A memo to Europe on idled resources and the opportunity in meltdown

posted at 12:16 pm on September 26, 2011 by J.E. Dyer
[ Economics ]   

Mark Steyn wrote over the weekend about the meltdown of the Eurozone and the impending “end of the world as we know it.”  Although it’s football season, and there’s plenty of fun stuff to do, it’s worth taking the time to point out some things about this global collapse deal, one more time.

First, the collapse of the Eurozone, which does look likely to happen, is the death of a Big Idea.  It represents more than the collapse of a common currency.  It’s the death of an idea of human life, regulated and directed and comprehensively administered by the state.  The collapse represents a triumph of reality over hallucination.  You can’t, in fact, build a sustainable model for having the state organize most of the investing for the people, and use its resulting power to tell the people what they are allowed to think and say, how much electricity they can use, and what medical services they will be allowed to have recourse to.

It is impossible to maintain a sound currency – much less a sound fiscal policy – when that’s your going-in proposition.  And it’s good news that we are reaching the breaking point.  The collapse of the Eurozone means Europeans cannot keep doing what they have been doing.  They will have to do something else.

There are millions of people in Europe who will all still be there the day after the official collapse, however that ends up being marked.  The collapse represents a gigantic opportunity for them, if they will take it.  Each nation already has a mechanism for choosing new representatives, people with different ideas, to govern it.  I am not convinced that there is no one left in Europe who has the discipline and character to chart a new course, instead of collapsing in the gutter, whimpering.  There is a colossal infrastructure in Europe, and what it needs is not solicitude and life support but a release of the clamps in which it is immobilized by the 20th-century “European idea.”

America is not that far behind Europe.  We have deceived ourselves that we don’t intend to end up overregulated and overspent like Europe, but the Obama presidency has demonstrated with disastrous clarity just how vulnerable we already were – had already made ourselves, long before January 2009 – to Sudden Overregulation and Sudden Overspending.  If we are to recover, politically and economically – not to mention spiritually – this cannot stand.  We, too, like the Europeans, have to do something else.

At the heart of the European idea is ratcheting up the “civilization premium”:  the extra that it costs us to earn our bread and lodging in a complex society, as opposed to foraging for nuts and berries while we wait to be eaten by the local wildlife.

In many ways, civilization and complexity make things more efficient for us.  But paying for civilization pulls against that effect in a perpetual dynamic.  And the very purpose of the Euro-nanny-state is to add a growing premium to every unit of work effort or purchasing power, in order to pay for civilizational goals.

It has been a long time since anyone in Europe, or in the rest of the modern, post-industrial world, has worked almost entirely to pay for his own needs. The most productive are working at least 4 out of 12 months to pay the civilization premium levied directly by the state through taxes. We then work some months after that to pay the premium imposed indirectly by regulation.

Obviously, we have to pay for police and fire services.  We want to; those services create a stable environment for family life, property, and business.  But paying government regulators to withhold water from us, terminate oil-and-gas drilling, and maintain a system of litigation in which we can be made to pay rent to others for exhaling, doesn’t do that.  It doesn’t enhance our well-being or economic prospects; it merely makes the necessities of life cost more.  It makes us work harder to pay for the same things.  Very often, that’s not worth it to us, and one of the costs of civilization becomes a systematic discouragement of our efforts at the margin.

Today, America and Europe are drifting on a sea of resources idled artificially by government policy.  To begin with, we have a combined population that is less well-educated than its ancestors.  That is a huge idled resource.  The same population operates increasingly on a mental attitude of entitlement and resentment, and that idles it further.  Both of these conditions were created by the implementation of the European idea in the public schools.  Our people – the ones walking around right now – would be much more productive without these handicaps.

To me, this is the most important idled resource, but it cannot be unleashed without removing the clamps of regulation and taxation.  Regulation has taken the place of taxation as the worst imposition on our daily economic life.  It is a silent, mostly invisible killer.  I would like to see the American capital gains tax rolled back, but it’s not our capital gains tax that is destroying our economy, it’s regulation.

Don’t forget the words idled resources.  I’m not talking here solely about capital available for investment, although I’m talking about that too.  I’m talking about how much more you could accomplish, and how much more you could save and buy (with cash), if the government didn’t keep driving up your basic costs (and, indeed, the cost of everything else) with regulation, while diverting 30-60% of what you’re worth to your employer in the form of taxes, mandated benefits, and “social investment.”

I’m talking about the natural resources we could be making use of if the state weren’t literally putting them off-limits to us.  I’m talking about what each of us could do to escape the industrial-job straitjacket if the cost of starting a small business weren’t so prohibitive.  Above all, I’m talking about the new lease on life the younger generations could have if their heads weren’t being filled with hate-thoughts about normal human life 24/7.

Imagine how the economies of the Western industrial nations would surge to life if people were allowed to profit from deciding to work however long it took to do profitable things.  A simple proposition, but fewer and fewer of us can do that today.  The idea of profit in any form is demonized; major segments of profitable work are effectively prohibited, either outright or through regulation; “jobs” are defined in terms of what benefits must accrue to them, rather than in terms of what needs doing; and when there is a profit, it gets hunted down and confiscated in one way or another.  If the capital gains tax doesn’t get you, the regulation will.

Government, as Reagan said, is the problem.  There is nothing we can’t do if we will allow the people to put our idled resources back to work.  Those idled resources represent trillions of dollars in wealth and revenues.  And those trillions would pay down an awful lot of debt.  But they can’t be extracted from a controlled, limited, managed citizenry; they can only be produced by people who are free to labor and profit on the basis of their own motivations.

The impending collapse of the Eurozone is proof of the first truth.  It represents the biggest opportunity Europe has had in a century to acknowledge the second, and act accordingly.

Europe, get rid of your failing welfare state, your unsustainable national health systems, your religious belief in regulation, and your “multiculti” hate-management schemes.  Unleash your people.  Get the demons of self-hatred and institutionalized discouragement off your back.  This is the chance of a lifetime.  Go ahead.  Show us the way.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

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