DB may recognize where our differences might lie. They are threefold. First, it does not seem to us that Greek citizens ought to suffer for the next few generations because a handful of leaders took lots of money, stashed it away in Swiss bank accounts and made the country effectively insolvent. We would prefer to see the Greeks – all the PIGS – walk away from an EU that grows more authoritarian every day.
Second, for the reasons suggested above, we don't believe that Europe ought to become more centralized. We have often compared the EU to George Orwell's famous description of a boot stamping eternally on the human face. Giving the EU more power will presumably just make this process more effective and the boot heavier.
Finally, we do not believe that the EU suffers from a lack of leadership; but this is because we do not believe Greece needs leaders, or not many of them at any rate. "Leaders" got it into trouble in the first place. Of course, Nixon is enunciating a popular point of view, in fact. He believes that more centralization of power and authority is better for the EU and for Greece.
We disagree. One of the main tenets of Money Power is centralization. This is in fact its most important dominant social theme. The world needs global government. A New World Order. Western elites are not far from their goal actually.
Using its enormous Money Power, these elites have created regulatory democracy (a kind of fascism) throughout Europe and the United States. Regulatory democracy is a centralizing force. Its ultimate, logical conclusion is world government. In fact, these sorts of societies are prevalent around the world.
The West created the template and everyone else has followed along somewhat – Islam least of all, which is why it may now be under attack. The end-result will be to combine all these democracies together into one big one. (Only it won't be "democratic" at all.)
In building regulatory democracies, what Money Power has done in fact is drain authenticity from the West. If one wants to be a teacher, one must usually work in public schools with all the corruption and chaos that government brings to the process. If one wants to be a businessman or investor, one must become involved in a regulatory democracy that channels one's enthusiasm and energy in directions that one might not wish to go. (But the regulators will insist on it.)
If one wants to be a politician, one must adapt to the demands of various lobbies that have various agendas that must accounted for. If one wants to be a doctor, one must use pharmaceutical drugs. If one wants to be a scientist, one must find a berth at an academy and apply for grants that channel research into certain areas.
Money Power, over decades, has managed to create entirely inauthentic societies. The more degrees one has, the more politically correct one must grow. The more success one has in life, for the most part, the more one is constrained by society to work for further sociopolitical and economic centralization – which is the goal the great banking families seek.
It starts very young. The elites have begun setting up private grade schools throughout the West that search out children that score very high on IQ tests. These children are encouraged to go to certain special schools. Maybe they receive scholarships. From these grade schools and high schools, they travel on to elite colleges. They may receive Rhodes Scholarships. The CIA or other Intel agencies may fund their ventures, making them millionaires at a young age.
What is obviously true is that at every step, the world's future leaders receive a certain kind of education and a certain worldview. When they go out into the "real" world, they know exactly what is expected of them if they are to make a success. They don't need to be told. If they want to move up, the need to adopt and propagate certain agendas. And many of them do. Lady Gaga was apparently identified this way. So was the founder of Facebook, Mark Zuckerberg.
Whether you are an artist, a businessperson or a politician, if you are successful at what you are doing, you will usually end up enmeshed in the society with which Money Power surrounds you like a poisoned chrysalis. This is the reason that leaders and leadership seem to have changed in the past 100 years.
Today's leaders are those who most wholeheartedly accept Money Power's one-world agenda. And today's leadership and actions are aimed at accomplishing it. It is very difficult to find someone at a high level anywhere in the world who has not become enmeshed. Of course, from our point of view, there is good news too. With the advent of the Internet, all this is beginning to change. One reason the elites are so desperate to propagate Zuckerberg-style social networks may be because those who use them can be influenced and controlled.
Are they too late? In the past 20 years, several generations have grown up and matured using the Internet. They are freethinkers who have not been fully trammeled by Money Power and they are inspiring an Internet Reformation of sorts. These may be some of the real leaders of tomorrow. Of course, there may be fewer of them, as human action does not necessarily demand a vertical organization. Free-market hierarchies tend to be flatter – another aspect of 21st century societies that is sure to bother the elites. The Daily Bell is at the forefront of recognizing and welcoming the Internet Reformation.