Patience Europe, Patience

By Steven Hill, Social Europe Journal, July 18, 2011

To understand the present and future, sometimes it’s helpful to revisit the past. In the case of Europe, it is instructive to consider the young United States of America in 1789. The thirteen former colonies had expelled their British colonizer with the crucial help of the French, and began the delicate task of trying to form themselves into a union of member states. It was an arduous and at times conflicted trial-and-error process, and its success was by no means assured.

This young America was torn by regional tensions and sovereign-minded member states that were constantly in the process of deciding to what degree they should forge a new union or maintain their separate ways.  Although all 13 colonies were British, like the different member states of the EU they were diverse in their histories, religions, and other characteristics. There were the Puritans in New England, the Quakers in Pennsylvania and the Church of England aristocrats in the south. New York was heavily Dutch, while Maine (originally part of Massachusetts) contained a large French-speaking population. And of course some were slave states, including the leading state of Virginia, with all the economic, cultural and moral dilemmas entailed, while other states were starting to voice opposition to slavery, a tension that within a few decades would begin to violently tear the nation apart.

Young America also had no single currency – each state had its own currency, indeed banks even had their own scripts that were used like currency. The new nation also was plagued by debt to domestic as well as foreign creditors. To meet these challenges head-on, the first Secretary of the Treasurer, Alexander Hamilton, took the lead in designing the beginnings of a modern financial system, including a single currency. Attesting to how controversial his efforts were, two of the most important and influential founders, Thomas Jefferson and James Madison, were fiercely opposed to Hamilton’s plans.

Hamilton was from New York – northern, industrial/commercial and increasingly slave free – while Jefferson and Madison were from Virginia, a southern agrarian slave state. So issues of finance, currency and economy quickly became embroiled in the volatile brew of region, culture and conflicting philosophies. Even more than the current European Union, this young America was gripped by regional tensions, north, south, east and west, with few member states wanting to yield much state sovereignty to a national government.

Americans were so suspicious of central government that President George Washington – who was a military hero and enjoyed god-like stature as the nation’s preeminent leader – dared not propose raising funds for a standing army. People were so against federal taxes that the first national tax, which was levied on whiskey – chosen because it was less controversial than other possible taxes – led to open rebellion in western Pennsylvania, prompting President Washington to march troops there to suppress it. Such was the fragility of the nation over its first two decades that Hamilton on his deathbed in 1804 – shot in a duel that itself was stirred within the cauldron of these tensions – uttered, “if they break this union, they will break my heart”.

There were moments throughout the 1820s, 30s, 40s and 50s when it seemed like those “united” states might crack apart as a result of its founding contradictions, in particular the credo that said “all men are created equal” yet many states’ economies were dependent on slaves. Finally, in the 1860s, the nation ripped asunder and was only held together after a bloody and bitter civil war which resulted in more American casualties than all other wars combined in which the US has participated, before or since. Europe today has many contradictions and tensions, but nothing on the scale of those that unravelled the United States of America.

In short, it took approximately 80 years from its founding for America to cease being a collection of regions and to become a nation. And during that time the US economy suffered at least seven bank and financial panics that make today’s euro difficulties look mild by comparison. Yet America persevered, continuing to define its union decade after decade, uneasily bound by a political will that believed, as Benjamin Franklin had forewarned, “we must all hang together, or most assuredly we will all hang separately”. Two hundred years later, most of the arguments from those times have long been settled to the point where Americans take most of these matters for granted.

Now, we see very similar echoes, familiar issues and arguments, playing out in the ongoing evolution of the European Union and the euro zone. Tensions between centralized authority versus member state sovereignty, federalism versus states rights, common currency and transfer unions versus state self-reliance, with individuals’ lives swept up in the turmoil. It’s important to remember that old Europe is actually very young. Nearly half of the member states have joined only since 2004, the euro dates only to 2002. Like the young America, the process of convergence and the noisy negotiations over degrees of federalism are going to take many years.

It’s also important to remember that as human beings we are used to our lives changing on the order of days, weeks and months. But societies change on the order of decades. The challenge for us as observers and social scientists is to see beyond the daily headlines and to discern the overall trajectory, the themes that are longstanding and revolutionary. As long as the European appetite for “union” is steadfast, as long as the heart of the enterprise remains beating, Europe will continue to define itself, and perhaps in surprising ways. This is very much a work in progress, one which at this point can be said to have reached “the end of the beginning,” to borrow Churchill’s useful phrasing.

Indeed, there’s no reason to expect that young Europe will become an exact replica of old America, that is, a United States of Europe. Nor should it; there are downsides to transfer unions, as California is now discovering, since California has been bailing out other American states for decades through regular tax transfers. California’s economy has been America’s Germany – truly too big to fail – but now that California is hurting, with the second highest unemployment rate in the nation and millions losing their homes and access to healthcare, the bailed out states’ ungratefulness displayed toward California has made a mockery of “union”. Germany is right to take this slowly, one step at a time.

Even the United States of America is a work in progress. The job of forging a union is never finished, as economic, political and cultural tensions constantly nibble at the ties that bind. And always looming in front are the never-ending economic challenges that prompted President John F. Kennedy to say, way back in 1962, “what is at stake in our economic decisions today is not some grand warfare of rival ideologies which will sweep the country with passion, but the practical management of a modern economy. What we need is not labels and clichés but more basic discussion of the sophisticated and technical questions involved in keeping a great economic machinery moving ahead”.

That is the task faced by the member states of Europe, as well as the US. And there’s no precise blueprint for a successful design, each generation must renew its commitment, its ideals, its policies and its institutions. The world is a work in progress, and so is Europe. Patience Europe, patience.

Steven Hill’s latest book is “Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age”