- - Sunday, December 11, 2011


“Moderation in all things,” said the North African Roman dramatist Publius Terentius Afer, better known to us as Terence. But like so many artists, he latched on to a beautiful concept but got the logic wrong. He is echoed these days in the oft-repeated mantra from talking heads calling for compromise. The call usually follows a description — inaccurate, of course — of how we are passing through the greatest crisis ever. But just a little review of past troubled times demonstrates just how difficult earlier threats were — whether they were the bloody days of World War II or the U.S. Civil War.

Logic shows that we cannot have it both ways: To describe our situation as a full-blown crisis demands that we recognize the solutions will have to be drastic as well, not measly compromises. Whether we are looking at U.S. political contests or the European economic scene, the need for incisive answers must match the depth of the crisis. And for the most part, the price that must be paid has not received general acceptance.

American voters confront a dilemma heading toward the November 2012 elections given the Republican primary choices: Are they to believe that former Massachusetts Gov. Mitt Romney — with long experience in both government and business but whose whole career has been compromises in the face of problems — is the man to help rescue the U.S. from its worst business cycle since the Great Depression? Or are they to go for a more adventurous, perhaps untested, advocate of a major overhaul of an entire structure, a structure that, for the moment at least, appears incapable of the kind of correction that followed one recession after another since World War II?

Somewhere, too, in all this theater is the question of “confidence.” In a digital age of unlimited data, it is easy to forget that the economy runs on a psychological track that is often more important than so-called “hard” statistics, no matter how many we can churn out quickly. The kind of inspiration needed to restore confidence often has little to do with successful economic remedies. For those who did not live through it, it’s important to recall that Franklin Delano Roosevelt’s New Deal was the quintessential embodiment of this phenomenon. In the end, FDR had no economic solutions for the Great Depression. President Obama’s pronouncements and other amateur historians notwithstanding, the U.S. economy did not recover its prosperity until mobilization for World War II revolutionized the whole economic landscape. But Roosevelt’s “Fireside Chat” leadership did inspire hope when the morale of the American people was at its lowest.

The parallel crisis now dogging Europe is, too, as much psychopolitical as economic. The Europeans, to block a third round of conflict after two wars that nearly destroyed Western civilization, began political and economic unification. But the “European Project” has been built top-down, guided by extremely clever bureaucrats creating a supranational framework. In the process, basic and conflicting interests of Europe’s different vibrant cultures — the glory of the Continent — were not adequately considered, much less integrated in a bottom-up process. The euro, a common currency theoretically fitting all, was an attempt at this kind of forced amalgamation — and its demise was predictable for that very reason.

Now the patchwork efforts to salvage it — for the euro has become a totem of the whole effort at European unification — continues, but there is little likelihood that any solution can be more than temporarily successful. It was emblematic that British Prime Minister David Cameron should play the villain in the latest act that played out last week, refusing to sign on to a treaty pledging renewed conformity to guiding budgetary safeguards. The proposed pact is not all that different from earlier formal statements that even France and Germany, now presenting themselves as paragons of economic virtue, violated.

Having lost so much of its glory, London’s role as the world’s second financial center was at stake. For any British leader to fail to defend that status would have been the last straw in reducing further Britain’s diminished role both in Europe and around the world. How to accommodate London’s primary interest in the European Union’s economic community should have been a problem negotiated long ago. For the moment, the financial centers in Frankfurt and Paris have their revenge for their long apprenticeship to the City. In the long run, however, recent events can be seen only as another failure of a semi-authoritarian European movement.

• Sol Sanders, a veteran international correspondent, writes weekly on the intersection of politics, business and economics. He can be reached at solsanders@cox.net and blogs at www.yeoldecrabb.wordpress.com.

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