The Poverty of Nations

24 10 2015

There’s a reason politicians shouldn’t interfere with how people identify themselves. They exploit it for their own ends. Identity is not fixed, but it is deeply felt. It isn’t just about how we see ourselves. It’s about how we differentiate ourselves from others. This is what makes it so dangerous when politicised. In a politician’s hands, it is a tool of division.

Identity isn’t just about the individual, but about how we relate to others – who we identify with, and who we do not. The Left tends to assume – or hope – that the great mass of people will identify by, and with, their socioeconomic class. “Class consciousness”, in  one of those quietly nauseating lefty phrases (the subtext being that if you don’t identify that way, there’s something wrong in your head).

No doubt this is true in certain times and certain places. The middle class invasion brought by gentrification of communities can quickly divide areas along class lines. The 20th century saw waves of class politics – although always with sizeable minorities of left-wing middle class activists and right-wing working class voters.

But class isn’t how most of us identify ourselves, at least not in recent times. Lifestyle columns that attempt to fit us all into class stereotypes usually reveal how thin these are. Middle class people shopping at Aldi, working class people who listen to the Proms, upper class twits at the football – none of these people are stepping out of their “social station”. It’s just a matter of finding a bargain, liking some music, supporting a team.

How people actually identify themselves, and who they identify with, varies hugely – everyone is different, after all. Local community is a common one – where you live and who lives around you, where you grew up and who you grew up with. Religion, race. Taste in music. Sexual preferences and behaviour.

It’s not just about who you are, but who you are not. “I’m a northerner, not a southerner”. “I’m not a hipster”. “I’m liberated; she’s such a prude”. Then there are the familiar badges of honour – “working people”, “taxpayer”. These are just the latest echoes of a refrain that has been repeated through the ages, back through Victorian morality, back through the Poor Laws, to time immemorial. It’s not a manifestation of class identity – there are and have always been workers who are poor. It’s a division between those who identify as “responsible” and “self-sufficient” and others who they feel are not. It is a form of identity that is relentlessly exploited by politicians.

More than just lines on a map

But perhaps the most enduring basis for individual identity is nationality. It’s not logical but identity rarely is. Maybe it’s different in regions that were carved up by colonists in a manner straddling ethnic and racial contours – perhaps in these regions, identity forms more strongly around community, ethnicity or religion than a sense of nationhood. But in Europe, national boundaries are not just the stuff of Sykes-Picot lines. European nations exist in the mind just as solidly as they do on a map.

Little wonder the European integrationist “project” has been so anti-democratic for so long. The crushing of Greece has made the EU’s democratic deficit headline news for the Left, but just because it’s news doesn’t mean it’s new. From the desperate attempts to avoid a British referendum on the Maastricht Treaty, via the referenda in the 2000s where countries that voted No to EU treaties were told to go back and vote Yes, through the post-2010 ousters of elected governments – all this leads inevitably to the EU’s brutality towards Greece.

“Inevitably” is the key word here. This is not an aberration of the EU. This is the EU. This is what the EU is, what it does, and what it has done – in less severe circumstances – for years. I wrote in 2013 about the morphing of the inter-governmental European Community into the untouchable anti-democratic monster of the European Union. The supra-national institutions of the European Commission and European Central Bank were created specifically to override national democracies. This was no accident. It was intentional.

The European federalist project – “an ever closer union” – was always political. It is an ideology in itself, uniting social democrats such as Jacques Delors with the neoliberals of current vintage. It had no basis in economics, no basis in history, and no basis in public opinion anywhere in Europe – across the continent, people identify with their country ahead of their continent. Therefore it had to be imposed from above – supra-national bodies that could dominate and dictate to democratic nation states. A Greek nation run as a debt colony of Brussels and Frankfurt is exactly where this has led.

The current crisis represents the dovetailing of two ideologies – Eurofederalism and neoliberalism. After the Greek debt crisis erupted in 2010, the neoliberals running the ECB and European Commission moved to protect the private banking sector – which had recklessly lent heavily to Greece – by effectively bailing them out. Greek sovereign debt was taken on to government books – it would now be owed to other European countries, with private banks let off the hook.

Similarly, the crisis was largely a result of the core Eurofederalist scheme – the single currency, which had created a single, unsuitable exchange rate for the widely divergent economies of Europe. But instead of admitting that the project was a fiasco (as was its forerunner, ERM) and needed orderly unwinding – which would have brought into question the very existence of the Eurofederalist project – the ECB and European Commission indulged in publicly beating up on the supposedly reckless and feckless Greeks, waging a sustained media war against their alleged profligacy and lax approach to taxation.

Banking debt was turned into state debt to protect neoliberalism. A systemic Eurozone failure was turned into an attack on national traits in order to save Eurofederalism. Both required the sustained manipulation of national identity through the public (and leaked) statements of EU institutions – thrifty creditor nations owed money by feckless debtor states. The Germans who worked hard and saved harder. The Irish who took their medicine. The Greeks who swanned about and dodged their taxes before retiring at fifty. Such caricatures belong in the pages of an 1860s edition of Punch. They now inform how the people of certain EU countries demand their governments behave.

And thus we now have the people of Germany demanding their government impoverish the people of Greece, whilst the government of Slovakia rejoices in punishing the Greek referendum result.

Milton Friedman saw this coming in 1997. He wrote then: “The drive for the Euro has been motivated by politics not economics. The aim has been to link Germany and France so closely as to make a future European war impossible, and to set the stage for a federal United States of Europe. I believe that adoption of the Euro would have the opposite effect. It would exacerbate political tensions by converting divergent shocks … into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.”

The EU has pitted nation against nation, democracy against democracy, people against people, to save the banks and Brussels. The legacy will last for decades.

Passing the bucks

National identity is fundamental because of transfer payments – where a rich area “subsidises” a poor area by having some of its tax revenues sent there. People in one area (or socioeconomic group) see some of their money disappear off somewhere else – they become net contributors, giving their money to net dependents. If a strong sense of shared identity – or solidarity – does not exist between the two, tensions are raised pretty quickly.

We see this in our own benefits system, where “hardworking” people resent seeing their taxes go to support unemployed people, single parents etc. The notion of a shared identity across all parts of our society has been driven apart since the financial crisis – it’s now “strivers v shirkers” and other such guff – so taking an axe to those transfer payments is now a vote-winner, and to hell with the consequences.

It’s the same geographically. The European Union – in its pre-Maastricht garb – could function effectively while it had money to spray around. Richer members prospered from internal free trade and external protectionism; poorer members were flooded with grants and development funding. Everybody won.

When EU wealth transfers were limited to development grants, far from the eyes and minds of most voters, there wasn’t an issue. But the expansion of the EU into Eastern Europe brought not just financial assistance for the poorer new members, but mass migration from the old Soviet bloc to the richer nations of Western Europe. This migration was also a form of wealth transfer – many migrant workers would send some of their pay to their families back home. But it was far more visible than before. Amid (often overblown) claims of lowering wages and taking natives’ jobs, hostility to EU migration rose, and hostility to the EU itself rose with it.

This would not have been the reaction if there was any sort of shared “European” identity. There wasn’t. The EU periodically engaged in various nonsense gimmicks to try and generate one, but this achieved little more than idle ridicule in the British right-wing press. People within a community, a city, or a nation may feel comfortable (sometimes) paying to assist poorer members of that community, city or nation. Richer states in the USA accept that some of their revenues are rerouted to poorer states – that’s just part of the deal. But it doesn’t apply between European nations. As a result, such policies within the EU have always been driven from the centre; there is no shared identity to drive them from below.

The EU bailouts in the first half of this decade created a debtor-creditor relationship between EU members. With the slump in Europe’s economies, any vestige of solidarity between European nations has collapsed; it is every nation for itself. With Greece owing huge amounts of money to other European countries, any default or restructuring of Greek debt is seen as another transfer payment, from richer creditors to struggling Greece. The fact that this debt is unrepayable under any circumstance is relegated to a footnote. With the EU and Germany in particular having spent years deriding Greece for its supposed laziness and corruption, it is little wonder the people of creditor nations reject any such “subsidy” being implemented now. There is no shared identity, no solidarity, and in such a case division is inevitable. The Schengen Agreement may have removed national border controls in Europe, but national borders are still there in our minds.

Even where a shared identity does exist – within national borders, even within local communities – extended perceived subsidies can wear it down. The British welfare state, seven decades old, is a perfect example: transfer payments introduced under a banner of post-war social solidarity collapsing under the weight of political rhetoric and public pressure from voters fed up of – as they see it – subsidising the “workshy”. Shared nationality only becomes relevant when ire is directed at foreign aid or refugees.

Another pernicious trend that is growing across Europe is a kind of economic separatism, where richer regions start pulling away from their nation state so as to hold on to their revenues rather than subsidising poorer parts of the country. This year’s general election campaign showed how many English voters regard Scotland as a subsidy junkie, whilst Scots see North Sea oil revenue as a wealth transfer to England. Catalan nationalism has spiked as voters in Spain’s second richest region tire of subsidising poorer regions. Similar trends can be seen in Italy and elsewhere.

What happens to poorer regions, without transfer payments or fresh investment capital, is left unanswered.

A new Dawn

Nationalism breeds nationalism in response. English nationalism rose after the Scottish independence referendum. Nationalism of various forms is rising across Eurozone states as the bitter fallout settles along national and intra-national lines.

The IMF knows that the Greek deal passed this summer will not work – there will have to be a debt write-off down the line, once Greek society has been driven even further into the dust. It doesn’t take Keynes to know where this is likely to lead – Greek nationalism, and an angry nationalist reaction from creditor nations finding the money owed to them will not be repaid. If similar failures occur in other stricken European states, the same pattern will occur.

The actual fault lines of neoliberalism’s failures are not along national boundaries – at least, not within Europe. Even Germany’s economic success was built on wage suppression (feeding in to a national identity of thrift and labour). Wherever you go throughout Europe, elites are enriched, banks rescued, public services cut, young people cast adrift, mothers squeezed to breaking point. Wealth has flooded up rather than trickled down.

All this is widely understood – so it has had to be justified, and then trumped. Justified with a combination of “capitalist realism” – There Is No Alternative – and morality tales about single mothers and scroungers. Trumped by the formulation of bitter arguments between European countries, so that instead of being seen in terms of class and power, it is fought as one nation against another.

It is logical and sometimes necessary – though never pretty – for conflict to occur along fault lines that exist. But what is emerging in Europe is different. Battle lines are being drawn between nations when the actual fault lines exist on another plane entirely. And when battle lines are drawn where fault lines are not, all blood that is spilt is spilt in vain. The underlying causes go untouched.

The European Union is now second only to Vladimir Putin as the single biggest threat to peace and stability in Europe. Democratic politics has a self-moderating tendency – even in times of enormous turbulence, people only turn to the radicals when the centre has been exhausted, and only turn to the extremists when the radicals have failed. When the latest Greek austerity measures fail – as all Greek austerity measures have failed before them – then the radicals will have failed and, unless Syriza’s anti-austerity Left Platform can successfully break free from its mothership, the extremists will be next in line.

The extremists, in this case, are Golden Dawn, the nakedly neo-Nazi movement that was roaming free and attacking migrants until a belated state crackdown last year. Only they, the small communist KKE and Syriza’s Left Platform opposed the austerity deal this summer. The centre-right New Democracy party, whose government preceded Syriza’s, tolerated Golden Dawn’s street violence as austerity tore the Greek economy apart. They reportedly have a significant presence in the Greek police. The EU has shown itself to be entirely comfortable with the rise of fascism as a by-product of austerity.

After this summer’s vote left Syriza’s fate resting on the success of measures it knows will fail, a further collapse of the Greek economy would strengthen Golden Dawn, even if only via the re-election of New Democracy. Greece has migrant populations from surrounding countries including Albania that have already been targeted by Golden Dawn. As Moscow waits and watches, the domino effect of civil unrest in Greece would reach into historically the least stable region of Europe, the Balkans.

Which is fitting. For the great mission to unify Europe has Balkanised and broken it. The rest will be history.