The Euro is a Big Success – No Kidding
by Greg Palast | The Guardian USA
Tuesday, 26. June, 2012
The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.
That progenitor is former University of Chicago economist Robert Mundell. The architect of “supply-side economics” is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell’s research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.
Mundell, then, was more concerned with his bathroom arrangements. Professor Mundell, who has both a Nobel Prize and an ancient villa in Tuscany, told me, incensed:
“They won’t even let me have a toilet. They’ve got rules that tell me I can’t have a toilet in this room! Can you imagine?”
As it happens, I can’t. But I don’t have an Italian villa, so I can’t imagine the frustrations of bylaws governing commode placement.
But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)
“It’s very hard to fire workers in Europe,” he complained. His answer: the euro.
The euro would really do its work when crises hit, Mundell explained. Removing a government’s control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
“It puts monetary policy out of the reach of politicians,” he said. “[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.”
He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.
That doesn’t bother Mundell. For him, the euro wasn’t about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher.
Mundell explained to me that, in fact, the euro is of a piece with Reaganomics:
“Monetary discipline forces fiscal discipline on the politicians as well.”
And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.
Thus, we see that (unelected) Prime Minister Mario Monti is demanding labor law “reform” in Italy to make it easier for employers like Mundell to fire those Tuscan plumbers. Mario Draghi, the (unelected) head of the European Central Bank, is calling for “structural reforms” – a euphemism for worker-crushing schemes. They cite the nebulous theory that this “internal devaluation” of each nation will make them all more competitive.
Monti and Draghi cannot credibly explain how, if every country in the Continent cheapens its workforce, any can gain a competitive advantage.
But they don’t have to explain their policies; they just have to let the markets go to work on each nation’s bonds. Hence, currency union is class war by other means.
The crisis in Europe and the flames of Greece have produced the warming glow of what the supply-siders’ philosopher-king Joseph Schumpeter called “creative destruction”. Schumpeter acolyte and free-market apologist Thomas Friedman flew to Athens to visit the “impromptu shrine” of the burnt-out bank where three people died after it was fire-bombed by anarchist protesters, and used the occasion to deliver a homily on globalization and Greek “irresponsibility”.
The flames, the mass unemployment, the fire-sale of national assets, would bring about what Friedman called a “regeneration” of Greece and, ultimately, the entire eurozone. So that Mundell and those others with villas can put their toilets wherever they damn well want to.
Far from failing, the euro, which was Mundell’s baby, has succeeded probably beyond its progenitor’s wildest dreams.
The System, The Verdict, The Response – Supreme Court Ruling on Health Care Law
The Supreme Court rules this week on the Affordable Care Act in what many believe will be, at the very least, the striking down of the personal mandate provision of the law. Some thoughts…
The System – James Fallows
You can try this at home. Pick a country and describe a sequence in which:
- First, the presidential election is decided by five people, who don’t even try to explain their choice in normal legal terms.
- Then the beneficiary of that decision appoints the next two members of the court, who present themselves for consideration as restrained, humble figures who care only about law rather than ideology.
- Once on the bench, for life, those two actively second-guess and re-do existing law, to advance the interests of the party that appointed them.
- Meanwhile their party’s representatives in the Senate abuse procedural rules to an extent never previously seen to block legislation — and appointments, especially to the courts.
- And, when a major piece of legislation gets through, the party’s majority on the Supreme Court prepares to negate it — even though the details of the plan were originally Republican proposals and even though the party’s presidential nominee endorsed these concepts only a few years ago.
How would you describe a democracy where power was being shifted that way?
‘Dysfunctional’ comes to mind…as does ‘corrupted’.
The Verdict - Bob Drummond
The U.S. Supreme Court should uphold a law requiring most Americans to have health insurance if the justices follow legal precedent, according to 19 of 21 constitutional law professors who ventured an opinion on the most-anticipated ruling in years.
Only eight of them predicted the court would do so.
“The precedent makes this a very easy case,” said Christina Whitman, a University of Michigan law professor. “But the oral argument indicated that the more conservative justices are striving to find a way to strike down the mandate.”
A fitting followup after they struck down campaign financing legislation and opened the doors to a handful of billionaires to purchase control of the White House and Congress.
The Obama Response To A Negative Verdict – Michael Tomasky
Almost never before in American history has a Supreme Court taken a law duly passed by the people’s representatives and in just two years’ time invalidated it. If that isn’t legislating from the bench, what is? Mr. Cool needs to get Hot. Against unanimous and ferocious opposition, and in the face of blatant lies about what this bill would and would not do, he and the Democrats came up with a way for people with cancer and diabetes and what have you to get the treatment they need and not be either turned away or gouged. He’s proud of that, he ought to say, and by God, he’s going to fight for it. That provision of the law is wildly popular—85 percent supported that, in a late-March New York Times survey. If you can’t play offense with 85 percent of the people behind you, I give up.
In sum, the Democrats should see an adverse decision as a chance to put the other guys—the Republicans in Congress, Romney, and the court’s ideological majority—on the defensive. It is what Republicans would do; they’d bay endlessly about an “out of control” court and all the rest. It’s one of the key psychological differences between conservatives and liberals. When conservatives suffer a political setback, they prowl the terrain like lions, looking for a few necks to bite. When liberals suffer one, they ball up like kittens and ask themselves, “Oh, gee, what did we do wrong?”
Unfortunately, regardless of the President’s response, true health care reform will never become a reality for as long as Republicans have a say about it in Congress…and in the courts. A Romney victory in November puts him in place to appoint the next Supreme Court justice ensuring that United Citizens and (likely) Affordable Care Act type decisions will be the norm for the next 20 years.
(The Supreme Court building source photograph is a Creative Commons licensed image from photographer Matt Wade.)
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