Are Fissures in Europe Worse Than Media Reports Suggest?

Thanks to an alert NC reader, we featured in Links more than a month ago the fact that Denmark, contrary to the spirit of the Eurozone, was implementing border controls. Today, a hand-wringing comment by Peter Spiegel, the Financial Times’ bureau chief in Brussels, describes how sentiment against Eurozone integration has risen among the locals. The near-victory of the nationalist True Finns, regime change in Ireland and Portugal, and demonstrations in Spain, Greece, and Portugal suggest that the citizenry is increasingly unhappy. Spiegel describes the Netherlands as “the California of Europe” and describes in some detail how it opposed the recent €440 billion rescue fund, opposed recent efforts to integrate the western Balkans into the EU, and demanded reform of immigration policies.

Perhaps I am projecting US tendencies onto the EU, but I see the same signs of elite isolation there as we have here (in the US, it’s a New York-Washington bubble that includes finance, government officials, and major media). Per Spiegel:

Instead, we may be witnessing a generational change in European political dynamics. Traditional left-right divisions have narrowed. No mainstream social democrat now advocates centralised economic planning, just as no conservative candidate seriously questions the underpinning of the welfare state.

In its place, we are seeing a new division, between globalisers and localisers. The urban elites on both the left (intellectuals, liberal internationalists) and the right (free traders, global business leaders) face a challenge to their postwar consensus from a new group of revanchists.

This political force also comes from both the left (trade unionists, working-class whites) and the right (rural nationalists, far-right xenophobes). More importantly, it may spell a new, unprecedented challenge to the European project.

Did you notice the divide? No right thinking, educated person is against globalization; it’s only the lower classes, people in the hinterlands, and wackos. This is simply astonishing. It somehow does not occur to Spiegel (and I assume that he is merely a reflection of the chattering classes in Brussels) that the globalization/economic integration experiment has led to increased income disparity and and erosion of democracy. Yes, the elites and the rich benefit, but there are plenty of educated and middle class people who have come out on the short end of the stick. He seems to have ignored Dani Rodrik’s trilemma, that you cannot have national sovereignity, democracy, and deep economic integration at the same time. As he noted, you can have at most two of those three:

To see why this makes sense, note that deep economic integration requires that we eliminate all transaction costs traders and financiers face in their cross-border dealings. Nation-states are a fundamental source of such transaction costs. They generate sovereign risk, create regulatory discontinuities at the border, prevent global regulation and supervision of financial intermediaries, and render a global lender of last resort a hopeless dream. The malfunctioning of the global financial system is intimately linked with these specific transaction costs…..

So I maintain that any reform of the international economic system must face up to this trilemma. If we want more globalization, we must either give up some democracy or some national sovereignty. Pretending that we can have all three simultaneously leaves us in an unstable no-man’s land.

Given the spectacle of bankster bailouts followed by grinding austerity which many realize all too well is primarily a further sops to financiers, it is not too hard to see that many citizens correctly discern that the globalization/eurozone experiment isn’t delivering the economic benefits they’d been promised, and they like to have back some of what they gave up, in particular, greater local self-determination. This is completely sensible yet the Eurocrats seem to see it as voter ignorance, rather than a warning shot that the powers that be need to be a lot more concerned about the living standards of ordinary citizens than they seem to be now.

Related to the desire of the elites to depict unhappy locals as uneducated crazies, I also wonder whether the mainstream media is underreporting the scale and geographic scope of active opposition. There are many stories about protests in Madrid and Athens, but this comment from reader Doly yesterday suggests that the uprisings in Spain are more extensive and have specific obejctives:

Thought I’d report what my mother is telling me in her emails from Spain, mostly the economically relevant bits. (Note – she’s 57 and doing perfectly fine financially. If even some Baby Boomers who are doing well feel like this, imagine the rest.)

I’m delighted with the movement in La Coruña (Note – La Coruña is in the Northwest corner of Spain, on the coast. Not exactly close to Madrid). They’re doing it so well!

There is communication among the camps of all Spain. A couple of days ago two young people from Puerta del Sol in Madrid came here, I imagine to coordinate, advise and provide ideas. I suppose they have sent people to all of Spain.

There are camps in more than 150 Spanish cities, and I’m told also in foreign countries. (Note – Most definitely. I live in Brighton, UK, and there is one here.)

A Portuguese friend tells me that the movement has bloomed strongly in Lisbon, helped by the very difficult economic situation in the country. It started on 19th May, when some Spanish students of the Erasmus program made a demonstration. Now it’s the Portuguese citizens themselves protesting. It’s possible that the example extends to other European cities.

Another thing. The sparkle may also put Buenos Aires on fire. The movement is supported by the Nobel Prize Adolfo Pérez Esquivel and the Mothers of the Plaza de Mayo. Both Spanish residents and Argentinians are joining. They have been in touch with movements in Uruguay, Chile and Mexico to make a joint manifesto denouncing police aggression against the campers in Barcelona.

For the 30th May they have launched an action: everybody take out 155 euros out of their bank account. People are very upset because all the money has gone into saving the banks instead of social support. Besides, when people can’t pay their mortgage, the bank takes the house, sells it at half price, and the families that were foreclosed on, apart from being on the street, still have to pay the mortgage. We ask that if the bank takes the house, people shouldn’t continue paying for a house they don’t have any more.

Tomorrow I’ll be in Madrid (Note – for personal reasons). The train arrives early so I’ll go directly to Puerta del Sol to see that. Your father has made me promise him I won’t go, he was really tiring, because he’s afraid I’ll be mugged or the police start hitting people. But you will understand I can’t miss this, and I have some experience with this sort of thing (Note – she means in times of Franco), though now I know I can’t run as I could. I want to see how the camp is organized there. I’ll tell you all about it.

This is once she arrived in Madrid, 30th May:

The tents where the people who stay to sleep are, are using up all the space, Puerta del Sol is small for such a movement, and they are debating taking out the camp and separate it into the different local areas. Today, 29th May, there have been assemblies in more than 140 places within the Madrid autonomous community, and it’s estimated that more than 25,000 people have met today to form local groups. Many of them will meet one, two or four times a month.

The protest of the indignant have made theirs the objectives of a platform called “Real Democracy Now”. Apparently this was born on the Internet. They say that “Real Democracy Now” is a group born in the University world about a year ago, and it has some notoriety under the slogan “without a home, without work, without a pension and without fear”. Other slogans are “Politicians are guilty”, “Cuts? Theft.”, “This isn’t a crisis, this is fraud.”, “We aren’t anti-system, the system is anti-citizen.” Other platforms have joined, such as “Don’t vote them” and some others.

These are their objectives (I’ve left full details on the economic ones):

1. Removal of the privileges of the political class

2. Against unemployment:

a. Distribution of work, encouraging reduction in work hours until structural unemployment is ended (that is, until unemployment goes below 5%).
b. Retirement at 65 years of age and no going up in retirement age until youth unemployment is ended.
c. Benefits for companies with less than 10% of temporary contracts.
d. Job safety: Mass layoffs should be impossible in big companies while there are profits, taxing big companies to ensure that they aren’t covering jobs that could be permanent with temporary jobs.
e. Bring back the allowance of 426 euros for all long-term unemployed people.

3. Right to a home:

a. Homes that were built and not sold in a long period of time should be taken by the State and put on the market to be rented by Councils.
b. Economic support for young people and all people of low income to pay the rent.
c. Mortgages should be cancelled if the homeowner gives the home back to the bank.

4. Quality public services:

a. Removal of unneeded expenditure in government, and establishment of an independent control of budget and expenditure.
b. Hiring of health workers until the waiting lists are over.
c. Hiring of teachers to guarantee a good ratio of pupils per classroom, and support groups.
d. Reduction in the costs of attendance of all University education, and make the cost of graduate the same as postgraduate courses.
e. Public finance of research to guarantee its independence.
f. Cheap and sustainable quality public transport: return the trains that have been substituted by high speed trains with the original ones and the same prices, make cheaper transport passes, restrict private traffic in town centres, build bike lanes.
g. Local social resources: Effective applying of the Dependence Law, networks of local carers, local services for mediation and tutors.

5. Control of banks:

a. Ban of all sorts of bailout of banks: those banks with problems must go bankrupt or be nationalized to become a public bank under social control.
b. Rising the taxes to bank directly in proportion to the social cost caused by the crisis that was brought about by their mistakes.
c. Banks should return to the government all the public money given to them.
d. Ban Spanish banks from investing in tax havens.
e. Regulation of sanctions to speculation and bad bank practice.

6. Taxes:

a. Raise taxes to the most wealthy and to banks.
b. Real and effective control of tax fraud and money going away to tax havens.
c. Promoting internationally the adoption of the Tobin tax.
d. (Some other things specific to Spain that I’m not sure of the meaning).

7. Citizen freedoms and participative democracy

8. Reduction of military expenses

Reader Diego qualified this list a bit, saying that 15-M and Real Democracy Now followers were not necessarily in agreement on the social demands (such as action against unemployment and housing policy) they were united on:

1) real democracy (which means a more representative electoral system, some measures of direct democracy, etc.); 2) fight against corruption (e.g. indicted people being expelled from office) and politicians’ privileges; 3) punishing bankers and regulating finance.

He suggested looking at #consensodeminimos on Twitter.

While it’s hard to discern the state of play from anecdotes, the level of economic distress in Europe and more important, the fact that it is likely to get worse before it gets better, gives every reason to believe that citizens are restless. And with the summer upon us, thing could heat up mighty fast.

This post originally appeared at naked capitalism and is reproduced here with permission.