October 24, 2011

The Beauty of Institutions

By ROGER COHEN

LONDON Jean Monnet, the postwar architect of European unity, once wrote: Nothing is possible without men, but nothing is lasting without institutions. When humankind fails, the best institutions save it from the brink. The forging of the European Union is up there with the U.S. Constitution as an act of creative genius. Loving an entity is hard, given the intangibility of the thing, but I love the bland Brussels institutions that gave my generation a peace denied its forbears all those young men engraved in stone and granite on melancholy town squares across Europe. Its a measure of the success of the European Union that peace is now taken for granted by its half billion inhabitants. Nobody pauses at the memorials. These days I find myself wanting to shout: Remember! Thats a tall order when people glide from France to Germany and onto Poland, across the killing fields of old, without pause for a border, and the Basque separatists of ETA have just laid down their weapons in Europes last armed confrontation. Yet I detect a dawning sense of the gravity of Europes crisis its political rather than financial peril in the parallels being drawn between dying for Danzig in 1939 and paying for Athens in 2011. These are dangerous times. Helmut Schmidt, who as a German is hardwired to the nature of cataclysm and at 92 knows what sacrifice brought a borderless Europe, declared as much the other day, lambasting anyone who considers his own nation more important than common Europe. There are plenty of such people these days, driven by frustration or boredom or pettiness to the refuge of the tribe. The euros creation was an irrevocable political decision. The currency, however, had the misfortune to be birthed just as the idealism that fired Europes integration sagged. The federalist implications of a common currency met the fissuring rancor of complacent Europeans. They had been lulled by the end of the Cold War, irked by European bureaucracy and wearied by the E.U. expansion to post-Communist states. The bad history uppermost in the minds of Franois Mitterrand and Helmut Kohl had faded. If ever a crisis was foretold, its the euro crisis. But the danger is broader. European frustration with remote, seemingly unaccountable
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institutions has spread into a wider anger against the impunity of the powerful and the richness of the ever richer. Growing numbers of people feel that the levers of globalizations compounding advantages are manipulated by the privileged few. From Manhattan to Milan, the Occupy movement is saying Enough Already! No, European leaders retort, we need more more budget-cutting, more sacrifice to set our houses in order after the debt-driven binge of this centurys first decade. Just as the euro had to row against an unraveling tide, so the austerity prescribed to save the currency now has to row against a tide of skepticism. Jean Arthuis, a French senator, gave this recent assessment of the state of the West: Globalization led us, through outsourcing, to give up our productive substance and opt for the comfort of consumption, while other states became the producers of what we consumed on credit: on our side sovereign debts, on the other sovereign wealth funds. Many Europeans and Americans experience that shift day to day as lost jobs, the disappearance of the credit that cushioned relative decline, growing disparities between rich and poor, a feeling of powerlessness, too many bills to pay, a gathering sense of injustice, and growing anger toward hapless politicians outstripped by markets they cannot control. Capitalism is crisis, says a big banner of the Occupy movement at St. Pauls in London. Indeed it is. As Joseph Schumpeter noted, Economic progress, in capitalist society, means turmoil. The trick is to convince people that crisis is creative more than it is destructive and thats not happening right now. The European Union was created for such a moment. It was meant to guarantee the impossibility of the worst not to deliver Europeans to postmodern bliss but to save them from the hell that began almost a century ago in 1914 and did not really stop until the Continent lay in ruins in 1945. Now, thankfully, the big bazookas are financial. Roll them out, whatever the subsequent cost in inflation. Irrevocable means just that: The euro cannot be turned back. There is no soft euro exit imaginable, only mayhem and danger. Recapitalize the banks. Bulk up on the rescue fund. Turn bankers Greek haircuts into buzz cuts. Do whatever it takes. Germany, ushered from ruin by the European Union, must lead the safeguarding of the euro or risk the loss of the stability that it prizes above anything. The best institutions are also self-correcting mechanisms. They work like the checks and balances of the U.S. Constitution. They turn crisis into opportunity. In time the euros defense will demand a federative leap forward. That will be good for Europeans even though they cannot

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The Beauty of Institutions - NYTimes.com

26/10/11 15:09

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