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Austerity and the Euro – an Appalling Lack of Quality Leadership

Well, the Eurozone crisis has certainly dominated the news this past week or so – and the Greeks are once again at the centre of it. But this time it’s different. This time it’s not so much the ORANGE vMEME of the ultra-rich financial speculators effortlessly wrongfooting the BLUE-dominated fiscal technocrats in Brussels and Berlin which is causing the problem – though the speculators are still making plenty of money! Rather, it’s the people – the newly-poor, crushed and deprived by the austerity measures wreaking havoc with lives right across Europe – who are democratically electing populist politicians and extremist politicians promising them relief from the austerity. (21 of the Golden Dawn’s neo-Nazi candidates made it into the Greek parliament in the 6 May election.)

New Greek elections in mid-June are tipped to give an outright victory to the leftist Syriza bloc which, if Syriza’s leaders stick to their guns, means forcing the European Union to renegotiate the second bailout deal agreed in March, so the austerity measures the Greek are forced to endure are that much less severe. That or Greece tears up the agreement and effectively leaves the euro.

Merkel meets Hollande, 15 May. Copyright © 2012 John MacDougall/AFP

Merkel meets Hollande, 15 May. Copyright © 2012 John MacDougall/AFP

In trying to predict what will happen – or what should happen – the pundits are all over the place. And so are the politicians! German finance minister Wolfgang Schäuble hinted as far back as early March – before the second bailout deal was finally agreed – that Germany might be prepared to see Greece leave the euro. In their first somewhat-underwhelming summit on Tuesday (15 May), German Chancellor Angela Merkel and new French President François Hollande made it unequivocal that they wanted Greece to stay in the Eurozone…yet only days before Merkel had been backing Schäuble’s position. The 2 positions are not, of course, mutually exclusive: it’s quite possible to want Greece in the euro ideally but be prepared to see the country leave if it doesn’t fulfil the criteria to continue to be a member.

The foolishness of the austerity-alone agenda
Hollande is being portrayed in some quarters of the media as a naïve simpleton who thinks, in Ed Balls fashion, that you can spend your way out of the kind of massive debt crises befuddling much of Europe. If Hollande does think that way, it’s not clear from his public policies that is what he believes. In public at least Hollande isn’t saying No to austerity; he’s saying let’s have less austerity on one hand and develop growth strategies on the other. We’ve yet to have any evidence Hollande knows how to grow an economy…but at least he understands the importance of growth. For all my initial enthusiasm for the Coalition in the UK – see: ‘Liberal Conservatives’: new politics? (May 2010) – it quickly became apparent that the new British government had little vision beyond its dogma of introducing swingeing public sector cuts – see: Cameron & Clegg: where’s the vision? (July 2010).

In retrospect it’s astonishing – and can only be attributed to BLUE’s myopic determination to do ‘the right thing’ – that the likes of Merkel, Nicolas Sarkozy and David Cameron really believed their national populations would passively accept having their living standards decimated.

People have lost their jobs, their homes and sometimes their marriages and families as an indirect – and sometimes direct – consequence of the austerity programmes introduced by these leaders. Imagine: your BLUE has done ‘the right thing’ your country expects of you (obeyed the laws, done your job to the best of your ability, paid your taxes, got married and produced children, bought a house with the biggest mortgage your salary can justify and consistently maxed out your credit cards in the name of consumerism and supporting the retail economy)…and then you lose everything because the government or a government-funded agency has taken your job away. Meanwhile, you see that ‘1%’ allowing servile politicians – hey, George Osborne! – onto their yachts and into their mansions and those same servile politicians then increasing tax allowances for the mega-rich – hey, George Osborne! – so they get even richer! No wonder BLUE subsides, betrayed, and RED takes to the streets and the barricades. Syriza saying No to the second bailout deal – and all the trauma that will produce – may yet be a preferable alternative to a people’s revolution and/or an Army takeover. (Greece is no stranger to either!)

Sarkozy is, of course, now consigned to the dustbin of history by an electorate not prepared to accept more and more years of austerity. (If he is remembered at all, beyond having a wife distinctly more glamorous than him, it will be for leading the West into the dubious but nominally noble role of being the Libyan rebels’ airforce in their 2011 struggle to oust Mouammar Gadhafi.) As for Cameron, the violence of last Summer’s riots – see: The Riots – who’s right: Cameron or Blair? – may just have given him the ‘reason’ to turn the police loose Gadhafi-style on the next lot of anti-Government protestors rampaging through the streets of London, judging from the astounding amounts of rubber bullets the Metropolitan Police are reported to be stockpiling. Even Merkel is no longer looking so invincible, with her Christian Democrats suffering heavy defeats to anti-austerity parties a week ago in the their once-safe region of North-Rhine Westphalia.

It’s a 2-dimensional view, worthy of Margaret Thatcher in the 1980s, to think that a single strategy can solve what, in reality, are multi-faceted problems. Thatcher thought that freeing up the financial services to generate wealth while doing away with the old ‘heavy industries’ and the trades unions that went with them would solve the UK’s lack of competitiveness. What those policies resulted in was a fabulously wealthy south-east of England – so rich it pulled Britain into the Top 4 richest nations on earth (as measured by gross national income (GNI)). Yet much of the Midlands, the North of England, South Wales and the lowlands of Scotland were turned into industrial wastelands characterised by high unemployment, broken communities and broken marriages, failing schools and sky-high truancy rates, widespread alcoholism and substance abuse, and rocketing crime rates.

As Britain is now statistically in a ‘double dip recession’, I can’t help having some sympathy with Ed Milliband’s repetitive chanting that this is a recession “made in Downing Street”. While just about everyone on the Labour front benches, from Alistair Darling, Labour’s outgoing Chancellor of the Exchequer in 2010, through to Milliband – with the exception of Balls – recognised the need to take radical action to cut the deficit, they also warned continually against cutting too fast and too deep. They recognised the dangers both to the economy and to the social fabric of the UK. Cameron and Osborne took no notice of such warnings – even when this February 2 credit rating agencies, Moodys and Fitch, warned that the UK’s austerity programmes were so severe that they risked strangling any putative growth. Even this Friday, in a speech to business leaders in Manchester, Cameron was defending the government’s economic and fiscal policies, without accepting any criticism of them. In the same speech he paid only a fleeting, cursory recognition that a second policy of stimulating growth might also be necessary.

So, for the time being at least, Britain is stuck in austerity, thanks to Cameron; while Greece and other parts of Europe are stuck in austerity, thanks to Merkel and Sarkozy. If growth policies do emerge to balance out the austerity programmes, they are unlikely to come from such leaders – their BLUE thinking is too limited to the single strategy of public sector cuts: the ‘one true way’. Osborne epitmoises this BLUE-derived cut-and-do-nothing-else railroad thinking. From his first financial statement in 2010, he has done almost nothing to encourage business growth.

It seems it may need new leaders to bring in new multiple strategies which can combine reducing public sector profligacy with fostering private sector growth. So far at least, the Greek Syrizans are vehemently anti-austerity but have not voiced any viable alternative. Hollande was elected on an anti-austerity/pro-growth manifesto. The realities of being in power and having to negotiate with Merkel (who openly championed Sarkozy’s re-election bid) seem to have tempered Hollande’s rhetoric in the short time since his victory. While he wants a new focus on growth – but doesn’t say how he will stimulate French private sector growth – he is now giving more credence to the idea of some degree of austerity in Europe as a whole, at least.

With the BLUE conformity to society’s expectations failing to maintain stability and security, people’s PURPLE gets frustrated and bewildered, leading to a partial breakdown in social norms – what Émile Durkheim (1895) termed ‘anomie’ – which allows RED to self-express in what can often be a quite dangerous way. Beliefs about what is appropriate behaviour start to morph and change. As Susan Blackmore (1999) has shown, when old memes start to become dysfunctional, new ones rapidly take their place.

The riots and looting in Britain in August 2011 illustrate only too well the dangers of austerity programmes leading to widespread anomie in the specific sense that Robert K Merton (1938) used the term. When ORANGE-driven consumerism continues to promote high-value goods as socially desirable and indicative of status but there are fewer and fewer legitimate BLUE/PURPLE routes to obtaining those goods due to austerity measures, then it is predictable that RED self-expressive and self-indulgent thinking will dominate in the minds of some and they will then ‘acquire’ those goods by whatever means available to them.

By its very nature Capitalism cannot stop producing/providing and selling what it produces/provides. Otherwise there is no revenue from which to pay wages and overheads and derive profit. Austerity is, in a sense, anti-capitalist because it limits the legitimate ability of the market to buy what the Capitalists produce/provide. The only way to then get what the Capitalists tell you you should have is through anomic means. Just one small example of what Karl Marx & Friedrich Engels (1848) were getting at when they talked about Capitalism having sown within itself the seeds of its own destruction.

Beneath the surface of the European Union
On the surface, the Eurozone crisis and the controversies about austerity are about European countries racking up unsustainable amounts of debt – hence the austerity programmes to reduce the debt. Additionally, certain countries – most notably Greece but Eire, Portugal, Italy and Spain are also in similar messes – allowed their debts to build up to the point where they no longer could generate the revenues to service those debts as the markets lost confidence in those countries and interest rates rose. (Friday’s downgrading of Spanish banks by Moodys illustrates this perfectly.) Hence, the need for bailouts from the EU and the International Monetary Fund for these countries just to keep going.

But why are there such discrepancies amongst the countries in the EU? How come Germany is the only nation in the EU with really solid growth (in terms of gross domestic product (GDP)), the Italian economy hasn’t grown in 10 years and Greece is effectively bankrupt?

It’s about far more than differences in geographical location and natural resources, as some commentators would have it. It’s deeper and more fundamental than that. It’s about values. Alan Tonkin (2010), in his Global piece, The EU: an Organisation divided by Values, presents a basic overview of the values mix in the different member states and shows that there are clear values faultlines in the composition of the EU. Germany, Britain and, arguably to a lesser extent, France are driven by what Alan terms ‘BLUE Order and ORANGE Enterprise’. In contrast, he sees the Mediterranean nations of Italy, Spain and Greece as rather more relaxed, with PURPLE and RED more to the fore.

Of course, such ‘broad brush’ analyses are vulnerable to criticisms of playing to stereotypes. Yet there may well be some accuracies in such national stereotyping – how ever ‘politically incorrect’ the GREEN vMEME may make that seem.

A personal anecdote…Kristina Benit is a young German woman working as a nanny in the Harrogate area of the UK and currently a participant in my latest Introduction to Psychology adult education class at Rossett School. One ‘homeplay’ I set the class was to observe over the following week instances of each of the vMEMES as they went about their daily business. When they fed back at the next session, Krissy spoke at length about how much BLUE she saw in herself and in her friends and relations back home – indeed, in German culture as a whole. In effect, Krissy was confirming the stereoptypes of Germans as being:-

  • Ordered, disciplined and hard working
  • Highly procedural and efficient
  • Intolerant and punitive of people who are not like them or their values

– all characteristics produced in the selfplex by the BLUE vMEME.

Of course, one case study proves nothing. Nevertheless, Krissy’s thoughts do appear to support the basic stereotype of Germans. In which case, there may be some degree of accuracy in stereoptying of national groups. However, as Spiral Dynamics co-developer Don Beck demonstrated in South Africa in the early 1990s – see: Don Beck & South Africa – it’s not being in a certain racial or ethnic group per se which produces attitudes but it is the vMEMES which dominate in the culture of a group.

Accept the broad brush stereotypes Alan Tonkin points to and accept that these come from vMEMETIC cultural domination as a ‘working hypothesis’…and it becomes possible to use 4Q/8L as an instrument to identify key factors contributing to the malaise afflicting the EU.

The rules and structures of the EU are located in the lower right quadrant and are largely derived from over-mature BLUE with some strong mixes of ORANGE and some fewer but nonetheless influential splashes of GREEN. The overall culture of Germany is in the BLUE-ORANGE zone – lower left quadrant – and, thus, is well-equipped to take maximum benefit from the EU structure. Greece, on the other hand, if dominated in its culture by the less-complex vMEMES of PURPLE and RED, is very ill-equipped to cope with the structures, procedures and demands of the EU.

Evidence of the weakness of BLUE and the strength of RED comes from the problems the Greek government has with tax collection. Greek culture is not heavily imbued with memes about ‘doing the right thing’. Evidence that ORANGE in Greece is in short supply comes from the fact there are such low levels of enterprise and business growth activity.

As Alan Tonkin hints, a key threat to the EU is that fact that more member countries are centred lower down the Spiral than are centred in the BLUE-ORANGE zone. In part, this explains why so much responsibility for the success and sustainability of the EU falls upon those countries centred higher up the Spiral – especially Germany.

Memetic and vMEMETIC changes can also be seen in attitudes amongst German electors. Once the staunchest advocates of European integration, resentment is growing at German wealth being risked to bail out a country with little or no short-to-medium term prospects of economic growth. At a cultural level, there is a longer-term danger of Germany becoming exhausted with supporting the European project and sliding into BLUE/PURPLE protectionism.

Hollande, Obama, Merkel and Cameron at Camp David, 19 May. Copyright © 2012 Associated Press

Hollande, Obama, Merkel and Cameron at Camp David, 19 May. Copyright © 2012 Associated Press

Whither Europe?
Yesterday the leaders of the G8 met at Barrack Obama’s Camp David retreat in Maryland.

Briefing the press afterwards, Obama said there is an “emerging consensus” that European countries must now focus on jobs and growth. That isn’t quite the tone of the official communique which stated  that the G8 leaders had committed themselves to promoting growth alongside fiscal responsibility. The communique also added that, with regard to what strategies might put be put in place, “the right measures are not the same for each of us”.

In other words, despite Obama’s disengenous optimism, there is no real concensus among the leaders. Cameron appears to have come around a little bit to the view of Obama and Hollande that there must be  a new focus in the Eurozone on growth. However, reducing the deficit remains his overrriding concern at home. Merkel is still wedded to austerity and is said to be concerned that the German viewpoint wasn’t given adequate consideration at the summit.

When the world is said to be on the brink of financial meltdown, this is a demonstration of an appalling lack of qaulity leadership. And it shows all too clearly that most of them don’t ‘get it’.

The botched manner in which the EU has allowed the Eurozone crisis to rumble on for over 2 years, with austerity put forward for most of that time as the only possible solution is an appalling indictment of the lack of higher level thinking of the leaders.

Even more telling is that they treat the Eurozone crisis as the issue: if they could only stabilise the euro, things would be OK! Unfortunately, that is a ‘sticking plaster’ solution to a gaping wound which the crisis has exposed. It is a failure to recognise that the problems with the euro and the ‘debt mountains’ accrued by many member states are symptomatic of more fundamental problems. As we considered earlier, it is the values differences created by different vMEMES in the 4Q/8L lower left quadrant which is the real source of many of the EU’s problems – as Alan Tonkin identified 2 years ago.

Acknowledging this, of course, means facing up to the stark reality that not all member states are equal and, therefore, cannot all be treated the same. This is anathema to the GREEN vMEME which has influenced certain elements of the German political intelligentsia for many years – a factor which may help explain why Germany has allowed itself to get sucked into some very unnatural and unequal partnerships.

In understanding how this mess has come about, it is necessary to keep in mind the original aim of the EU: to contain West Germany (as it then was), increasingly resurgent economically (after the country was devastated at the end of World War II) and to minimise the likelihood of Germany and France ever going to war again. On the basis that countries which are economically interdependent rarely end up going to war with each other, the original European Coal & Steel Community was launched in 1951. The economic aim was to serve the political aim.

Again, when many of the former Soviet bloc countries joined the EU in 2004, it was politics driving the agenda – with economics having to meet the political needs. The political aim was to safeguard these countries from either disintegration and social chaos and/or to minimise lingering Russian or Communist influence. But, of those countries, only Poland so far has shown the potential to be a significant European economic power on the same level as Germany, France and the UK.

Yet, although the EU is driven by political agendas, the politicians, if indeed, they have the will, are unable to persuade their electorates that direct political controls – ie: some form of federalism – are necessary to manage some level of EU-wide fiscal and economic policies. Without that, we get exactly what we’ve got: Greece ‘cooking its books’ and running up vast quantities of debt, dependent on German hard-won wealth to bail it out.

Once you consider it from a 4Q/8L perspective. a straightforward union of nations containing Germany at one extreme, dominated culturally by BLUE and ORANGE with some GREEN, and Greece at the other, dominated by PURPLE and RED with some BLUE, was never going to be an easy match-up. Even with federal controls!

It may indeed be that some form of federal Europe is not acceptable to the peoples of Europe – but that has yet to be tested electorally, so  we don’t know for sure it isn’t. However, if centralised control isn’t acceptable, then Europe has to find another means of managing the divergent cultural values of its member states.  On Friday David Cameron said: “Decisive action is needed by the Eurozone. They cannot go on kicking the can down the road.” While Cameron’s superficial analysis appeared to go no deeper than the woes of the euro, his criticism of the inertia of the EU leaders was spot on. They cannot go on kicking the can down the road – but the can is more than the problems of debt and the common currency: the can is the fundamentally-flawed structure of the EU which gives equal status to countries with wildly-divergent values and, therefore, wildly-divergent aims.

It may be that the EU, instead of treating its members as if they are all the same, has to apply differentiated strategies to them. It may even be that there needs to be differentiated tiers of membership whereby Germany, France, the Benelux countries, the Baltic states and perhaps Poland form one tier; and perhaps the others are split between 2 other tiers, based on a banding of GDP:debt ratio? Each tier would have a different set of obligations and a different set of benefits? EU members which don’t use the euro would form a totally different category of membership?

What ever steps are taken- undoubtedly, tentatively! – to do something about the present crisis – and it’s hoped it is at least a sticking plaster job! – the EU needs fundamental reform. Cameron has talked about ‘bold initiatives’ being required with regard to the Eurozone. In that respect at least, he is right. But any intiative – no matter how ‘bold’ – will only work to a degree unless the EU tackles the values divergences within its membership.



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  1. Rob Geurtsen says

    Well well well – an outsider trying to depict European reality and the trouble with the yellowists appears again: we want – no we need leaders en strong reforms, thus hiding their ER-greed and core desires to surrender power to a convincing authority which funnily enough are mostly alpha-males.

    The lack of leadership in Europe is strange, maybe it is the old way of leadership that you noticed lacking. What we really can see is the dominance of northern-european politicians who are able and willing to maintain the flow of money from the south to the north – as it was and as it will be. That is not a lack of leadership but effective economic thinking.
    let’s not forget besides peace the EEC and later the EU was always and ever an economic endeavor to promote free market, and dominance of market over political institutions.

    That is why most outsiders are still critical of the political institutions of the EU and the political connections to nations. That was on purpose, my dear friends.

    What is lacking in the piece is the analysis of why and what kind of reforms are needed. It is pop-babble that doesn’t get to the point at all.

    From a SD point of view the writing is not only silly but reveals a lacking of basic understanding of ECLEty the theory developed by Clare. W Graves. The theory is not about typologies of nations at all. Thus a paragraph that does so,

    “Germany at one extreme, dominated culturally by BLUE and ORANGE with some GREEN, and Greece at the other, dominated by PURPLE and RED with some BLUE, was never going to be an easy match-up. Even with federal controls!”

    Such utter nonsense. My god how low can you go, with a misunderstanding of a helpful theory and model for human development and values. German the most developed nation from an SD-perspective. Let’s go get a drink downtown… drunk we will make a lot more sense than the above.