Can the EURO be Saved by Top Down Budget Controls that Start Next October? And Is Brussels Really Up to this Job?

The New EU Agreement May Not Work in Practice

After the American Century 

I confess that the Euro Crisis seems to me only temporarily "solved." Except for Britain, all the other countries seem ready to let the EU have a veto over their budgets.  Is this idea feasible or practical? I think it will prove unworkable, at the latest by November, 2013. I very much hope events prove me wrong, but I fear this was an ill-advised treaty based on panic diplomacy.

Assume this new agreement goes into force and try to imagine how it will work. Each autumn all 17 nations using the Euro (and some 8 or 9 nations who might someday use it)  will send their national budget to Brussels and then sit back and wait for weeks or more likely months to hear whether their budget is acceptable.

Brussels will need to have deep knowledge of each nation's domestic politics and economy, so deep that each budget can be evaluated fairly, and quickly. If a single committee of experts examines each of the 25 national budgets and gives just one day to each, it will require five weeks to review them all. That is too superficial a look and yet would take to long, so there would need to be teams of Eurocrats devoted to different clusters of nations. And what chance is there that different committees will all apply the rules in the same ways?

These 25 or 26 national budgets will be complex documents built upon political compromises and assumptions about how each national economy will do in the following year.  This year it took the Danes well over a month to come up with their budget, which began with horse-trading behind closed doors between members of the newly elected coalition. What if the technocrats in Brussels declare such a budget invalid? Who then decides where the cuts should be made? How long will decision making take? How will coalitions respond if Brussels imposes cuts that hurt one party in the coalition far more than others? Might not Brussels cause governing coalitions to collapse, forcing new elections, and leaving nations without budgets in the meantime?

Which economic theory will be used to provide the standard model?  And what system of national accounting will be used? All nations will need to use the same or very similar systems, one would think, otherwise it will be hard to apply the same rules in an evenhanded manner. Most nations will have to "translate" their customary budget into an EU-friendly form.

What will be the allowable margin of error - i.e. the allowable difference between annual projection and actual performance in the previous year? Will a nation that suffered a natural disaster, such as a flood or earthquake be fined for failing to meet expected performance targets?  What if the cuts favor banks rather than homeowners, or they hurt schools rather than hospitals? Workers rather than pensioners? Suppose an EU budget decision is controversial? Can it be appealed? Meanwhile, is a nation making an appeal unable to tax and spend until a decision is final? These are only some of the questions that come to mind. I cannot imagine such a scheme working in the real world. 

If we assume that the new arrangement is approved this spring, expect a bureaucratic circus in October and November, 2012.

I think the new treaty is a bad idea because
(1) it is a top-down control mechanism that will be unworkable.

(2) It is based on the idea of cutbacks everywhere as the solution, and does nothing to create jobs or foster growth, except growth in the Brussels bureaucracy.

(3) It does not focus on the international banks as a major part of the currency problem. The banks irresponsibly loaned billions of Euros to nations that could not repay their debts, and the new idea is to let the European Central Bank make those loans instead. I would rather see much tighter controls on the banks themselves, learning from the effective regulation of the Canadian banks who rode out the 2008 crisis quite well.

The Scandinavian countries, none of whom now have the Euro. should put a few people to work on Plan B: a common currency for Norway, Sweden, and Denmark. This would quickly be recognized as solid and secure. Compared to working with Brussels, it would be easy to administer. This particular Plan B has been discussed before and rejected. Would any Danish political party have the courage to explore this idea? Probably not now.

Wait until about 2013, when people see the complexities, inequities, and delays that come with a centralized Euro and top-down control of national budgets. By then, Britain may look like the smart one who opted out early.

My Mark Twain (A tenuous, triple relationship)

I have always suffered from the pleasant illusion that I have a personal relationship to Mark Twain. This is a family matter.  Those who have read Roughing It will recall that Mark Twain describes going to Nevada, where his brother was to serve as the secretary to the Governor. That governor was named James Nye. In fact, an entire county is named after him today, Nye County, in Southern Nevada.  Go look at any map, and it is there, perhaps the largest county in the state, and some of it highly radioactive.  On the map below, it is the largest green spot, the green being a case of false advertising, for this is a sun-baked desert of little value to most people, unless you like rattlesnakes and tumble weed.

No doubt it was this part of Nevada that Twain had in mind when he remarked, "Some people are malicious enough to think that if the devil were set at liberty and told to confine himself to Nevada Territory, he would...get homesick and go back to hell again." Nye County has one of the most impressive suicide rates of any county in America. It is almost exactly the same size as Denmark, and I am proud of its sun-baked potential. It will surely one day prove to be a solar energy bonanza. If any of you want to  know more about Governor (and later US Senator) James Nye, I have a book in the office that gives a short biography of him. My uncle, George Nye, the family antiquarian and genealogist until he passed away in 2000, wrote that book.

But this is not my chief reason for thinking I have a personal relationship to Twain. No, it gets worse. Twain spent much of his time as a platform speaker and humorist. One of the other  speakers of the day was Edgar Wilson "Bill" Nye. Like Twain, he was a Midwesterner who had gone out West. Bill Nye was the editor of a newspaper in Laramie, Wyoming for a while in the 1880s, with the wonderful name The Boomerang, and while writing for that paper he became a funny man. In 1894, considerably after escaping from Wyoming, he wrote a comic history of the United States that sold almost as well as some of Twain's books. Both of these men began as newspaper reporters. They started stretching the truth to fill their pages, and ended up telling tall tales and making fun of the world, as a way of making a living. This line of work has always appealed to me. It explains why I became a historian. Twain once said of Bill Nye, "Edgar W. Nye's humor I enjoy for it is the frosting on the cake. There is something shining out through it all."

Bill Nye and Mark Twain were friendly, and they even appeared on the stage together a few times. The difference between them, however, is, that Mark Twain is still funny today, while much of Bill Nye's humor seems a bit faded. Some of his remarks are still fresh, however, such as: "I have been told that Wagner's music is much better than it sounds." Bill Nye was in tune with his times, and he made Victorians laugh, but Twain was more in tune with the ages. He not only made his contemporaries laugh but all those who came after him as well.

Still, I like to think that with these blood relatives who knew Twain, one at the start of his career and another one later on, I have some deeper connection to him than most people. I also have visited his house, which is now a museum, in Hartford Connecticut, not far from where my parents once lived. I could give the tour guide's talk myself, if I had to. So, if after a few drinks I begin to make mystical claims about Twain, you will have to consider the fact that my family and his have been connected for about 150 years. Of course, Twain died decades before I was born, but I have spoken to people whose lives overlapped with his. My great aunt, Grace Nye, lived to be 101. She was born in 1892, so it may well be true, as she said, that she once saw Twain when she was a little girl.

Mark Twain

None of this really means a great deal. In the world of criticism it counts for nothing at all.  But I want to claim a genuine and ineffable superiority to anyone who does not have a giant desert wasteland county named after their family in Nevada, a now forgotten ancestor who was a platform humorist who knew the great Mark, and a deceased aunt who (she said) once met him. 

Socialists Break Another Promise: Public Transportation

After the American Century

Socialists and the Socialist People's Party campaigned on the green platform of improving mass transit, reducing fares, and taxing the heavy traffic that floods into Copenhagen every day. Now that they have won, however, the plan is to do nothing of the kind. Instead, they will make no improvements in mass transit, raise the fares, and yet still impose the road pricing on those who drive into town. So taxes will go up, prices will go up,  quality will go down, and the roads will remain just as crowded. This is not what one expects from a socialist government. One expects them to be able to deliver social services.

The photograph shows a Copenhagen bus advertisement promising that if they come to power the Socialist People's Party will lower bus and commuter train fares by 40%.  Instead, they will rise 3.1%

The Socialists have broken many campaign promises, notably to the universities and the hospitals. They have decided not to return to the tax code in use when the country was prosperous and could afford its social services in the 1990s. Rather, they will keep the lower tax rates developed by the previous conservative coalition. The new government seems to have been captured by the same incompetent planners and economists who advised the conservatives. It appears that there is almost no difference between Right and Left in reality, with the notably exception of how they say they will treat immigrants.

An Electrical Blackout Just For Me?

After the American Century

The storm that lashed Denmark Saturday night with hurricane winds caused a blackout at our house. We were watching television when suddenly all the lights on the ground floor went out, and the film we were enjoying disappeared. The buglar alarm began to ring, as it does when forced over on to battery power. Not its forceful full screaming mad sound, but an insistent call for assistance. Looking out the window, my wife and I immediately saw that the neighbors were not affected, and we soon found that the floors above and below us still had power. It seemed obvious that the problem could be solved by changing a fuse. We found a flashlight and a fuse, made the change, and. . . nothing happened. By this time we were getting a bit cross, missing the film, and quickly put in another fuse, also without any result.

All this time the burglar alarm continued to ring, intermittently, and we began to wonder if we might be hearing this all night. So we called the security company and asked if they could stop it, and of course also reported that the power outage was the reason. We could hear the wind howling.

It being the middle of a weekend, the last thing we wanted to do was call an electrician, because coming for an emergency on a Saturday would cost us a minimum of $200, based on past experiences when we needed a plumber or a locksmith. So I decided to go outside in the rain and wind to see if by any chance I could spot the problem. It seemed unlikely, but worth a try.

Outside there was lots of wind, but little rain, and I shone the flashlight up on the side of the house where the four electric lines come in. They all seemed very securely attached. But then, from the corner of my eye I saw and in my right ear I heard a buzzing bluish spark. One of those four lines was loose at the other end, where it joined the main line! 

We called the power company, assuming that we would have to wait, perhaps even to Monday, but glad we knew the problem. It was not a short-circuit caused by a leak, for example, which would have been hard to find, expensive to fix, and in the meantime a danger.  This was far better, as the problem was not our fault, and we would not have to pay anything.

Remarkably, a crew was on the scene in less than two hours from the time we called, and by 11 PM a truck with a lift had taken a man up to the loose wire, sizzling there in the rain, and his nonchalance made him casually heroic in the gusting wind. In less than two minutes he had reattached the electrical line and the power was on again in our house.

What does this event mean? Well, that some things work really well in Denmark. But not everything. One of the most frequent causes of blackouts is a failure to trim trees growing beneath power lines. Did I forget to mention this? The electrical line that failed is slightly entangled in a tree, and our neighbor whose windows are closer to the connection than ours, asked that someone from the city come and cut it back. Nothing was done, however, as the municipality seems to be saving money on such things.

That said, it nevertheless did seem rather amazing that of all the houses on this  street, ours should be the one affected, and only one floor, where I happened to be. After all, my last book was about electrical blackouts. Power failures are usually more widely shared, but this one was quite private.

New Danish Government Breaks its Word and Slashes University Teaching Budgets

After the American Century                          

Many hoped that the new socialist-led government would offer a dramatic improvement over the previous right-wing coalition. But in many areas where they promised change, they have continued the old policies. Some of the promises they have broken were made with extreme clarity, and then forgotten immediately after they came to power.

One of the most notorious examples was the promise, given in writing as an unshakeable commitment, that the hospital emergency room in Svenborg would not be closed. It serves several islands and the southern part of the larger island where I live, This signed promise was broken as soon as they took office. Now they declare it will be closed. I firmly believe that some people will die because it will take them over an hour from the time an ambulance arrives until they can get to the only emergency room left on these islands, in Odense, where I live. This is a blow to a beleaguered area that already has trouble attracting residents. Before the election, the Socialists claimed they would help such outlying areas, and not continue the policy of centralization that is undermining them.

Likewise, the new Socialist-led government promised to roll back a large cut to the university budgets proposed by the old government before the election. In Denmark a certain amount is paid to each university for every student it matriculates. The old government proposed to cut this amount by 3000 kroner per student, and the new government now agrees. In 2012 Danish universities will find their teaching budgets reduced by c. 600 million kroner, or more than 100 million dollars. (Those who read Danish, see the news stories here, and here) To put this another way, support in most of the humanities will fall by 6.5% per student, but given rising costs the effect will feel like a 10% reduction. This decision will force universities to cut the number of teaching hours, put students into larger classes, fire some faculty, and slow down the purchase of essential equipment. UPDATE, October 2012. These things are all happening. There are now "language" classes, focused on improving oral proficiency, with more than 30 students, in some cases more than 40. This means that during an entire semester a student in such a class will only speak English for about 20 minutes each, at most about two minutes per week. It means that new BA programs are implemented without hiring any additional faculty or providing any additional money in the budget, while announcing goals that cannot possibly be met given the faculty and resources.

These cuts are twice as large as the increases announced for research, amounting to c. 300 million kroner for 2012. These funds are not all funneled to the universities, however. For example, some research money will go to hospitals or other institutions. In any case, the research funds that do go to universities cannot be used for teaching. The plans for 2013 call for even larger reductions for teaching, which will create a severe crisis.

Before the election the Socialists said (or rather they pretended to believe) that increased funding for education was essential, because the only real asset Denmark has is its people. A highly educated and skilled population will be needed to compete in the global market. But this new government, like the old one, now is unwilling to pay for it.  SDU's Rektor Dr. Jens Oddershed, speaking for the rektors of all the universities, declared that the government had broken its word. He was being diplomatic. A more objective view would be that the Socialists are cynical prevaricators.

Readers inside Denmark know that these are just two of many examples of the socialist-led government's unapologetic refusal to honor campaign promises. Like the previous government, the Socialists lack integrity. They proclaim one thing, but do quite another. In a few areas they are better, but in general it seems that, as George Orwell put it in the conclusion to Animal Farm, "The pigs have become men."

Where might the money come from to support hospitals and education? This government has refused to roll back tax cuts given to the wealthy by the previous right-wing government. Anyone can now see that the cuts were based on miscalculations and that they were un-financed.

Why should universities and hospitals be cut instead of rolling back the tax cuts for the wealthy? This is not even remotely a socialist program. It is not even an intelligent capitalist program. The new government has been a severe disappointment.

What we can be thankful for on Thanksgiving

After the American Century

A cynic might say that we have nothing to be thankful about on Thanksgiving. But there are some good things. I am delighted that Sarah Palin is not Vice President, for example, and glad, too, that McCain is not living in the White House. I am pleased that US energy use (per capita) has leveled off in recent years, and that the shift to renewable energy is continuing, more slowly than I would like, but it is happening.

It is a good thing that the Cold War came to an end, and that the economies of Eastern Europe continue to improve - a story that has been rather swept aside with all the focus on Greece's deficit. Likewise, little Iceland has clawed its way back from the brink of collapse. Denmark has gotten rid of a very bad government and replaced it with one slightly better. The Germans remain willing to bail out the failed economies of Southern Europe, and the French show signs of dumping their prime minister, whom I never have liked much. Italy has finally gotten rid of that buffoon Berlusconi. As for Spain, the economy is rotten and the socialists have been cast out by the voters, but at least their football is sublime.

Many bemoan the low house prices in much of the western world, but this is a good thing for millions of first-time home buyers, who also get lower interest rates than in a booming economy. My own house is worth a bit less, but I am not planning on moving any time soon.  The loss for me and the majority of people is more theoretical than real, and those starting out a life can get a good deal, often after years of waiting.

I am also glad that the US did not make the turkey the national bird, as Ben Franklin suggested. For in that case it might have become a protected species, and instead we might be eating genetically enhanced butterball bald eagles.

Benjamin Franklin's London House

After the American Century

Benjamin Franklin (1706-1790) was one of the most famous Americans in his own time, and he has remained an iconic figure ever since. He is on the $100 bill, his Autobiography is still in print, and some of the institutions he helped create, notably the University of Pennsylvania, are flourishing. He was interested in everything, and his curiosity led him to discover that lightning was a form of electricity. He invented a practical and efficient stove. He discovered the existence of the Gulf Stream. In his 80s, when his eyes were weak, he invented bifocals. Franklin was also a consummate politician and a key figure in creating the American Revolution.  Yet one looks in vain for a Franklin house or homestead in the United States. The houses where he lived have not survived.

The reasons for this are not hard to find. Franklin lived abroad most of the time from 1757 until 1785, almost entirely in London and Paris. In both capitals he represented the Americans. First, in London, he served as representative for several colonies in their affairs with the British government. Before the Revolution, he functioned as a proto-ambassador. Afterwards, he was the first American ambassador to France (1776-1785).  

In London between 1757 and 1775 he lived at 36 Craven Street, close to Charring Cross Station (built much later, of course). This house was opened as a museum in 2005, and it is well worth a visit. Fortunately, the house is easily accessible, being just a few minutes walk from Trafalgar Square. No doubt Franklin chose to live there because it was near government offices. It was also a convenient place for his many scientific friends to drop in.

The Georgian house was relatively new when Franklin rented its best rooms and hired a family to keep house for him. It survived fire, flood, and World War II's bombings, which destroyed several other houses nearby. The place was nearly falling down when saved for posterity. The restored rooms are largely bare of furniture, but their woodwork and arrangement are preserved.

Visitors are taken on  a tour into the past by an costumed actress/guide who holds a dialogue with disembodied voices that have been pre-recorded. The visit to each room becomes a dramatic vignette, that seizes the imagination more than one expects. This sort of thing can be done badly, but it worked well for me, and seemed historically accurate. For the people whom I took the tour with, this technique worked also extremely well. It was like attending an innovative theatrical production.

The next time you are in London, visit the house and get a glimpse of Franklin and of how he lived in c. 1770. If you are interested in doing research on Franklin, note that the top floor of the house has been made into the Robert H. Smith Scholarship Centre, with an array of source materials, plus links to Yale University and other centers that hold Franklin materials.

Finally, in case you have not already read it, Franklin's Autobiography is an excellent book, available in many editions, and also in digital format.

Cleveland's Marvelous Public Library

After the American Century

I had the pleasure of spending one day in the Cleveland Public Library. The librarians were knowledgeable, courteous, and efficient. The two buildings were handsome places to work, but the real test of a public library or an archive for a historian is what one finds. Sometimes an entire day yields almost nothing, perhaps due to poor luck, but often due to poorly organized materials, finding aids that are inadequate, or staff who make only a minimal effort. Sometimes, I get what I hoped to find, and go away satisfied, which was my experience on a similar mission at the Boston Public Library a year ago. But once in a great while I find much more than I had dared expect, and if this happens it almost always is because the librarians and archivists are real professionals. 

Cleveland Public Library, the new building holds the photographic collections

In this particularly happy research expedition, I spent almost all my time in the photographic collection, housed in the newer of the two library buildings and located on the fourth floor. All the images that I requested seemed to be near at hand, not buried in a vault or stored off-site. Moreover, the staff, led by the extremely capable Margaret Baughman, took a real interest in my project, and suggested places to look that I had no way of knowing about.

In the space of a single day, I reviewed hundreds and hundreds of images, selecting 14 in the end for reproduction. These images were scanned and ready for me as digital files the following day. Moreover, the price was extremely fair, in an age when every archive routinely demands $100 or more for each image. I have paid as much as $500 for a single image from a well-known magazine, whose name you might guess but I will not specify here. Such high prices force historians to make compromises or omit images, unless they are fortunate enough to find an oasis like the Cleveland Public Library.

Below, I reproduce one of the images I found there, but to fit it within this blog it is a mere jpeg file, not the wonderful TIFF scan provided to me. This is too large for easy use on this blog.

This image shows part of the Ford Motor Company's Model T assembly line. This is how it looked in c. 1915, when the method of manufacturing had just being invented. It was so new it did not yet have a widely used name. Originally, this photograph was used in one of the Cleveland newspapers, now defunct, whose images were donated to the Cleveland Public Library. I amusing it in America's Assembly Line, to be published by MIT Press in 2013, a centennial history of the assembly line in American culture.

Many of the best things in life are unexpected. The efficiency, intelligence and helpfulness of this library staff make Cleveland an attractive place to do research, and I very much expect to return for help with a quite different project, dealing with a young man who grew up in Ohio and edited a newspaper there for some years before the Civil War.

Halloween in Boston

After the American Century

In the Halloween streets of Boston costumes. Dracula in the subway, a cowboy in the diner, and a gypsy in the bookstore. Free candy at almost every cash register, and even in a serious office a bit of playful clothing, an odd hat, flashing electric earrings or a wild orange tie.

Whatever may be wrong with the US economy, whatever fears may clutch at the heart (or the wallet), Americans still know how to be playful and a little crazy. There is an edge, and it is not getting dull.

This playfulness should not suggest frivolity, for it is the flip-side of the energy and drive that Americans pass down through the generations. Yes, there are problems, and I write about them here in this space often enough. But there is no lack of enthusiasm and shared good humor nevertheless.

OK, this is just Halloween, but the levity is a sign of good mental health, despite the bitterness about the banks, despite the partisan politics, despite the 9% unemployment, and despite the weight of individual difficulties. Walking around the city today was a reminder that the country is far more than the sum of its problems.