Europe: The Continent That Follows Rahm Emanuel’s Maxim

The former White House Chief of Staff, now the Mayor of Chicago, must feel the depth of the insult. Nobody much cared about his — constitutionally correct, politically wise — rule about using fundamental crises to undertake serious reforms.

Unfortunately, all of Washington’s, New York’s and indeed the country’s powers-that-be united against any such desire for reform. Not here, not now, not while we’re in power.

However, in the course of human history, it is a well-known phenomenon that a philosopher, and especially a practical philosopher using maxims and expletives alike, ends up garnering the least respect in his own environs, while — for reasons that are hard to understand — the guidance he gives and the maxims he preaches are embraced fully elsewhere.

For such a power-hungry player as Rahm Emanuel, that must be hard to swallow. To assuage his pain, he would do well to realize that there is an entire continent living by his dictums.

That his most famous remark — “Never let a serious crisis go to waste” — caused such a ruckus when he uttered those words in November 2008, soon after Barack Obama had been elected, came as a surprise to any student of U.S. political history.

After all, it is U.S. conservatives themselves who proudly claim that the established legal order in the country should only be reviewed — and new laws should only be made — in times of serious crisis. Apparently, the current crisis isn’t much of one to them (and their balance sheets).

Independent of questions of self-interest versus public policy choices, conservatives, and Americans in general, cherish the fact that, in contrast to activist, statist European governments, the political process in the United States is biased against legislative activism.

Mr. Emanuel’s pregnant words have since, predictably enough, been cast — and castigated — as the rallying cry for the outbreak of socialism in the United States.

Now, as far as Europe is concerned, it has had more than its fair share of real-life crises in recent years and months. In the context of the Greek fiscal crisis, the continent is sometimes said to be on its deathbed, ready to be bought up for mere pennies on the dollar by vulture funds.

And true also, Europeans do their fair share of trying to sweep things under the rug, as is the practice here in the United States.

But things diverge across the Atlantic in two major ways. First, in a concerted effort to deploy diversionary tactics, market and media sentiments “made in the USA” are currently keen on manufacturing a consensus that the mighty United States is at risk of becoming the victim of those hapless Europeans.

Victimizing oneself, believing one is haplessly at the receiving end of somebody else’s body blows, is usually not an American trait. This fact alone shows how desperate the efforts are to detract from the myriad crises created in the United States itself.

Second, this is not a tit-for-tat matter, but rather one about who is practical enough to use a crisis to improve oneself. And on this front, there is no dispute that the entire history of the European Union demonstrates that it has a strong tradition of using very real crises to remake itself.

The fact of the matter is that the entire process of European integration over the past 55 years has been driven by constructive crisis management. Indeed, the whole European enterprise was borne out of the spirit of a grave crisis, World War II, and the ruins and rot it left behind.

Ever since, European politicians have managed to use regular crises as a mechanism to further European integration and/or to enact economic or financial reforms that were considered impossible and pure fantasy by “Eurocrats” only a few months earlier.

And so it will be once again at the present stage. What all Europeans realize in the Greek/euro crisis is that nobody holds any umbrella over any nation in the defense of its fiscal balances. Nobody can — and nobody will. Anybody who pretends otherwise will be punished by the markets. Citizens know, too, that there are no two ways about it.

At the same time, there is no denying that solving the problems of the eurozone, alongside eurobonds and clear-cut lines of fiscal authority and mutual interference, is a very complex matter. But so were forming a customs union and a common internal market. Like layers of an onion, things are being peeled away, with courage and decent success.

What is significant about today’s Europe is that, unlike in the United States, there are very few EAEAs — eternal accountability escape acts, otherwise known as presidential or congressional commissions.

The more testimony is heard by those august bodies, Washington’s favorite escape act, and the weightier the words spoken and the more elaborate the reports presented, the less realistic the prospect of any real-life action being taken in the U.S. capital, or so it unfortunately seems.

If anything, this profound paralysis ought to point the markets to quite a different sentiment — properly discounting the stalling in, or decline of, the U.S. economy, as well as the brewing disaster ahead for the U.S. political economy.

The recent debt-ceiling debate is a clear indication that it is pure fantasy to believe that a plan for budgetary consolidation over the medium term will happen in the hyper-partisan and mutual-destruction-bound-atmosphere of Washington.

Of course, miracles do happen — but one shouldn’t base market sentiment (and analysis) on it occurring. The fact that outright vitriol has spread rapidly all across the country in recent years — and probably exceeds the sentiments the Greeks may hold vis-à-vis the Germans, and vice versa — means that the prospect of coming up with a credible plan is that much more unlikely.

That is where the core difference lies with Europe — and that is the real reason why Mr. Emanuel should be mad. It’s not that it can’t be done. It’s just that too many Americans still believe that being at each others’ throats is a substitute for a credible fiscal plan.

The markets may go on for a while in buying that juvenile attitude of systematically eschewing responsibility. After all, it isn’t just rating agencies that suffer from severe and prolonged cases of home bias, but the markets themselves.

In fact, the agencies are just one avenue through which to express that home bias. Now that S&P, at least temporarily, reversed course and called a spade a spade, it is no wonder that “the markets” and their media supporters sanctify America, while vilifying Europe.

But the Europeans need not, ought not, complain about that. As long as they are the ones to live up to the Rahm Emanuel rule of politics, they will eventually come out ahead.