Europe Doesn’t Need a ‘New Deal’, it Needs Its Old Freedoms Back

The Wikileaks Facebook team recently shared a link to the website of a political group named DiEM25, which describes itself as “a pan-European, cross-border movement of democrats, and wrote that it had launched a “European New Deal”. I wondered why they had posted this link until I discovered that Julian Assange is on its ‘Advisory Panel’. That explained it.

Other members include Caroline Lucas, co-leader of the UK Green Party, Slavoj Žižek, Professor of Philosophy at the European Graduate School and Yaris Varoufakis, Former Greek Finance Minister.

Given that the New Deal in America not only failed to end America’s Great Depression but also prolonged it, the phrase “European New Deal” had already set alarm bells ringing in my mind. However, I took the time to read the group’s proposals. But those alarm bells kept ringing.

They start off by fairly accurately describing everything that’s bad about what the EU has become and the negative consequences of its rule. But then make the mistaken diagnosis that the EU’s failings are, essentially, the result of a lack of intelligence and virtue on the part of the individuals who hold positions of power within the EU. They write:

“Alas, today, a common bureaucracy and a common currency divide European peoples that were beginning to unite despite our different languages and cultures. A confederacy of myopic politicians, economically naïve officials and financially incompetent ‘experts’ submit slavishly to the edicts of financial and industrial conglomerates…”

EU politicians and technocrats aren’t “slavishly” submitting to the edicts of financial and industrial conglomerates. They’re merely acting in their own immediate self-interest according to the incentive structure they occupy. In other words, they’re acting like human beings who pay no price for making wrong decisions do and like people with the power to spend other people’s money do. They’re acting like egotists who want power and prestige do and will always do.

One would imagine that Julian Assange, more than anyone else on that panel, would have the least faith in people with state power. And yet, here he is showing virtually blind faith in future incumbents of a reformed EU. Seemingly based on the fact that he and his colleagues have redesigned the powers they will wield so expertly that no negative and unforeseen social or economic effects will occur.

It wasn’t a common bureaucracy and a common currency that was uniting European peoples; it was free-trade across European borders. It was simply fewer government obstacles to commerce, more economic freedom for Europeans.

Furthermore, it was inevitable that a common European fiat currency and government bureaucracy would eventually cause political conflict between European nations and economic stagnation – i.e. that it would enrich some nations in the short term, the smallest economies that contribute the least but gain the most from EU membership, and hinder progress for the largest economies who put in the most but gain the least.

The EU is not causing economic stagnation and political upheaval only because its incumbents are myopic, naive or financially incompetent. It’s causing this harm because it, as an institution, is the wrong means to the ends of prosperity and peace across Europe. In other words, because creating a super-state and throwing a net of government rules and regulations across the distinctly uneven economic and social terrain of Europe doesn’t make all Europeans wealthier and cannot possibly accommodate the many different cultural and political outlooks that exist among them.

Let’s now look at what this group of intellectuals proposes as a solution to the problems being caused by the EU, which it calls a European New Deal. They exclaim that “Europe is disintegrating!” But just because the EU is disintegrating doesn’t necessarily mean Europe will descend back into war and poverty.

They seem to have concluded otherwise, but continued peace and renewed prosperity across Europe is not impossible or even unlikely in the absence of the super-state that is the European Union; in the absence of this common bureaucracy and its common fiat currency.

The opposite is true. The EU and the Euro need to be dissolved for a new prosperity to emerge in Europe. And yet, this group of intellectuals desires to “fix” the Euro by ending “self-defeating austerity”. Which seems to suggest they believe they can solve the debt problems of EU member states by preventing their governments from cutting spending.

Are they so smart that they have discovered a magical way for governments to pay off their massive sovereign debts without cutting their spending? No, obviously that’s impossible. That leaves only one option. They must intend on solving the debt problem with immoral action only governments can legally indulge in – theft, fraud and money printing.

Read the group’s European New Deal paper and you’ll find this is indeed the case. Their grand plan for Europe is over one hundred pages long, but the details don’t change the fundamental nature of it. They talk the talk when it comes to opposing protectionism and closed borders, but they don’t walk the walk when it comes to economic freedoms and respecting individual liberty – the foundations of Europe’s prosperity in the post-war era.

The group’s proposed European New Deal contains many of the same disastrous elements that its inspiration, Roosevelt’s New Deal, imposed upon Americans in the 1930s, which ended up prolonging America’s Great Depression rather than curing it. The European New Deal proposes: higher taxes (pan-European taxes), increased government spending, substantial redistribution or ‘sharing’ of capital, comprehensive entitlement programs (“All Europeans should enjoy the right to basic goods (e.g. nutrition, shelter, transport, energy) in their home country, along with the right to paid work contributing to the maintenance of their communities while receiving a living wage).

And, perhaps unsurprisingly, it also proposes more banking regulation. Despite the fact that the banking/finance sector is already the most regulated and most government-fettered market in the world (which is precisely why it tanked and plunged the world’s economy into a depression and why it threatens to do the same again). Read the paper, all the ugly details are contained therein.

After 8 years of Roosevelt’s New Deal, unemployment in America had not fallen but increased and its economy had sunk deeper into depression. His Grand Plan produced entirely the opposite outcome to what he had intended and to what all his intellectual supporters expected. But, thanks to various blinkered, biased or economically illiterate mainstream historians, the New Deal went down in history as a triumph for American progressivism. Capitalism failed but FDR stepped in and saved the day, is how the story goes.

There is no reason to think the European New Deal proposed by the DiEM25 group will not backfire in the same manner as Roosevelt’s did. The best case scenario would be that it wouldn’t start Europe’s economy growing again and it would fail to have any positive, meaningful impact on unemployment in Europe. In the worst case, it would increase real unemployment across Europe and tip the stagnating economies of the EU’s member states into deep depressions.

The intellectual thinking behind Roosevelt’s New Deal was that capitalism was good, but it needed to be managed by state experts to stabilise and correct it. The DiEM25 group, however, apparently has even less faith in legitimate human freedom. It believes capitalism is uncivilised and ultimately not a force for human progress. As the group explains:

“DiEM25 is convinced that capitalism is impossible to civilise in the long term, primarily due to its inimitable capacity to undermine itself through technological innovation that engenders excess capacity, inequality and insufficient aggregate demand for goods and services.”

This is an extreme conviction, which I doubt even any far-right groups would adopt. However, I suspect what they identify as ‘capitalism’ is actually state-controlled or bound capitalism and not capitalism functioning free of the perverting and corrupting influence of state power, which has yet to be experienced. Let’s be generous and give them the benefit of the doubt.

Part of the aim of this European New Deal, then, is “Planning for a post-capitalist, authentically liberal and open Europe…” Capitalism is the spontaneous order that emerges when people have sufficient freedom to think and act freely and to acquire and dispose of property according to their own will. It is a function of freedom. So a post-capitalist society must mean a post-freedom society. To refer to this state as ‘liberal’ is to completely pervert the meaning of the word.

Let us hope and pray that we never arrive at this imagined utopia under a European super-state reformed according to the DiEM25 group’s blueprint. Because post-freedom also means post-prosperity, peace and progress.

The DiEM25 group is, of course, right to say Europe’s peoples should oppose the rise of protectionism, nationalism and right-wing authoritarianism in Europe. But they are mistaken in believing their own form of ‘democratised’ authoritarianism is the solution. Having different intended aims doesn’t justify using the same illiberal means of legal force. Nor will it make those means effective.

Europe doesn’t need a New Deal. It needs its old freedoms back.

 

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