One of the impacts of Brexit on the EU will be to remove one of three most powerful and influential members of the bloc. That can only have the effect of increasing German hegemony unless the other EU and Eurozone members take concerted action to prevent this from happening. So far they have shown little sign of doing so. German led austerity policies remain in the ascendant, particularly in Greece, although economic trends have been improving elsewhere. But politically, German conservatism, inertia, complacency and a sense of entitlement appears to rule the roost.
So why do the other EU member states not take more concerted action to ensure the EU and Eurozone are managed more in their collective interests?
There appears to be a lot of ideological capture and attempts at imitation which simply can’t work for everyone. Germany is only one vote on the Council and needs quite a few allies to form a blocking minority. Draghi appears to have been doing quite a good job in resisting pressure from Germany to end his “unconventional” monetary policies, but the other EU institutions don’t appear to have a will to get anything done that Germany doesn’t like.
True, Germany can block Treaty change, but progressive Treaty change is never going to happen in the currently climate anyway. Hence the focus in my previous diary on initiatives that can improve the quality of administration and of life for as many EU citizens as possible without requiring unanimity or Treaty change.
Epochepoque argues that only a crisis could alter this conservative reactionary mindset, but most recent crises have resulted in regressive rather than positive change. A car crash Brexit could literally damage the German car and other industries disproportionately and force a degree of rebalancing which could benefit southern and eastern member states disproportionately without necessarily reversing austerity as a whole.
However as Krugman has observed, the deflationary impact of austerity measures is proportionate to the rate of change of public expenditure reductions, and thus even a slowing down of cutbacks can enable a (relative) recovery. It is thus appalling that we are still talking about more austerity in Greece, but the overall economic picture seems much brighter at least until we see the impact of Trump and Brexit.
Overall Europe has been in relative economic decline for a long time now, negatively impacted by a transfer of resources to oil rich states from the 1970’s onwards and now more recently by the impact of globalisation and the relative rise of the far east. People have had to work harder, longer, smarter whilst standing still. Now it takes two full time workers with increased qualifications to raise a family whereas before one worker, often less qualified, could earn enough to raise a family.
None of that is going to change any time soon unless we get a far greater rate of redistribution from the winners of globalisation to the losers and from capital to labour. That’s not going to happen without a rebalancing of power from global corporates to nation states, and the larger the state, the better the chance it has of doing so. That is partly why I think the long term impact of Brexit will be catastrophic, particularly for the UK, but probably not great for the EU either.
However we also need a regional, demographic and policy re-balancing within the EU, from Germany to poorer peripheral member states, from older to younger members of society, and from rentier capitalists to entrepreneurs. Neo-liberal economic theory is blind to all these distinctions and assumes a “trickle down effect” will “lift all boats” almost indiscriminately, or at least those who are deemed to deserve it.
And it is this quasi-moral overlay on already discredited economic theory which we need to challenge. It is not a crime, or a sign of a moral deficiency, to be younger, poorer, or from a peripheral region in Europe. The real crime is to value a rentier sense of entitlement and complacency above entrepreneurship, energy, innovation and hard work.
Perhaps one of the reasons for the decline of social democracy in Europe is a failure to recognise that distinction. Socialist parties have become identified with older, male, relatively secure workers and pensioners in state guaranteed or highly unionised environments when the reality of life for most other workers is very different.
Most workers around Europe can only dream of the wages, security, working conditions, working hours, and quality of life available to many in Germany and the richer northern states. It is time that hegemony was challenged, and the only surprise is that that challenge has been so muted to date.
