Last year I wrote a series of gloomy posts about Europe: Is this the Beginning of the End for the European Union? and The Deep Historical Roots of the European Crisis. Unfortunately, the European crisis has only deepened since then. Tomorrow the Brits vote for, or against the “Brexit”. Even if the Brits choose to stay in the European Union, there may be a “Frexit Referendum” next year, if Marine le Pen emerges as the front-runner in the 2017 French presidential elections. The Dutch may also run their own referendum.
Signs of dysfunction abound. Belgium did not have a national government for months. Lack of cooperation at the national level is partly to blame for the horrific Brussels terror attacks. Spain similarly can’t seem to be able to put together a national government. The likelihood that a future referendum on independence succeeds in Scotland or Catalonia remains high. Greece, which prompted my 2015 posts, is a bleeding wound.
Let’s think of the EU as an empire, of which we have many examples in history. Of course, it’s an empire of a somewhat new kind, because it was put together without conquest, the tool for building empires. Still the EU is not entirely new, because not all empires were conquest states. Think of the previous “European Union”, the sixteenth century’s Hapsburg Empire – it was also cobbled together by non-violent means: a series of dynastic unions.
And like what eventually happen to any empires, the EU has now entered the disintegrative phase. (For those of you not familiar with this terminology, see entries under “structural-demographic” in Popular Posts and Series).
Cliodynamics suggests that the causes of imperial collapse are manifold. In The Deep Historical Roots of the European Crisis I discuss one set of causes: the disappearance of an external threat (represented by the Soviet Union) and imperial overstretch resulting in gobbling up too much territory to the east and south.
But there are also internal causes. The structural-demographic theory points to two fundamental causes of imperial failure: popular immiseration and elite overproduction. I haven’t studied as thoroughly the situation in Germany as in the United States, but it definitely looks like Germany is following the American trajectory, although with a time lag.
Why focus on Germany? Because in many ways the European Union was a German empire. Or, at the very least, a collaboration between the German economic elites and the French political elites. Now this cooperation is unravelling, and the place to watch is, I think, Germany.
Everybody talks about how Germany managed to keep low unemployment and sustain economic growth, unlike the rest of Europe. The reforms under the Gerhard Schroeder government are credited for this “success.” But the success is a hollow one. Schroeder broke the social contract on which the modern Germany was founded: the cooperation between the Workers’ Unions and the corporate managers. As a result, we have the paradoxical situation in which the unemployment rate is low, while the proportion of Germans below the poverty line is growing rapidly.
It takes time, but as the capacity of the population to purchase goods declines, this will eventually undermine the potential for economic growth.(And yes, I know that Germany’s growth has been driven by exports, but there are limits to export-oriented growth.)
If the income inequality and the proportion below the poverty line are increasing even in the most economically sound European country, Germany, everywhere else the situation is much worse. I remember the media reporting on one Greek protester in Athens exclaiming, “It’s not right that children live worse than their parents!” But that’s the trend all over Europe. Yes, the European youth have smartphones and the Internet, and much more that the previous generation couldn’t even dream of. But they lack the economic security of the previous generation. Many of them can’t afford to live in their own homes.
The youth cohort in Europe, those in their 20s and 30s, are the highest educated in the history of humanity – and there are not enough jobs that would use their skills. History shows that the overproduction of youth with education credentials is a sure sign of political turbulence to come.
What does the poor in Germany and overeducated youths in Greece and Spain have to do with the Brexit? Just that the Brexit is only one of the indications that the European Union is failing. I may be wrong, but my guess is that the Brexit Referendum tomorrow will fail (more will vote to stay). But that will deal with the deep structural forces that are tearing the EU apart. The disintegrative phase has set in, and unless the structural-demographic trends are somehow reversed, the EU seems to be doomed.