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Europe’s crisis of ideas

Europe’s crisis of ideas
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First Published: Tue, Feb 23 2010. 09 51 PM IST
Updated: Tue, Feb 23 2010. 09 51 PM IST
Europe is in a crisis. Superficially, the crisis is about money: the Greek budget, a German-led bailout, the risk of contagion, moral hazard, the fragility of the euro. Fundamentally, it’s a crisis of ideas.
At last month’s World Economic Forum in Davos, Greek Prime Minister George Papandreou offered a view on the source of Europe’s woes. “This is an attack on the euro zone by certain other interests, political or financial,” he said. In Madrid, the government has reportedly ordered its intelligence service to investigate “collusion” between US investors and the media.
Maybe the paladins of Spanish and Greek politics seriously imagine hedge fund managers sit around dimly lit conference rooms like so many Lex Luthors and—cue the sinister cackles—decide on a whim to sink this or that economy. Or maybe they think there are political dividends in playing to peanut galleries already inclined towards these kinds of fantasies. Whichever way, the recrudescence of conspiracy theory politics is just one symptom of Europe’s intellectual malaise.
Why do Europeans so often find themselves trapped in this sterile dialectic of populist obscurantism and technocratic irrelevancy? Largely because those are the options that remain when other modes of prescription have been ruled out of bounds. “All European economic policies are the cultural derivatives of one dominant, nearly totalitarian statist ideology: the state is good, the market is bad,” says French economist Guy Sorman. The free market is “perceived as fundamentally American, while statism is the ultimate form of patriotism”.
In the US, faith in the general efficacy of markets isn’t simply a cultural inheritance. It is sustained by the work of serious university economics departments, think tanks and grant makers, plus a few editorial pages here and there. It’s also the default position of the Republican Party, at least rhetorically.
By contrast, in continental Europe the dominant mode of conservative politics is sometimes pro-business, but rarely pro-market: During his presidency of France, Jacques Chirac railed against “Anglo-Saxon ultraliberalism”. There are think tanks, but they are almost invariably funded by political parties and hew to the party line. Not a single economics faculty in Europe is remotely competitive with a University of Chicago: Since 1990, only three of the 36 winners of the Nobel Prize in economics were then affiliated with a European university.
Then there is the media. Last week, German foreign minister Guido Westerwelle, who leads the market-friendly Free Democrats, took to the pages of Die Welt to lament that Germany’s working poor make less than welfare recipients. “For too long”, he wrote, “we have perfected in Germany the redistribution (of wealth), forgetting where prosperity comes from”. For his banal observations, he was roundly accused of “(defaming) millions of welfare recipients” and urged to apologize to them. It takes a remarkably stultified intellectual climate for an op-ed to spark this kind of brouhaha.
This is all the more remarkable given that Europe’s economic travails aren’t exactly difficult to grasp. Greece in a nutshell? It costs $10,218 to obtain all the permitting needed to start a business there, according to Harvard economist Alberto Alesina. In the US, it takes $166. But tyrannies of thought are hard to break, especially when the beneficiaries of state largesse—from college students to government workers to captains of subsidized industries—become a political majority. The US may now be approaching just such a point itself.
Is there a way out? “I am deeply convinced,” says Sorman, “that I belong to a continuous tradition of liberty against?the?state... Montesquieu, Tocqueville, Jean Baptiste Say, Jacques Rueff, Raymond Aron, Jean-Francois Revel”. Not an Anglo-Saxon name among them. Europe’s recovery—and the recovery of Europe— will come only when they are no longer prophets without honour in their own lands.
THE WALL STREET JOURNAL
Edited excerpts. Bret Stephens is a WSJ columnist. Comment at otherviews@livemint.com
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First Published: Tue, Feb 23 2010. 09 51 PM IST