The Old Continent Creaks: Austerity and the failures of the technocratic elite have created the current populist backlash. France’s experience is instructive—and, possibly, ominous::
What’s the matter with Europe? Wherever one looks these days, there are signs of deep trouble. Economic growth has stagnated. Deflation threatens. Unemployment is rampant in many member states of the European Union. Support for the former mainstream parties of the center-right and center-left is waning. Populist parties of the far right and far left are on the rise. Anti-Islamic movements such as PEGIDA in Germany have attracted worrisome support, while in France the xenophobic National Front has topped all other parties in recent polls. Terrorist attacks by native-born citizens in Paris and Copenhagen have raised fears that the social fabric has irreparably deteriorated—fears compounded by the flight of several thousand young Europeans to join the Islamic State in Syria. And to top it all off, Ukraine has been racked by civil war and threatened with disintegration since Russian-backed separatists rejected the rule of the government in Kiev.
Are these various crises and upheavals related? Who or what is to blame? And what does all this turmoil portend for the future of the EU, which not so long ago was praised by some as a model of ingenious institutional innovation and cooperative transnational governance, while simultaneously denounced by others as an insidious instrument for subjecting ostensibly democratic states to the imperious dictates of capitalism in its latest ‘neoliberal’ form? For two generations after World War II, memories of the devastating consequences of nationalism trumped economic rivalries, giving technocrats maneuvering room to devise continental strategies for economic growth that nevertheless enabled member states to maintain sufficient control over social policy to satisfy voter demands. For decades, this arrangement held.
By the mid-1980s, however, enormous changes in the global economy forced the European Community to reinvent itself in order to remain competitive. The original balance between national sovereignty and technocratic government at the European level was altered, limiting the ability of member states to set their own economic policy. But today’s convergent crises raise the question of whether the European Union that replaced the European Community needs to reinvent itself yet again. And if so, is reinvention possible at a time when many Europeans, and especially those for whom World War II is a distant memory, feel that the EU is exacerbating nationalist enmities rather than calming them? Is the ‘ever-closer union’ promised by the Treaty of Rome compelling EU member states to accept social and economic changes their citizens do not want? What has been happening in France since the election of François Hollande as president in 2012 clearly illustrates the tension between democracy and technocracy that has plagued transnational government in Europe since its inception. What I propose, therefore, is first to give a broad overview of Europe’s problems, and then to ask what we can deduce from the French case about the likely evolution of the present crises.
Diagnosing the Difficulty
The very multiplicity of Europe’s maladies makes the Old Continent a diagnostician’s dream. Each specialist can find somewhere in the complex tangle of dysfunction a manifestation of the particular virus or cancer that she believes to be fundamental. Is the tumor of globalization eating away at the welfare state? Did the virulent DNA of financial capital express itself as feverish speculation and overborrowing in susceptible European climes? Did Germany’s refusal to take the prescribed Keynesian medicine allow a curable infection to develop into a dangerous general sepsis? Or has the social-democratic vaccine against capitalism’s endemic diseases lost its efficacy? It’s true, of course, that the entire world has been in crisis since the global financial system was plunged into turmoil by the collapse of the U.S. housing market in 2008, yet the effects of that crisis seem to have settled on Europe with particular virulence. An ominous sense of epochal change hovers over the continent. Even before the crash, Europeans worried that what they like to call their ‘social model’ was uniquely unfit for survival in the regime of intensified competition ushered in by the era of globalized capitalism. They envied the seemingly higher growth rates of economies unburdened by the heavy taxes associated with the European welfare state. Shortly after winning the Nobel Prize in 2004, the economist Edward Prescott wrote in The Wall Street Journal that what Europe needed to do in order to compete successfully with the United States was to ‘[f]ree European workers from their tax bondage,’ which would lead to ‘an increase in gross domestic product (oh, and you might see a pretty significant increase in gross national happiness, too).’ International organizations such as the Organization for Economic Cooperation and Development, the IMF, and the World Bank criticized the ‘rigidities’ imposed by state regulation, which they blamed for perpetuating high unemployment and creating a ‘dualized’ labor market, in which some workers enjoyed high levels of social protection while others lived ‘precarious’ lives and were forced to bear the brunt of market fluctuations.
The repeated finger-wagging by free-market ideologues made many Europeans uncomfortable, however. The welfare state, the mixed economy, market regulation, worker protections—these were the essential elements of the postwar compromise between labor and capital that had made possible what the French call les Trente Glorieuses, the 30 glorious years of recovery after the end of World War II. For countries that had suffered the worst ravages of the Great Depression and its aftermath, the idea that a return to the unfettered capitalism that preceded the crash should be embraced as the remedy for the 30 subsequent years of slower growth and rising inequality ending in the Great Recession never attained the status of unassailable truth—pace Professor Prescott’s call to emancipation from ‘tax bondage.’
Furthermore, Europeans liked their welfare state regardless of where they stood on the political spectrum. The roots of ‘social democracy’ lie on the left, but by the 1980s the preference for a mixed economy, generous health and pension benefits, and regulated markets had become, on the European continent at least, what Antonio Gramsci called a ‘hegemonic ideology.’ These preferences were embraced by parties of the center-right as well as the center-left, compatible with capital yet acceptable to democratic majorities, and rejected principally by the extremes—and British Tories. The idea that this well-liked welfare state, deemed by many to be indispensable to social peace, might soon prove unviable in the globalized economy of the late twentieth century hence became a source of great anxiety.
Defending the Welfare State
To combat that anxiety, an influential group of Europeans turned in the mid-1980s to the other great institutional pillar of postwar Europe, the European Union. At its inception, the European Community had mattered symbolically more than functionally. Symbolically, it signified a common will to banish the national animosities that had bloodied the twentieth century. Functionally, the European Economic Community prior to 1985 was little more than a customs union and a modest framework for rationalizing key sectors of the European economy. For Alan Milward, ‘the nation-state and integration . . . [were] fundamentally contradictory tendencies, which nevertheless in promoting economic growth fortuitously complemented each other.’ Europe therefore developed as a loose confederation of nation-states, each jealously guarding its sovereignty and clinging to its prerogatives except in certain clearly circumscribed sectors (such as agriculture, coal, and steel) where cooperation was recognized as mutually beneficial. When growth began to slow, first with the oil price shocks and stagflation of the 1970s and then in the face of rising global competition, worries about sustaining the welfare state compelled European elites to think anew about the future of their union.
The Schengen Agreement of 1985 and the Single European Act of 1986 initiated a momentous series of changes that culminated in the introduction of the euro (in a subset of EU member states) in 1999. Today’s European Union in some respects resembles a nation-state. Goods, capital, and people move unimpeded across its internal borders. But it is a state without a government and with a small budget compared to its enormous GDP. It has a single currency and a central bank to manage that currency. But it has no federal treasury, no centralized system of taxes and transfers, and no military budget to serve as shock absorber and transfer agent. Hence it is not an ‘optimum currency area’ (as economists use that term), and the ‘fundamentally contradictory tendencies’ of member-state sovereignty and ever-tighter economic integration that Milward noted long ago have proved since the crisis to be less ‘fortuitously complementary.’
The move to an economically more integrated Europe was willed and orchestrated by social democrats, most notably Jacques Delors during his tenure as president of the European Commission, the EU’s executive body, from 1985 to 1995. Today, the EU is often attacked from the left as the thin end of the neoliberal wedge, yet the rationale for the single market was precisely to defend the social-democratic welfare state in an era of heightened international competition. The expanded internal market was intended to promote economies of scale, higher productivity, and a more efficient allocation of resources, which would in theory allow welfare states with a high social wage to hold their own against lower-wage competitors. True, the thinking of Europe’s reformers converged on numerous points with the thinking of aggressive financial entrepreneurs like Claude Bébéar, the former head of the AXA insurance group, who told The New York Times in 1991, ‘[t]o compete, it is necessary to either find a niche or become very big and very international.’ But it would be a mistake to conclude that the goal of European integration was to further a neoliberal growth agenda, strip national governments of budgetary sovereignty, or deregulate all markets.
Integrated Europe is also attacked from the right by populists and nationalists who resent its transnational reach and elitist institutional structure. Despite the existence of a European Parliament, policy-making at the EU level remains opaque to most Europeans, whose emotional investment in the EU is as tenuous as their understanding of its arcane complexities. The European anthem may be Beethoven’s ‘Ode to Joy,’ but the European Commission has lately been associated with a distinctly joyless austerity, conceived by unelected functionaries and enforced from Brussels. For the ‘economic patriots’ of the right, the EU epitomizes ‘foreign’ constraints on national economic policies. In their eyes, it embodies a foreign ideology (Anglo-American neoliberalism), the asperities of foreign competition, and the imperatives of an unelected and largely faceless elite. Although the rules under which the ‘Eurocrats’ of Brussels and Frankfurt operate are set by a European Council comprising the democratically elected heads of government of member states, this is evidently insufficient to pay down the perceived democratic deficit. At times the EU’s alien inscrutability and Byzantine, not to say Kafkaesque, complexity have served national governments eager to shift blame for unpopular decisions elsewhere.
The euro crisis has exacerbated these latent tensions. As the historian Perry Anderson observed in 1997, in a volume containing remarkably prescient anticipations of the current crisis by a number of scholars, the construction of Europe ‘was bound to lead to . . . a persistent pattern of consequences that disconcerted and foiled the intentions of its architects.’ The intentions made good sense: to foster economies of scale through cross-border capital investments guided by comparative advantage, to generate sufficient tax revenues to sustain existing national social models, and to bind a reunified (and therefore potentially hegemonic) Germany into a constraining federal structure. But the pattern of perverse consequences—first, divergent unit labor costs across Europe, concomitant trade imbalances, excess investment in unproductive sectors such as housing, and lack of budgetary discipline facilitated by mispricing of sovereign debt, and later, after the crisis precipitated by the foregoing, an insistence on austerity instead of countercyclical fiscal policies—threatens to shatter the political party systems of numerous member states.
The French Connection
In the starkest possible way, France exemplifies the unintended political consequences of the economic choices made by Europe’s architects, Delors foremost among them. Indeed, France’s current president, the Socialist François Hollande, was a Delors protégé, sometimes described as his ‘spiritual son.’ His current chief of staff, Jean-Pierre Jouyet, served on Delors’ staff at the European Commission. And France’s current finance minister, Michel Sapin, was a classmate of Hollande’s and Jouyet’s at the École Nationale d’Administration (ENA), which prepares France’s administrative elite. The three men were also bunkmates during their military service. Pierre Moscovici, who preceded Sapin as finance minister and is now France’s representative at the European Commission, is also a graduate of the ENA, where he studied economics under Dominique Strauss-Kahn—who would likely have been the Socialist Party candidate in 2012 had it not been for a disastrous 2011 encounter in a New York hotel (sexual-assault charges against him were lodged and dropped, but he paid a settlement).
All of these men shared Delors’s vision of a more tightly integrated Europe, bound together by a single market and a single currency, as social democracy’s best defense against globalization. The Delorian philosophy is nicely encapsulated in a sentence from Giuseppe di Lampedusa’s novel The Leopard: ‘Everything must change so that everything can stay the same.’ The judgment of the 1980s—an accurate one, I think—was that the price of preserving the social-democratic welfare state was the wholehearted embrace of this ‘leopardian’ approach to economic governance. ‘Leopardism’ is radically conservative: radical in its means, by extending the social-democratic compromise with capital into the realm of finance, but conservative in its ultimate goal, which is to preserve welfare capitalism from the ravages of globalization.
These French Socialist modernizers entertained a rather ambivalent relationship with democracy. As rigorously selected products of France’s elite civil service training system, they thought of themselves (in the words of the best-known French technocrat of an earlier generation, François Bloch-Lainé) as a ‘priesthood’ with a ‘vocation of public service.’ They were used to the style of governance fostered by France’s semi-presidential system, which bestows unique prerogatives on administrative elites, who persist in influential posts even as governments change. At the ENA, future administrators (colloquially and not necessarily affectionately referred to as énarques) are taught to privilege the longue durée over the vicissitudes of electoral and parliamentary politics—the mere froth of l’événémentiel, as the French say, as if to suggest that statesmen appropriately concerned with the long run of history need not concern themselves unduly with the everyday travails of their fellow citizens. The training of énarques instills hardheaded pragmatism, together with superb confidence in their subtle acuity at divining the persistent ‘general interest’ beyond the vagaries of the popular will.
Many Europeans will tell you that the problems of the European Union stem from a ‘democratic deficit,’ or a lack of citizen input into the decision-making process. But the ENA-trained technocrat would argue that this diagnosis gets the problem precisely backward: The problem with the European Union is a democratic surfeit at the national level, granting volatile electorates too much influence over policies that can succeed only if pursued with the requisite patience, to be ratified by voters only occasionally, and at moments judged opportune by the technicians. In France, wariness of the popular will has long been deeply ingrained in elite thinking. Le peuple, aka les classes dangereuses, thrive best when nudged in the direction of their ‘self-interest properly understood,’ as Tocqueville put it.
These mental habits of French administrators have left their mark on governance at the European level, where French influence, strongly represented from the beginning in the person of Jean Monnet, was extended into the transformative period of 1980 to 2000 by Delors and his young acolytes. Scholars such as Philip Nord and Mark Blyth have shown how the technocratic reformism of the 1930s—exemplified by Walter Lippmann in the United States, the nonconformists in France, and the ordoliberals in Germany—was perpetuated in postwar political thinking in many places, but most of all in the European Union, where technocratically managed capitalism is more at home than in any national polity. Technocratic paternalism was second nature to the Christian Socialist Delors, who knew that the liberation of capital he believed necessary to save the welfare state would not likely prove to be a winning electoral formula for the Socialist Party, which still, even after the forced-march ‘modernization’ of the Mitterrand years, continued to harbor a substantial anti-capitalist faction. In the run-up to 1995 presidential election, Delors briefly considered running for president of France himself but concluded that, even if elected, he would lack a majority in the National Assembly to carry out the reforms he thought necessary. He nevertheless continued to believe that the program could be shepherded to successful completion if the political battles were fought in the administrative or technocratic arena, as he had been doing at the European Commission for years, rather than at the ballot box. In any case, the EU was a theater better suited to his talents and temperament.
The Hollande Era
As noted, Hollande grew up in the school of Delors and was heir to the administrative paternalism deeply embedded in the French governing style. But in addition to Delors, Hollande also had a second mentor, a pure political animal who viewed France’s corps of highly trained technocrats not as enlightened tribunes of the people but as a resource to be exploited in service of his own will to power. President François Mitterrand fed the political ambitions of the young Hollande and many other énarques who came of age in the late 1960s and who today stand at the pinnacle of French political power. Mitterrand first recruited Hollande as an adviser in 1981 and subsequently encouraged his rise through the ranks of the Socialist Party, of which he was eventually appointed leader by Mitterrand’s hand-picked successor, Lionel Jospin, in 1997. From Mitterrand, Hollande learned that ‘the long march through the institutions’ favored by Delors could be very long indeed unless pushed along by an actual government enjoying a popular mandate, even if that mandate was subsequently rather freely interpreted. Mitterrand demonstrated that promises could be made and later broken with impunity; his sinuous cunning earned him the sobriquet ‘the Florentine’ and also kept him in office for 14 years. Since Napoleon III, no other French leader has held power for so long.
The lesson was not lost on Hollande. Emulating Mitterrand, Hollande tacked sharply to his left in order to win the presidential election of 2012. In a campaign speech delivered in the Paris suburb of Le Bourget that many observers consider the best of his career, he denounced the fiscal pact that his predecessor, Nicolas Sarkozy, had signed with German Chancellor Angela Merkel—colloquially known as the ‘Merkozy pact’—as an agreement to protect the interests of ‘the world of finance,’ which he declared to be his ‘adversary . . . exempt from every rule, every tenet of morality, every form of control.’ This speech marked a turning point in the presidential campaign, the moment at which Hollande shed his image as a vacillating compromiser. Despite or perhaps because of his long years in the political trenches, he had been saddled with the image of an apparatchik, a second fiddle without a commanding presence, unable to ‘incarnate’ the presidency, to use the term the French like to apply to an office they still associate, even after decades of disappointment, with the demigod de Gaulle—the French spirit made flesh. One of Hollande’s opponents had ridiculed him as ‘the captain of a pedal boat,’ and newspapers compared him to a soft custard dessert. But at Le Bourget, the Socialist candidate’s apparent boldness catapulted him ahead of Sarkozy, whose tougher image—no one would compare Sarkozy to a bowl of custard—had been undercut by his acquiescence in the Merkozy pact, which authorized the European Commission to impose sanctions on states that failed to observe strict budgetary discipline.
Hollande’s election in May 2012 thus raised hopes across Europe that France would lead an anti-austerity coalition. No sooner did he take office, however, than he declared he would not be renegotiating the pact with Germany after all and that his government would instead seek to reduce France’s deficit at a rate rapid enough to satisfy German demands. From this followed a series of extremely unpopular measures, including substantial tax increases that struck hard at the middle class. If popular approval is the measure of success, Hollande has had a disastrous first three years in office. At one point his approval rating plunged to 13 percent, the lowest ever recorded in the history of the Fifth Republic.
True to his mentor Mitterrand, Hollande, once elected, felt free to reverse course. But he forgot that Mitterrand had spent his first two years in office making a show of implementing the Common Program on which he had run before backpedaling. Hollande’s decision to renege at once without the slightest public display of resistance to Chancellor Merkel’s soft-spoken diktats violated the rule that in politics it sometimes pays to fight battles one expects to lose. Glorious defeat demonstrates character and may even build it. Worse than defeat, Hollande’s unexplained surrender not only dismayed his own electorate but also lent credence to one of Marine Le Pen’s central arguments. Le Pen, the leader of the extreme-right National Front (FN), alleges that there is no essential difference on key issues between Sarkozy’s Union for a Popular Movement (UMP) and Hollande’s Socialist Party (PS). In her characteristically pungent way, she makes this point succinctly by combining the initials of the two parties and denouncing the ‘UMPS.’
For Le Pen, who has the build and swagger of a lady wrestler, both Hollande and Sarkozy are meek little men who allowed themselves to be dominated by the Iron Chancellor. France, Le Pen says, has forfeited its sovereignty and control over its borders to a European Union run by and for powers—economic as well as political—that do not have the interests of ordinary Frenchmen at heart. For her, there is no point in preserving the Franco-German marriage: A divorce is the only way to restore to the French government the powers necessary to protect French interests—and the French welfare state, which she, too, portrays as sacrosanct. She would withdraw from the EU, jettison the euro, protect French markets with tariffs, restore French competitiveness by devaluing the reinstated franc, and, by repudiating the Schengen Agreement, exclude the immigrants she claims are taking jobs from native workers and sapping the welfare state of resources that would otherwise be available for the native-born.
Le Pen’s jaw-jutting anti-EU pronunciamentos tap into anxieties widely shared across the French political spectrum. She claims simply to be saying out loud what many politicians in the mainstream quietly believe but do not dare to express openly: that France has forfeited too much of its sovereignty to a transnational entity it thought it could control, only to discover that it is no match, as she sees it, for the combined power of Germany, financial markets, and Anglo-Saxon economic ideology.
Social Liberalism with Sauce Hollandaise
Why, then, would a Socialist politician, freshly elected on a promise to diverge sharply from the course set by his right-wing predecessor, immediately reverse himself and stake his all on preserving the Franco-German entente? Perhaps Hollande thought it wise to avoid a humiliating rebuff in his first months in office—a rebuff that would have clearly demonstrated his limited room for budgetary maneuver. Or perhaps he didn’t see his action as an about-face requiring an explanation. His tactics may have been Mitterrand’s, but all along his strategy remained Delors’s. A believer in a Europe built around the Franco-German couple, he takes the maintenance of that partnership as a primary duty of the French presidency. If the price of scrapping the Merkozy pact was an open breach with Germany, it was a price Hollande was unwilling to pay.
Nothing Hollande has done since taking office suggests that he believed that if only the Merkozy pact could have been scrapped, all would be well in France. Since Germany was not willing to boost demand through deficit spending, Hollande, ever the Delorian realist, chose to do what he could do on his own, just as Delors, forced to work around insuperable Franco-German differences to create the euro, had to make do with a currency union whose imperfections he fully recognized. Hollande’s technocratic instincts, learned from Delors, trumped his political instincts, learned from Mitterrand.
In the realm of economic policy, Hollande has therefore sought by fits and starts to ‘restore French competitiveness’—a phrase that has become a mantra among Socialist policy-makers convinced that France’s long-term challenge is to slow the rise of unit labor costs, broaden the tax base to reduce the ‘tax wedge’ between the wage paid to employees and the cost of labor to employers, and make it easier for firms to restructure. Hollande’s enemies on the left denounce these ‘structural adjustments’ as neoliberal, ‘social liberal,’ or ‘Blairite’—all terms of opprobrium in the portion of the political spectrum that includes the small Trotskyist parties, the Greens, the Front de Gauche, and the left wing of the PS itself. But Hollande himself views his program as realistic, in contrast to the vaguely formulated alternatives favored by his critics. Hollande thus stripped from the Socialist Party the veil he had created during his years as party leader. As leader, he had the reputation of being a trimmer, one who was constantly seeking face-saving compromise between the party’s more left-wing elements and its social-liberal right. But in a press conference in January 2014, he proudly embraced the market-friendly ‘social democrat’ label and, two months later, he named Manuel Valls, the most outspokenly social-liberal of Socialists, as prime minister—a move that led eventually to the departure of three more left-wing ministers as well as the Green Party. In addition, Hollande’s endorsement of economic reform proposals made by a commission appointed by his predecessor Sarkozy has further disheartened and demobilized the left wing of his own party and given Marine Le Pen additional ammunition to attack the ‘UMPS.’
What lessons does the French case hold for the future of the European Union? In a formal sense, the governing institutions of the EU resemble those of France. Both have an all-powerful executive: the president of the republic in the case of France, the European Council in the case of the EU. In both cases the will of the executive is implemented through entrenched technocratic hierarchies: the ministries of the French administration and the directorates of the European Commission, respectively. In both, the relatively limited role of the legislature means that groups opposed to the policies favored by the executive feel that they are deprived of a voice and that the only way to change policy is to replace the executive. In France, this structure increases the stakes and heightens the drama of each presidential election. At the EU level, where the executive is a council comprising the heads of member-state governments, the absence of any simple electoral route to changing the policy preferences of this multi-headed executive is a constant irritant to national electorates. As long as things go reasonably well, the European governance structure enjoys what political scientists call ‘output legitimacy,’ meaning simply that citizens are content because the union is producing results they can live with. But when things don’t go well, the EU executive lacks not only output legitimacy but also ‘input legitimacy,’ because it is hard for citizens to understand how their votes to choose their own national leaders translate into policy at the European level, where policy is decided behind closed doors by the members of the council, whose votes are weighted so that some national leaders count more than others.
A strong executive deaf to dissenting voices, reinforced by a consensus of technocrats, and unchecked by a broadly representative legislature is a recipe for populist opposition. As we have seen, the populist backlash in France, led by the right-wing FN, has lately been gaining strength and now represents approximately 25 percent of the electorate. Yet most observers agree that Marine Le Pen will not be able to surmount the obstacle posed by France’s two-round presidential voting to become the country’s next president in 2017. Elsewhere in Europe, however, where austerity-induced hardship is greater than in France, the populist backlash against technocratic rule may well lead to changes in government. This has already happened in Greece, where Syriza, at the opposite end of the political spectrum from the FN, captured 36 percent of the vote in January’s parliamentary election and was able to form a coalition government. In Spain, Podemos, another left-populist party, has attained levels close to the two mainstream parties in recent polls. In these cases it is easy to blame the populist turn on the EU’s insistence on austerity. But strong right-wing populist parties exist not only in France but also in the Netherlands, Belgium, Austria, Denmark, and Sweden, where austerity has not been as prominent an issue, and where unemployment is nowhere near the dramatic levels it has reached in Greece and Spain. The key issue for populist parties in the north of Europe is not economic policy but immigration. Hence, populist protest is unlikely to change the position of the European Council on austerity, since the populists themselves divide along north-south lines.
Proposals to move beyond this stalemate are not lacking. A ‘French Manifesto,’ signed by such notable intellectuals as Pierre Rosanvallon and Thomas Piketty, suggests adding a new chamber to the European Parliament, whose members would be drawn from national parliaments in proportion to each country’s population. In Germany, the Glienicker Group earlier proposed a different formula for amplifying the voices of citizens at odds with policies set by the council and the commission. Marine Boisson-Cohen and Bruno Palier (who also signed the French manifesto) have drafted a ‘new European social contract,’ while economists Henrik Enderlein and Jean Pisani-Ferry offer a scheme for promoting Europe-wide public investment that does not require the creation of new federal institutions, which are unlikely to be approved by voters who remain morose about Europe’s prospects. But none of these schemes has yet mobilized significant political support.
Since the crisis it has become apparent that while Europe may call itself a union, the continent remains divided not simply by national boundaries but also by deep economic differences. According to the economist James K. Galbraith, ‘across continental distances, average European incomes are dramatically more unequal than those in the United States.’ This data point is but one sign of a stark economic asymmetry that points to the flaw in Jacques Delors’s plan to save the European welfare state by promoting a single market and single currency. The reforms initiated by the European Commission did lead, as intended, to extensive restructuring of European industry, improving the competitive standing of key firms. But they also encouraged an unsustainable housing boom in Spain and an unsustainable expansion of government employment and benefits in Greece, while Germany continues to run trade surpluses in excess of European Commission-recommended limits.
The populists are wrong to think that the EU is responsible for the woes of their respective countries and that the problems can be fixed by restricting the flow of goods and services and abandoning the single currency, but the difficulties created by those measures require a new level of coordination that seems impossible to achieve in the current climate of mutual recrimination. The dismal showing of the French Socialist Party in the March 2015 local elections indicates that backlash against the EU has spread from the periphery of Europe to the core. Elite policy-makers may find that their deeply held conviction that they have chosen the only rational course is no bar to their being turned out of their offices by the unemployed janitors who used to clean them.