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MARKETS, FINANCIAL CHAOS AND CULTURAL CRISIS

No conventional remedy seems to offer solace to the ills the world economy has been suffering, especially in the West, since the catastrophic financial crisis of 2008. Recovery is still elusive and millions of jobs have been lost, despite all the emergency measures taken by governments and monetary authorities in the USA and the EU.

Andrea Bertolini / Planet Next

No one seems to have a clue about the true nature of the crisis, but politicians do not seem willing to turn a page and proceed to a deep rethinking of the global system and the unsustainable ambitions of unregulated growth. In the US, Democrats and Republicans are bickering over the conditions to attach to the lifting of the national debt ceiling–without which the US would be technically in default, with consequences too dire to contemplate.

In Europe, after a recession, an unprecedented series of bank bail-outs, and the bursting of the housing bubble in several countries (Spain, Ireland, UK), fears of a sovereign debt crisis has gripped the EU governments: Greece, Ireland and Portugal were saved, at least temporarily, from defaulting on their obligations by the intervention of their European partners. All in the name of the euro’s stability. As we speak, Italy is under attack: a huge public debt, a weak government, a static and rigid economy and a growth rate which barely registers, all contribute to making it a natural target for speculators.

Is this indeed simply a financial crisis, complex and stubborn, but ultimately temporary, or is the financial crisis only the symptom of a larger, deeper malaise in our Western societies? All this to say that the West, with few exceptions, is in deep financial trouble. Banks, economists, governments, supranational institutions such as the European Union have been variously blamed for not having predicted the crisis, for having provided inadequate solutions, for having irresponsibly squandered money. Some economists have blamed the US government for having injected massive funds into the economy; and some have blamed the EU, and especially Germany, for having done exactly the opposite. In other words, there is no consensus on a solution: at best, the blind is leading the blind.

Very few, however, have been asking a different question: is this indeed simply a financial crisis, complex and stubborn, but ultimately temporary, or is the financial crisis only the symptom of a larger, deeper malaise in our Western societies? For decades we have been preached the gospel of constant growth, of globalization, of free trade: the results, even aside from the financial crisis, are at best dubious. (More) growth needs (more) resources and resources on our planet are finite; sustainable growth requires difficult choices, which no one seems prepared to make. Globalization has certainly benefited some developing countries, but one could argue that in the West it has wreaked havoc, substantially decreasing the industrial base in many countries, shipping tens of millions of well- paying jobs to the East–in essence starting a process of a pauperization of the middle class, which in Europe and North America has been the basis for solid democracies.

A few have benefited: aside from the receiving countries, our Western economic and financial elites, who have reaped fat profits by producing in low income countries and selling in higher priced markets. Everybody else is, economically, a loser. That the rich get richer and the poor get poorer is not just a saying, it applies concretely to the societies in which we live. Statistics are clear: income inequality is growing by leaps and bounds in most Western countries. What this will mean, not only for the financial well-being of a nation, but also for its democratic institutions, is still unknown, but it is no secret that excessive disparity of income goes hand in hand with totalitarian and dictatorial regimes.

Let us return to the euro. According to most economists, it is impossible to have a common currency in the absence of a common fiscal policy; there is also the fact that several countries were able to enter the eurozone thanks only to official waivers to the basic rules established in the founding Treaty of Maastricht (for instance, Italy and Belgium at the time of joining the euro had a public debt almost double the limit fixed by the Treaty) or to downright cheating (Greek politicians have openly admitted that the government fiddled its national debt and deficit figures in order to come aboard the euro train–most certainly with the tacit and complicit knowledge of the EU Commission and Council).

So the euro was born of a political decision based, perhaps, on good intentions but mired in ambivalence. It might have worked if peer pressure had been sufficient to keep everyone on their best behavior. It did not. What did happen is that, buoyed by easy access to credit, several countries, especially in the south of Europe, went on a spending spree without precedent. Since the system was predicated not on a common fiscal discipline but on political compromises–you scratch my back, I’ll scratch yours–no one seriously dared to object. Until this official Ponzi scheme crashed, leaving the entire eurozone quivering in its boots.

There are two common threads to the dubious promises of infinite growth and globalization, on the one hand, and of the eurozone’s largesse, on the other: greed and lack of responsible behavior, both personal and collective. They were the icons of our generation, from the Reagan years to our day. Hence, what we are facing today is a profound cultural crisis which goes well beyond the financial one and this realization should force us to revisit and rediscover our core values–if there are still any, besides the obsession with vacations and foreign travel, a new car every three years, a bigger apartment and an early pension. It is wrong to help those who heeded no warning, it is wrong to save those who cheated and behaved irresponsibly.

Banks are an easy target, since they are said to make a profit no matter what (on the other hand, since so many of them have ran aground, one must posit that that assumption is not always true). But the real estate bubble in the US, UK, Ireland and Spain contained enough blame to go around: to the governments for promoting unhealthy growth, to the banks for lending to unsuitable clients and for inventing improbable financial instruments, to the developers for ruining the environment and getting rich in the process, but also to the man/woman on the street, who allowed themselves to be manipulated into borrowing for things they could not afford–and who continued to  max out their credit cards for all sorts of unnecessary objects and activities.

Post-war Europe was built through hard work, sacrifices and savings, a reasonable consensus between capital and labor, shared aspirations and inspired leadership. This allowed Europe to create a welfare system which was, or should have been, the envy of the world. But do we really believe that our nations can continue to pay for free education and healthcare, for social and pension benefits if we no longer work and save? If capital reigns supreme, unchecked by strong labor unions, sending jobs abroad and demanding cheaper and cheaper domestic labor which must be imported, with all the consequences we have experienced in the past 20 years? And if politicians refuse to lead, and pander exclusively to the wishes of a selfish electorate (just think for instance of Angela Merkel’s recent countless U-turns on a host of issues…)? Unlikely.

Still worse, now those who worked and saved (countries and individuals) are now being asked to bail out those who did not, in the name of an alleged euro-solidarity—but in reality, so that the circus can go on. It is almost too easy to say no: it is wrong to help those who heeded no warning, it is wrong to save those who cheated and behaved irresponsibly. It is time instead to question the validity of the growth-at-all-costs principle, to look in the face of the damages, both social and economic, caused by globalization, it is time for everyone, big and small, to take responsibility for their actions, putting an end to the orgy of narcisism, self-delusion and greed which are destroying our communities. And it is time to return to a more sober, modest, almost Aristotelian perception of what life should be.

(Planet Next)