Over the past few months, Americans have been pushed to the edge with the financial meltdown and crisis that has stumped some of our greatest minds and innovators. Yet while we have all been discussing the plight of our near insurmountable deficit, constant economic turmoil, and partisan government, Europe has been on the verge of its own economic collapse. I got to witness these nations first hand this summer studying abroad in London, while also visiting Paris, Brussels, and Greece.
Since this summer and more recently, challenges abroad have intensified and differing plans have been concocted to no avail. After last week’s latest European rescue plan, nothing has been shown to address the economic weaknesses that have plagued the Euro Zone and has propelled it to a near catastrophic meltdown. The fact is this, however successful the package may prove in leveling out the turbulent markets, the members of the European Zone still face the problem that has infected America. That is, preventing a partisan division, however this time, with multiple European countries. It is undeniable the strain of European leaders having to deal with multiple nations under a common currency, especially given the lack of other critical policies, such as government borrowing and regulation. This issue allowed for differences in growth rates among the countries to expand during the cycle of the last half-decade or so in Europe.
Needless to say, similar to America’s situation, the writing was on the wall. Yet, by having a single fiscal policy and regulatory framework, the United States has experienced far fewer internal stresses and strains.
Our federal budget includes “automatic stabilizers” that, without further congressional action, shuttle money to hard-hit areas. We have a strong ability to reconcile our issues before an ultimate collapse, and I believe that is something that Hobbes would agree with as a protection of the “state of nature” in relation to the current economic situations both here and abroad. Hobbes approach stating, “during the time men live without a common power to keep them all in awe, they are in that condition which is called war; and such a war as is of every man against every man” would appreciate America’s ability to maintain their common power even in the face of recent adversity, while Europe’s common power through the seventeen nations could be abandoned any day due to the disparity of the economies. This to Hobbes would prove a chaotic mess.
Take Germany, for example, and witness a strong nation of business, drive, and resourceful energy. In part because of a “grand bargain” nearly seven years ago that ‘blended regulation, job security and wage restraint, German productivity and economic output both grew by almost 10 percent between 2000 and 2010.’ They have enjoyed a nice renaissance when compared with the other European nations who have been struggling of late. Italy and Spain have been overcome with massive unemployment, stuck above 20 percent thanks to its unyielding labor market. Like Greece, Portugal is struggling with an uncompetitive economy and inflated government payrolls.
If the seventeen European nations decided to get rid of their common currency, and allowed for the weaker countries to flounder and take the approach of devaluation, it would “entail unimaginable complexity and bring its own form of chaos.” It is my opinion that this would clearly prove Hobbes’ “state of nature” claim that absolute authority is paramount for a successful society, and under a broken system, Europe would crumble.
Thus, has the American system of protecting their financial markets with higher authority from chaos proven to hold up despite recent years of adversity? If so, would Hobbes arguments for the necessity of absolute higher power to keep man in order apply? And finally, would he even go so far as to take credit for the American way? Who deserves the credit? Both?
Furthermore, what could Europe do to rectify their current crisis without disrupting their common peace and ignoring Hobbes? Should they look to America’s single fiscal policy as a springboard for reform, or continue to search for ways to patch up their political failings in the hopes of restoring absolute authority?