Category: Europe Page 1 of 16

I keep reading about how if Europe increases military spending they’ll have to cut welfare spending.

Let’s look at a little history: back around 1960 West Germany spent 4% of GDP on their military. They were happy to do so. They also had a very generous welfare state. So did most of Western Europe and they were spending a lot on their militaries.

“But Ian,” you exclaim, “that’s not possible. If you have a warfare state, you can’t have a welfare state!”

Here’s the rule. Pick any two of the following three:

1. A Welfare State.
2. A Warfare State.
3. Low Taxes on the rich and corporations.

All it takes to have both a warfare and welfare state is 90% top marginal tax rates and various other taxes and laws designed to force corporations and the rich to invest in actual production and not in rentierism. Strangely, when Europe and the US had those tax rates, they had the best economies in their entire history.

Wonder why none of the pundits suggest going back to the successful warfare/welfare policies of the 50s and 60s?

I guess it’s a mystery.

(Oh, and why did Europe pay less than 2% of GDP on its military in recent decades? Might it have something to do with the fact that the USSR collapsed and there was no actual military threat to Europe?)

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Even before election, Trump is roaring. Screams of taking over the Panama Canal, Canada and Greenland. Promises of tariffs on, essentially, everyone. Lots of domestic threats about immigrants and going after Democratic politicians. At the same time his proxies, like Musk, muse on slashing Social Security and Medicare.

Europe’s in particularly tentative position: threats of tariffs and forcing Europe to spend more of its money on defense, by which Trump means “buying more US weapons.”

Western Europe has been an American satrapy since WWII. The Americans invaded and never left, and have had the Euros under the economic thumb the entire time. When necessary they have overthrown governments and they have every politician of note under surveillance.

Eastern Europe fell under the thumb after the collapse of the USSR and were, mostly, happy to do so.

For a long time this was a pretty good deal. Europe was a “garden”. GDP per capita might have officially been lower, but life was better than in the US. Europeans lived longer, were healthier and had all the social welfare that Americans didn’t have.

In most cases they had better food, too.

As for Eastern Europe, the EU massively subsidized it post Warsaw Pact and countries like Poland, often aggressively in disagreement with Brussels, couldn’t survive without the EU’s subsidies.

The EU wasn’t some lovely place devoid of conflict, however. In particular Germany used the Euro to de-industrialize most of the other European nations. The Euro was cheaper than the German mark would have been and almost everyone else’s currencies were more expensive that their pre-Euro currencies. Italy, in particular, which had been an industrial powerhouse, took it on the chin.

Meanwhile, on the other side of the world, China rose. America sent China its industry and a lot of its tech. This is an old tale, so let’s just say it was a combination American elite greed and Chinese ability to plan long term and take advantage of that greed. At the same time, Europe was falling behind technologically: the fast movers in science and tech were the Japanese, Koreans, Taiwanese, Americans and, later, the Chinese, who now lead in about 80% of fields.

Europe wasn’t even in the technological game: they had legacy tech, mostly, with a few exceptions. This was especially true of Germany, with big advantages in steel, automobiles and industrial chemicals.

German industry was, as a rule, pretty heavy and it used a lot of energy. It got that energy, increasingly, from Russia. Cheap.

Then came twin blows: the Russian energy was no longer available cheap (though the Euros still buy plenty thru cut-outs like India) and China caught up and even surpassed Germany, especially in automobiles.

And so, as just on example (auto jobs are also being slashed):

As European industry (German industry) collapses, it either goes away entirely, or in many cases moves to America, where energy costs are lower.

America is cannibalizing Europe and Trump seeks to cannibalize the rest of America’s allies. The tariffs and threats are an attempt to move as much industry and as many jobs back to America as possible.

Meanwhile Europe has serious internal divisions. The right is rising, fast, in multiple nations. Though not as dramatic, so is the left. (The real left.) The center-right and center-left parties are in disarray. Eastern Europe with exceptions like Hungary, is rabidly anti-Russia, but Western Europe, and especially Germany, objectively needs Russia if it wants to retain its industry.

Poland now has a significantly larger army than Germany and better equipped. Poles… Poles do not like Germans or Germany. Hate is not too small a word. They take German and French money, but they hate Germany. Russia isn’t a threat to Germany. But if I were a German politicians or general I’d been looking at Poland with fear and wanting to re-arm.

My best guess is that the European, EU project is not long for the world. Multiple rising parties are anti-EU. The Euro has been bad for most European countries, and has been run to benefit Germany. Freedom of movement has led to intakes of immigrants which have lead to massive anti-immigrant backlashes. These backlashes are often cloaked in racism, but the bottom line is that Europe is in decline and people already there don’t want to share if it looks like sharing is bad for them.

Now Trump is pushing policies which are clearly anti-European and unlike Biden who was mostly sub-voce about it (except when opposing Nord Stream) Trump is in the Euros face.

If the EU wants to survive, it’s going to have to change into a real, non-vassal government. More like, the project will shatter. Next week we’ll talk more about this, in particular what they can and should do.

The great European garden is full of weeds and looks likely near its end. Can it be saved, or can any individual countries save their bit of the garden?

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