The Euro-fundamentalist

National Review, February 21, 2019

The caustic reaction of EU Commission president Jean-Claude Juncker to a series of Brexit votes in the British parliament provoked a tweet from one Conservative Brexiteer describing Juncker in anatomical language un­printable in this magazine and — oh dear — of continental origin. Her fury was proof of sorts that Juncker is in the right job.

Jean Monnet, the most important founding father of what evolved into the EU, believed that only a united Europe could assure the continent’s peace and prosperity. In the absence of popular enthusiasm for such a union, it would have to be built, Monnet once remarked, “by zig and by zag,” obliquely, quietly, and by misdirection. “Of course,” observed Juncker years later, “there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?”

Sovereignty cannot be transferred to an idea. Monnet’s genius lay in establishing the essence of a government — a civil service (the commission), a court, and the precursor of a parliament — long before there was any state for it to run. The commission’s objective was to use the powers it had been given and then accumulate more, often with the connivance of politicians mistily supportive of “Europe” but unaware of the deeper significance of what they were agreeing to. As Juncker explained in a 1999 interview: “We decide on something, leave it lying around, and wait and see what happens. If no one kicks up a fuss, because most people don’t understand what has been decided, we continue step by step until there is no turning back.”

The three words — “ever closer union” — included in the EU’s defining treaties meant what they said. There is no reverse gear.

Two genuinely great Commission presidents were Walter Hallstein (1958–67), who set Monnet’s machinery in motion, and Jacques Delors (1985–95). Under Delors, the pace of integration picked up noticeably, not least with the establishment of the “single market” and the creation of a clear path to a shared currency. Since then, the principal task of the EU Commission’s president has been to steer rather than set the course, with plenty of direction — when it came to larger initiatives — from national leaders. Thus the Lisbon Treaty, the notorious pact that bypassed voter rejection of a proposed EU constitution, owed more to Angela Merkel than to José Manuel Barroso, then the president, a pattern repeated when the euro-zone crisis erupted in 2010. Merkel counted in a way that Barroso did not.

Juncker, too, counted. At the time, he was not only Luxembourg’s prime minister, a position he had held since 1995, but also its treasury minister. It was in that second capacity that he chaired the Eurogroup, a forum for the euro zone’s finance ministers, until 2013. He thus had a key role in the successful defense of the currency union against the financial pressures that could have fractured or even shattered it, a defense that, in its early stages, included — as his French counterpart admitted — violating “all the rules”: “The Treaty of Lisbon was very straightforward. No bailout.” What mattered more was keeping the euro zone intact, an example of how, throughout his career, Juncker has combined a certain — uh — flexibility with an unyielding dedication to ever closer union.

To be sure, the latter has been good for his career. The EU has handed Juncker a playing field that is far bigger than his native Luxembourg (which has a population of around 600,000). But his country’s geography and history, and, to the extent that we know much about it, the famously secretive Juncker’s background, are all reasons to think that his Euro-fundamentalism is sincere.

Luxembourg has three official languages, French, German, and Luxem­bourgish (a primarily Germanic language). It is lodged between Belgium and, more uncomfortably, France and Germany, both of which have lodged in it in the past — Germany, most recently, in both world wars. Luxembourg was incorporated into the Reich in 1942. Under the circumstances, it is unsurprising that Luxembourg was a founding member of what became the EU. Adding a personal twist, Juncker’s father, no Nazi, was drafted into the Wehrmacht and later taken prisoner by the Soviets. His father-in-law, by contrast, collaborated actively with Luxembourg’s German occupiers. Juncker was born nine years after the war, but his conviction that a federal Europe is a bulwark against a return to the horrors of the past makes at least psychological sense.

Juncker’s appointment to the Commission’s presidency in 2014 was a reminder that, however much Barroso may have been reduced to a secondary role during the euro-zone crisis, integration ground on. Juncker’s predecessors were chosen by the leaders of the EU’s member states, but this procedure was revised by the Lisbon Treaty with the addition of a proviso that they should “take into account” the results of elections to the EU’s parliament. This reliably federalist body, representing a European “demos” that doesn’t exist, used those words to try to snatch control of the nomination from the member states, asserting that the new president should be picked by the party that could summon up the necessary backing in the European parliament. That put Juncker, the nominee of the European People’s party, the parliament’s center-right bloc, in the pole position. Hungary’s Viktor Orban and, fatefully, U.K. prime minister David Cameron (backed by some of the more excitable sections of the British press) came out against Juncker. References in the Sun to Juncker’s family links to the “Nazi regime” were unlikely to turn the Luxembourger into an Anglophile.

Cameron and Orban distrusted Juncker’s Euro-fundamentalism. There were other concerns, too, and they were shared beyond the Anglo-Hungarian awkward squad even if those who felt them were not prepared to step so far out of line as to vote against Juncker. He was tainted by the memory of Jacques Santer, the last Luxembourgish commission president (handy intermediaries between France and Germany, there have been three in all), whose term ended in ignominy when he and his entire commission resigned amid widespread criticism and credible accusations of corruption against one of his team.

Juncker had served in government under Santer and had succeeded him as prime minister: Was he cut from the same cloth? Other worries included Juncker’s involvement in a scandal over the activities of — don’t laugh — Luxembourg’s intelligence service, which eventually led to his resignation from the premiership. Then there was his reputed love of the bottle. Wading through the euro mess might have driven anyone to drink, but it was a destination where Juncker had long since arrived. Allegedly.

None of this can have bothered Angela Merkel overmuch. She threw her support be­hind Juncker, and that, as usual, was that. Juncker took office in November 2014.

In normal times he would have been a suitable enough choice, amenable to accommodating the EU’s dominant Franco-German axis but otherwise devoted to the discipline of “ever closer union,” if, sometimes, rather late in the day. Almost immediately after assuming the presidency, Juncker came under fire when leaked documents showed how Luxem­bourg’s enviably relaxed tax regime had become even more welcoming during his years in office. Evidently shocked, shocked, by what had been going on, Juncker accepted only “political” responsibility for these “problems,” which could, he argued, be eased by the imposition of a “common tax base” across the EU of a type, further leaks a few years later revealed, he had previously opposed. Juncker, a climate warrior with a fondness for private jets, contains multitudes.

But these have not been normal times. Merkel’s decision to fling open Ger­many’s doors in September 2015 (and her subsequent demand that some of the new arrivals be relocated elsewhere in the EU) gave an additional boost to a populist revolt that had already been gathering momentum mainly, but not exclusively, in some of the countries most brutally affected by the procrustean economics of monetary union. Making matters worse still, even if they (for the most part) affected the U.K. only indirectly, the twin currency and migration crises reinforced many Britons’ belief that the EU was not only poorly run but also a menace, toxic sentiments with a Brexit vote in the offing. Even so, had Brussels demonstrated a little more flexibility in its negotiations with David Cameron ahead of the referendum, the Leave campaign, which secured only a 52–48 majority, would have lost.

Not all the blame or credit — far from it, in fact — for the referendum result lies with Junker. Nevertheless, his unbending loyalty to both Angela Merkel and ever closer union played a part in helping the Brexiteers past the winning post. To a lesser degree, the similar approach he is taking to the terms of Britain’s withdrawal is contributing to what is likely to be a damaging relationship with the U.K. after the divorce. Away from Brexit, Juncker’s robotic insistence that the answer to the EU’s wider problems — from its troubled currency to migration — is “more Europe” is stoking populist anger across the bloc, with possibly interesting implications for the EU’s parliamentary elections in May.

Juncker came into office promising a “highly political” commission, but, although he can boast of some technocratic achievements — such as this year’s trade deal with Japan — his political record, scarred by that rising populist challenge and, above all, Brexit, contains little to brag about. Brexit will, of course, remove the British brake on ever closer union, but that silver lining will accrue to a future president. The cloud is all Juncker’s.

A tin ear (fêting Marx’s 200th birthday was not a way to win over restless Eastern Europeans) and embarrassing public displays (his sporadically strikingly un­steady gait has, however, been blamed by loyal officials on sciatica rather than alcohol) have all contributed to an impression of growing disengagement from a job Juncker recently described as “hell.” All this has made all the more credible allegations that he has fallen under the sway of a German puppet master, Martin “The Monster” Selmayr, the authoritarian Euro­fundamentalist who was until recently his chief of staff. These fears were exacerbated when, in a charade rushed through in a few minutes and relying on a legally questionable technicality, Selmayr was appointed the commission’s secretary general (its top bureaucrat) in February 2018. Any opposition at the top of the commission was — it is claimed — muffled by talk of increased retirement benefits. After looking into the matter, the EU’s ombudsman expressed serious reservations last year. These were confirmed in a final decision issued on February 11: “Mr Selmayr’s appointment did not follow EU law, in letter or spirit, and did not follow the Commission’s own rules.” Meanwhile, in December, a vast majority of the normally docile European parliament had passed a resolution calling for Selmayr’s resignation. None of this has made any difference. Juncker will step down when his term ends later this year, but the Monster will continue to preside from his new lair.

This shady, secretive, and successful maneuver, which the EU’s parliament described as “coup-like,” is yet more evidence that the EU is sliding ever further away from democratic control. Despite the current turbulence, it will probably continue to do so, and there will be no shortage of Junckers to help it on its way.

Jean-Claude Juncker’s boast about the euro is an insulting fantasy

CapX, January 4, 2019

History may or may not repeat itself, but hubris certainly does. In April 2008, as the euro approached its tenth birthday, Joaquín Almunia, the EU’s then Commissioner for Economic and Monetary Affairs, recalled how its construction had been accompanied by “dissenting voices”. “One economist” had jeered that it was “at best, an act of uncertain merit”. Another had denounced it as a “great mistake”. Fools! Almunia bragged that “the euro [had] proved an economic success”.  Within 18 months Greece was in crisis.

Earlier this week Jean-Claude Juncker marked the euro’s 20th anniversary of with words seemingly so far removed from reality that not even sciatica could explain them away: “The euro has become a symbol of unity, sovereignty and stability. It has delivered prosperity and protection to our citizens…”

Goebbels once wrote that “the English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous”. However, he would not have expected the English to mock those who they were trying to convince.

Juncker, no Englishman, but known to some as “the master of lies”, has rarely shown much concern about appearing ridiculous. Nevertheless, boasting that that the euro has delivered prosperity insults almost every member state other than Germany, particularly those hit hardest by the bursting of bubbles wholly or partly inflated by the single currency. Most may have crawled out of the A&E (or in Ireland’s case done rather more than that), but memories of what they went through are fresh. And in some instances, they aren’t even memories. Youth unemployment in Greece has only recently fallen below 40 per cent. GDP per capita in Italy (where the euro’s corrosive effect is real, but more difficult to assess) stands roughly where it did in 1999.

On the other hand, Juncker’s claim that a currency which has brought chaos and division in its wake is a symbol of “unity” and “stability” may seem equally absurd, but seen from Brussels, it makes good sense. To appreciate why, note the reference to “sovereignty” as another of the qualities symbolised by the euro. A country that relinquishes its own currency gives up some of its sovereignty, but Juncker was focused on where that sovereignty had been transferred. And that was to “Europe”. Having its own currency represented a major advance in the EU’s step-by-step assumption of sovereignty, and with it, the attributes of a state.

Now adopt that same Brussels perspective to understand what Juncker meant by unity. Despite sharp disagreements, those running the Eurozone stuck together through the crisis, trashing treaty obligations, promises to voters, a referendum result, the integrity of the European Central Bank, economic logic and basic democratic norms to keep the currency union intact. They succeeded in a display of unity that also delivered Juncker’s notion of stability — a Eurozone that weathered the storm — as well as a strong indication that it will continue to overcome the challenges that come its way.

Part of the reason for that, is that once in the euro, there is no easy exit. “Ever closer union” are perhaps the three most important words in the EU’s definition of itself: They imply that there is no reverse gear. Nowhere is this more the case than, as its creators intended, with the single currency, described in 2012 by one top German civil servant as “a machine from hell that we cannot turn off” — words to remember amid current talk of widespread support for the euro.

But back to hubris. Like so much central planning, the euro was born of arrogance, over-confidence, conceit and ideological obsession. Cramming a large number of diverse economies into a necessarily Procrustean currency union made little economic sense—the savings flowing from the removal of foreign exchange risk were somewhere between minimal and illusory. It was also an invitation to disaster, made riskier still by the absence of any degree of fiscal union, something which might have provided a safety net, but would not have been politically acceptable in many of the countries signing up for the new currency.

One example of hubris overlapped with another. Some of those in charge of putting the euro together were aware of its innate flaws but expected that they would eventually lead to—as the phrase in Brussels goes— a “beneficial crisis”. This would be the catalyst for forcing through the fiscal union that had always been the logical counterpoint of monetary union and would also constitute a giant leap forward towards ever closer union. The hubris lay in believing that such a crisis would be manageable in the manner that Brussels hoped.

It wasn’t. Even allowing for its starting point, Juncker’s perception of unity is based on turning a blind eye to some highly inconvenient truths. Made even more destructive by its intertwining with the financial crisis, the storm that tore into the Eurozone essentially divided the currency union’s member states into two antagonistic camps, creditor nations in the north and debtor nations in the south.

The north’s distrust of the south, and the south’s resentment of the north, along with economic distress and the realisation that Brussels and its allies bore much of the blame for this mess (but had no interest in changing direction) also boosted political parties once confined to the fringe or triggered the formation of new parties that would once have found a home there. Those forces were given additional impetus by an unrelated issue— mounting unease over immigration and its longer-term implications. What’s more, many continental eurosceptics have been transformed from naysayers opposed to further integration into a force that actively wants to reverse the direction of ‘ever closer union’. Populist governments (of very different hues) have come to power in Greece and Italy.

Germany and other ‘northern’ states are now even more firmly set against fiscal union, rightly regarded as a device to milk their taxpayers in perpetuity. In the Eurozone’s south, meanwhile, there is increased resistance to Germany’s insistence on enforcing its sometimes counter-productive brand of fiscal discipline on everyone else. It’s significant that, with Emmanuel Macron’s own plans for fiscal union floating face-down in the Spree and gilets jaunes roaming France’s streets, his government will now be breaching (just a one-off, of course) the EU’s budgetary rules.

All that said, betting against the survival of the euro is unwise. The political will to keep this vampire currency going should, as the last ten years have shown, not be underestimated and populist parties are just as conscious as their more orthodox rivals of the general public’s fear of ‘something worse’.

But European growth prospects are deteriorating despite years of the ECB doing “what it takes”. The economies (and balance sheets) of many of the Eurozone’s weaker member-states continue to suffer from the after-effects of the last crisis and remain confined to the straitjacket of a one-size-fits-all currency:  They will not be well placed to cope with a fresh slowdown. It’s hard to avoid the conclusion that another Eurozone drama may well be approaching, with political consequences that are likely to be much trickier than last time around.

One way to head off some of the worse of what might lie ahead would be by splitting the single currency into ‘northern’ and ‘southern’ euros which would better reflect the economic realities of the domestic economies they serve. This would be far from straightforward, but it beats sticking with a status quo that offers much of the Eurozone little more than stagnation at best, and catastrophe at worst.

But such a split runs against the idea of the irreversibility of ever closer union. It’s never going to happen.

Her Inner Brezhnev

National Review, November 15, 2018

There was a time when Angela Merkel, like many young East Germans, would don a special shirt (blue rather than brown; different dictatorship) and parade for the Party, sometimes (not everything had changed) by torchlight. On occasion, she and her Free German Youth comrades would have marched behind banners carrying the portrait of Leonid Brezhnev, the Soviet leader whose extended (1964–82) rule has more than longevity in common with her own.

No, no, Merkel is not a Communist. Nor does she order the invasion of other countries; she merely bullies them. She may have participated in the overthrow of Italy’s unruly and unacceptably euroskeptic Silvio Berlusconi, but no tanks were deployed, just “suggestions” made menacing by Italian fears of what the bond-market vigilantes might do.

Look deeper, however, and unsettling similarities come into view. That Brezhnev was no democrat is hardly a surprise. That Merkel, the bien-pensant “leader of the free world,” has repeatedly demonstrated her disdain for democratic propriety is, by contrast, disappointing. Perhaps it is a legacy of her East German upbringing, but, whatever the cause, it has poisoned both the politics of the country she leads and those of the EU, the misbegotten union that Germany dominates with a mixture of passive aggression, money, and size.

In the early 2000s, Brussels, compelled as always by the imperative of “ever closer union,” midwifed an ambitious draft constitution only to see it felled by French and Dutch referendums. When voters get a direct say on deeper European integration, they have a way of saying no.

That should have been the end of the matter, but Merkel used Germany’s tenure of the EU’s rotating presidency (it’s complicated) to cobble together the Lisbon Treaty, a sly pact that reproduced the spurned constitution in every material respect but was structured in such a way that pesky referendums could be dodged everywhere other than reliably awkward Ireland. No matter: The Irish rejected the treaty in one referendum but, engulfed by the financial crisis, were cajoled into changing their minds.

The treaty became law, but, not for the last time, Merkel had underestimated the consequences of paying so little attention to popular feeling. Lisbon, which helped pave the way for Brexit, reinforced many Europeans’ anxiety that the EU was slipping into post-democracy, a perception later bolstered by Merkel’s role in the euro’s long ordeal and, more recently, by her efforts to bludgeon other EU countries into accepting more of the migrants and refugees she so carelessly welcomed in 2015.

Some of Merkel’s actions in the latter two instances were a straightforward defense of German national interests. But her insistence on Lisbon was another reminder that, at some level, this supposedly pragmatic politician clearly believes that European integration is on the right side of history, a phrase, Robert Conquest wrote, with “a Marxist twang.” If so, she is not alone, but it is reasonable to ask whether in Merkel’s case this dubious proposition has been made easier to swallow by formative years spent in a land where Marxism was a part of the ideology of the state.

Merkel’s authoritarianism has taken an even more disturbing turn at home. Her instinctive dislike of dissent — the dark side of consensus politicians — curdled into something more sinister in the wake of that 2015 decision to throw open Germany’s doors. With mainstream media hymning the chancellor’s Wilkommenskultur, Germans uneasy about the influx into their country had nowhere to go but online, sometimes via the gutter, often not.

Infuriated, Merkel began by bullying social-media companies to clamp down on what she regarded as hate speech. When they did not, in her view, do enough, she looked to her parliamentary colleagues for assistance. The result, prompted also by scaremongering over “fake news,” the switched-on censor’s excuse du jour, was Germany’s social-media law — the notorious Netzwerkdurchsetzungsgesetz. It represents an attack on free speech so draconian (for example, if a social-media company fails to take down “manifestly unlawful . . . hate speech” or “fake news” within 24 hours of a complaint, it can be fined up to 50 million euros) that it has provided useful cover for Russian legislators looking to shut down undesirable talk online, a development that would have amused old Leonid.

When Mikhail Gorbachev launched his program to overhaul the Soviet Union, he attacked Brezhnev’s “era of stagnation,” a label encompassing political as well as economic inertia. While Brezhnev was appealing to a far smaller “electorate” — the party elite — than Merkel has done, the key to the length of their tenures was (obvious differences aside) sticking with consensus and maintaining stability. As a strategy, it worked, but the stagnation that ensued contributed to the Soviet collapse. As for Germany, it is too soon to say.

By ending the experimentation of the Khrushchev years, Brezhnev shrank the political and intellectual space within which the regime could safely operate. When his moment came, Gorbachev saw a relaxation of party control as inseparable from a desperately needed economic reset, but, after Brezhnev, it was too late to change direction. If the opening for reform within the system had ever existed, it had closed.

Germany is not, of course, lurching toward a Soviet-style implosion. That said, Merkel’s capture of the middle ground, inspired by both personal conviction and strategic savvy, is showing signs of backfiring in ways that, if events oblige, as they well may, will undermine the centrist order over which she has presided for so long. The middle ground ought to be a battlefield of ideas. That is not how it has been under Merkel. By moving her center-right CDU so far leftward, Merkel has occupied much of the territory that the SPD, the leading party of the center Left, once called its own. The SPD’s displacement was accelerated by its participation in coalition governments with Merkel between 2005 and 2009, as well as since 2013. As partners go, she has proved to be something of a black widow. Between 2013 and 2017, the SPD’s support fell by over a fifth, to 20.2 percent, half its level in 1999, and it is still falling. The SPD now trails the Greens, who are hipper, socially liberal, migrant-friendly, NATO-not-so-friendly, eurofundamentalist, but — and this is a major but — environmental issues apart, relatively centrist on economics.

Upheaval has come to the Right, too. Merkel’s agreement to the bailout of the euro zone’s casualties drove some classical liberals, skeptical about both the single currency and the steps being taken to preserve it, to set up “the professors’ party,” the Alternative for Germany (AfD) — its very name a protest against Merkel’s stifling consensus — in 2013. The AfD saw some early success but shifted into a higher gear, losing much of its former leadership in the process, when it also became a vehicle for social conservatives and immigration skeptics who felt that there was no longer a place for them in the CDU or the CSU (the CDU’s considerably more conservative Bavarian counterpart). This was particularly so after Merkel flung open those doors — and clamped down on those who dared to demur.

The AfD’s transformation has given it a rougher-edged nationalist following. After a string of provincial successes, the party made it into the federal parliament in 2017, cutting into the vote won by the CDU and the CSU. In this October’s elections in Bavaria, home of the CSU, it took 10.6 percent. When consensus hardens into an orthodoxy enforced by establishment parties, voters, when worried enough, ignored enough, and silenced enough, look elsewhere.

Brezhnev’s era of stagnation was also an era of squandered opportunity. The USSR’s vast oil reserves could have made a substantial contribution to funding the reorganization of its economy. But, isolated within an increasingly archaic consensus, the Soviet leadership renounced even modest reform, preferring to anesthetize the population with (very) modest prosperity. The windfall was frittered away on massive defense spending, hugely generous subsidies of allies and satrapies, and a futile attempt to prop up a command-and-control system that could not meet the demands of a modern economy. The reckoning was not long in coming.

Whatever the criticisms that can be made of Merkel, splurging on the defense budget is not one of them. Her slide to the left may not have involved an embrace of the neutralism that runs through so much of German politics (Merkel is no fan of Putin and pushed for sanctions in 2014), but she has been reluctant to challenge either neutralism’s consequences — the armed forces have been so badly neglected that their combat-readiness has been called into question — or its assumptions. To be sure, Merkel has undertaken to increase defense spending (currently 1.2 percent of GDP), but only to 1.5 percent of GDP (still far below NATO’s 2 percent target) and only by 2024. Throw in the prospect of increased dependence on Russian gas once the Nord Stream 2 pipeline is operational, and after 13 years of governments headed by the alleged leader of the free world, it is uncertain how effective and reliable an ally Germany really can be.

On a brighter note, the German economy is booming, rich, and the envy of most of the world. Nevertheless, it’s worth remembering that in the 1990s Germany was, by its standards, struggling. Quite what changed is fiercely debated. Explanations include labor-market reforms and tax cuts (the latter, tellingly, opposed by Angela Merkel, then the CDU’s new leader) introduced by the Social Democrats under Chancellor Gerhard Schröder in the early 2000s; the boost to Germany’s crucial export sector from a concealed devaluation (the switch from the deutsche mark to the euro); the easing of some of the strains associated with German unification; and, since the 1990s, the manner in which more-decentralized wage-bargaining has increased flexibility (and, with it, restraint) over pay. This turnaround gave Merkel the latitude to coast, but, given her own less-than-market-friendly views and her determination to command the center ground, she was never likely to build on the Schröder reforms. And she has not. Sometimes, such as by the introduction (in 2015) of a uniform minimum wage across the country, she has even subverted them. Business remains heavily regulated, a hurdle that goes some way toward explaining the relatively low levels of capital investment by German companies in their own country. That investment shortfall has, in turn, contributed to faltering productivity growth.

High taxation is another disincentive, and not only to investment. The writer of a recent article for the business daily Handelsblatt detailed how Germany had failed to keep pace with corporate tax cuts elsewhere. He blamed the complacency bred by the economy’s current strength, but that is only part of the story. Germany’s prevailing consensus has scant room for aggressive tax-cutting, something that Merkel has done nothing to change.

Meanwhile, a blend of panic after the Fukushima nuclear disaster in Japan (which triggered a German decision to speed up the planned phase-out of nuclear power) and an enormous and hugely expensive program of investment in renewable energy prompted by panic over climate change (another critical element in the politics of Germany’s middle ground) has meant a dramatic hike in energy costs for industry and, even more so, consumers, while — central planning being what it is — failing to yield the promised environmental return.

So long as Germany prospers, none of this may matter, but a cyclical downturn, perhaps exacerbated by trade tensions, could well be approaching. That may cause difficulty in the immediate future — and it will not help the absorption of all those migrants into the work force — but longer-term concerns are beginning to surface, too. The old Soviet economic model was unable to cope with the changed world of the second half of the 20th century, and there are signs that its (admittedly immeasurably more flexible) German counterpart might not be doing what it takes to keep up with the evolving digital economy. This is so with basic infrastructure — according to a 2016 OECD report, under 2 percent of German broadband connections were fiber-optic — but also, more subtly, with the adaptation of business practices or, for that matter, products that lie ahead: With autonomous vehicles coming down the pike, will Germany’s automakers soon be facing off against Google?

That will be a problem for someone other than Merkel to contemplate. After the disappointing general election was followed by setbacks for the CSU in Bavaria and the CDU in Hesse, Merkel stepped down as the CDU’s leader. She will continue, she says, as chancellor until the next election. Maybe, maybe not — but there’s a suspicion that she sees hanging on in office as the best way of securing the CDU leadership for Annegret Kramp-Karrenbauer, the party’s general secretary, a Merkel 2.0.

If “AKK” should win, the CDU will show that it has learned nothing from the failures of the Merkel years. Stagnation is like that.

Blue wave? More like a blue trickle

TheArticle, November 7, 2018

New York City, July 2018 © Andrew Stuttaford

“Treason,” it has been famously said, “is a matter of dates”. The same, rather more obviously, is true of political surprises. At the beginning of the year, there was excited talk of “a blue wave” that would sweep the Democrats into power in the House of Representatives and, despite unfavourable political geography (Democrats were defending many more Senate seats than Republicans, including a good number in states won by Trump in 2016), quite possibly the Senate too. A new president’s party typically struggles in the first Midterm elections held after his victory. And when that president was polling so poorly as Donald Trump, well…

By October, those hopes had largely evaporated. The prevailing conventional wisdom was that the Republicans would hold the Senate and lose the House, but not dramatically so. As it was, the GOP has actually managed to add to its current 51-49 majority, an impressive achievement under the circumstances. To be sure, Republicans have lost the House by a little more than the most recent expectations, but by quite a bit less than the carnage of Democrats’ January dreams or, say, the humiliation inflicted on the Democrats in 2010, two years after Obama first took up residence in the White House.

Even a blue trickle will prove sufficient to bring down that non-existent wall. However, the President will, come 2020, be able to blame the failure to fortify the border on Democratic obstruction rather than Republican hesitation, one element in a wider perk of defeat that Trump, better at running against than for, will exploit to the full. A Democratic House will make for a tremendous target, especially if, as seems likely, the Democrats continue to swing to the left. Making Trump’s task easier still will be the fact that this iteration of the left is driven more by the politics of identity—terrain where Trump has considerable skills of his own— than by those of economic grievance.

Today, of course, marks both of the start of the 2020 election season and a surge in complaints that it is too early to start discussing 2020. All I will say for now is that the GOP will, absent “events”, be fighting the 2020 election as unambiguously the party of Trump. The President’s appeal to a changing base both saved yesterday (more or less) for the Republicans, but his spiel –and the baggage that comes with it—drove yet more moderate voters on the coasts and in the more affluent suburbs into the Democratic camp. This is a self-reinforcing process. As ‘purple’ parts of the country turn blue, they throw out the GOP lawmakers most likely to push back against the President, leaving the remainder even more closely bound to the man from Trump Tower. There is a great deal of division in this nation, and it is not going to narrow.

Nevertheless, part of Trump’s persona is as a deal-maker. As he contemplates a newly hostile House of Representatives, he may well try to see if he can win its agreement to the increased infrastructure spending he has always wanted, but without the tax increases that would infuriate the Congressional GOP. He might get that—even if, with government debt coming into ever more uncomfortable focus, another splurge would not delight the bond market—but it won’t buy him enough Democratic goodwill to head off the flurry of investigations that will be coming his way from congressional committees now under Democratic control. Trump’s reactions to siege by subpoena will not be edifying, and they won’t help either him or his party. And if those investigations come up with anything, well…

Meanwhile Special Counsel Mueller plods on, gathering evidence, securing pleas, and, doubtless, fully aware that the decision to impeach is ultimately political, not legal. With the Democrats in charge of the House (the institution that would initiate impeachment) the politics have just changed, and not to Trump’s advantage.

No one ever said his presidency would be dull.

Midterm madness — or Trump’s last stand?

standpoint, October 29, 2018 (November Issue)

La Guardia Airport, New York City, May 2017 © Andrew Stuttaford

There are journalistic assignments that should be refused, not as a matter of principle but out of basic common sense. Making predictions about American politics in the age of Trump is one of them. That Donald Trump won the Republican nomination was surprising. That he ended up in the White House was — well, a strong enough what-the-hell adjective does not exist (I did not expect Trump to prevail and nor, quite possibly, did he). However, the chequered nature of that win, a two per cent loss in the popular vote (the widest margin of “defeat” for a victorious candidate since 1876) but a passable, if far from overwhelming, majority in the only vote that counts — the Electoral College — was a necessary reminder that federalism matters more and elite opinion less than is sometimes assumed.

Remembering that is a good beginning to understanding why, despite Trump ratcheting up a record of gaffes, blunders and peculiarity unthinkable in any other president, earlier talk of a Democratic “wave” in the   midterm elections on November 6 has evaporated.

While that might merit a celebratory presidential Diet Coke, the Republicans still face a tricky day on the sixth. Despite a healthy economy (GDP grew at an annualised 4.2 per cent in the second quarter, the unemployment rate dropped to 3.7 per cent in September and in the same month consumer confidence reached an 18-year high), almost all the “generic” polling has the generic Democrat comfortably ahead of the generic Republican. Even without Trump in the Oval Office this was coming. An incumbent president’s party almost always struggles in the midterms. Like a British by-election, except for far higher stakes (all the seats in the House of Representatives will be up for grabs, as will 35 Senate seats and numerous state-level offices), midterms are often used by the voters who show up (turnout is typically around 40 per cent, compared with 60 per cent in a presidential election year) to shake a fist at those in charge.

There are incumbent presidents, and then there is Donald J. Trump, whose approval rating has been dismal for most of his time in office. As I write (late October) it is ticking up and now stands somewhere in the mid-40s, weak for a strong economy and at a roughly similar level to Barack Obama’s polling eight years ago. But that was in the aftermath of the financial crisis and shortly before game-changing midterms in which the Democrats suffered a loss of more than 60 seats and control of the House, as well as a brutal reduction in their Senate majority. The Republicans’ chances will be hurt by too much Trump in some areas — upscale suburbs and their remaining redoubts on the east and west coasts in particular — but they could, in a paradox that may mean trouble for them beyond 2018, be hurt by not enough Trump elsewhere, specifically in the rust belt, where voters who moved from Obama (or no vote) to Trump made enough of a difference in their states to tip the 2016 election the GOP’s way.

The Great Revolt  by journalist Salena Zito and Republican strategist Brad Todd may be something of a rose-tinted (although fascinating) study of some of those who switched sides, but the results cited in the book are what they are. Luzerne County, Pennsylvania, a traditionally coal-mining area, gave Obama (also its choice in 2008) a 5-percentage point edge in 2012, but went to Trump by 20 points four years later. Tiny Lake County, Michigan is the poorest county in that state. It preferred Obama in 2008 and 2012 (on the latter occasion by five points), but handed Trump a 23-point lead in 2016. There were plenty more swings like that, and they were enough — just — to deliver Pennsylvania (by a little over 40,000 votes) and Michigan (by a little under 12,000 votes) to Trump in 2016.

At their heart, those swings to Trump were a protest by embattled “left-behinds” trying to preserve what was left of their status in a rapidly changing nation led by a political and media class that insulted, demeaned and demonised them. The pushback was not confined to the rust belt. The New York Times’s Nate Cohn noted last year, “Almost one in four of President Obama’s 2012 white working-class supporters defected from the Democrats in 2016, either supporting Mr Trump or voting for a third-party candidate.” These voters saw themselves at the wrong end of globalisation (they were), on the wrong side of the many-layered social, cultural and economic revolution being pushed by America’s coastal elites (they are), and they really, really did not like Hillary Clinton (who in turn dubbed them “deplorable”). But however much they had fallen out with the Democrats, they suspected that the Republicans were just a different side of a corrupt Washington establishment with no interest in their plight. To them, Trump was an outsider, a disruptor. Billionaire or not, he appeared to sympathise and they heard his dog-whistle too. They handed him a mandate to try something different (and they were prepared to lend some votes to those riding on his coattails as well).

Those new voters ought to be pleased enough with their choice. No small part of Trump’s appeal was his pledge to fix the bad trade deals that had supposedly cost so many American jobs. Since taking office, he has revised the free trade agreement with South Korea, and secured Canada and Mexico’s agreement to replace Nafta with the United States-Mexico-Canada Agreement (USMCA), in each case in ways designed to boost American manufacturing employment. As it is, some 400,000 new manufacturing jobs were created in the first 21 months of the Trump administration, far ahead of the pace in the last Obama years. Trump has also taken the tariff fight to the EU (for now there is a ceasefire), and, much more significantly, China. And when it comes to the red, white and blue, these voters should appreciate the difference between an Obama too ready to apologise for his country and a Trump rarely prepared to apologise for anything. Trump’s tough stance on immigration will not hurt him with this constituency either.

For all that, the polls suggest that quite a few rust belt bolters will return to the Democratic fold. Unions, determined to bring their numbers back in line, have stepped up their campaigning. Much of the economic recovery is still passing the left-behind by. Trump may be on the stump, but he is not on the ballot. Voting for just another Republican stiff does not deliver that same insurgent thrill.

Trump is a one-off. He was able to break through because he had the bucks, dreary competition and a powerful place in popular culture. However, he could not have managed it without an audience ready for the message that, thanks to the internet, he was able to communicate directly — with sly skill and without the intermediation of America’s nauseatingly pharisaical media. Say what you will about former Trump consigliere Steve Bannon, he grasped that the “three-legged stool” — strong defence, social conservatism and free market economics — that Ronald Reagan saw as essential for a GOP victory, was broken.

Republicans will not go as far down the populist and nationalist route as Bannon (who was also keen to defy the GOP’s tax taboo by raising taxes on the very richest) would advocate, but as former Trump speechwriter and transition adviser Frank Buckley pointed out his recent book, The Republican Workers Party, most Americans skew further to the left economically than many Republicans realised. Buckley maintains there is a “sweet spot” for the candidate “who won’t touch Social Security and who promises to nominate a judge in the mould of [the late conservative Supreme Court Justice] Antonin Scalia. Donald Trump, in other words”. Trade apart, the more “leftist” side to Trump (which has, to be fair, always been there) has not been, to put it mildly, very visible since he took office. However, regardless of the direction in which Trump may turn in the next two years, the best shot at a successful GOP future lies not with a Reagan 2.0, but in a formula that blends patriotic populism with, economically and socially, a robust American variant of Christian Democracy. It will not be a smooth ride.

Republican failure to repeat Trump’s rust belt miracle will not mean a Democratic landslide: Trump’s appeal to blue-collar whites has not disappeared, and his wider base within the GOP has remained remarkably resilient through the tweetstorms. While Trump’s approval ratings are low, and have always been low, they come with a very sturdy floor, albeit one that rests, to make a nonsense of architectural metaphors, on just one column — Republican voters. America’s political divisions have sharpened. The once respectable degree of approval a president could expect from supporters of the other party has been shrinking since the Eisenhower era. According to Gallup, both Ike and JFK enjoyed approval ratings from across the aisle averaging a little under 50 per cent. Bill Clinton, by contrast, could (the Pew Research Center found) only manage 27 per cent, a figure of which Obama (14 per cent) could only dream. Trump? Seven per cent.

Republicans, however, have stood by their man. On average, 84 per cent of them approve of the job Trump is doing, a rating roughly in line with that received by earlier presidents from their own team. Even if we ignore the effect of a strong economy (and we should not), and even if we ignore the way that America’s growing political polarisation is pushing Republicans to downplay or turn a blind eye to their leader’s obvious flaws (we should not), this is less surprising than it may seem. Stylistically Trump may have next to nothing in common with previous Republican presidents (or presidents full stop), but this former Democrat’s administration has broken with his (current) party’s orthodoxy by less than some imagined.

This year saw a massive tax cut (that it ignored the concerns of budget hawks was not, sadly, anything new). There has been significant regulatory rollback, both by repealing existing regulations and, no less importantly, by not introducing new ones. According to calculations by the Brookings Institution, 69 “major rules” (as defined by the Office of Management and Budget) were introduced in the first year of the Obama administration, but only 30 in Trump’s initial 12 months, a slowdown that should continue regardless of the midterm results. Sometimes it takes a crony capitalist to understand the value of getting government out of the way.

Then there are the courts. With the law increasingly politicised, the appointment of judges — as the fight over Brett Kavanaugh’s nomination to the Supreme Court demonstrates — has become an increasingly bitter battlefield. Trump has placed two conservative judges onto the Supreme Court, offering Republicans the prospect of the clear right-of-centre tilt that they have been awaiting for years. He has also pushed through a record number of appointments further down the judicial pecking order. Neither achievement would have been possible without GOP control of the Senate. The Kavanaugh collision will have reminded any GOP voters who needed reminding that there is a lot at stake on November 6.

While Trump’s views on trade make some Republicans wince, there has been little (overall — as always with this president there have been some alarming moments) in his broader foreign policy to disturb them. Abandoning both the neocons’ expensive (in many senses) universalism and the ostentatious humility and “leading from behind” of the Obama years, in favour of a colder “Jacksonian” calculation of the national interest, has played well with the GOP’s rank-and-file. Trump has eased off his nuttier talk about Nato, and he appears to have bullied some of the Atlantic Alliance’s deadbeats into agreeing to cough up a bit more. Meanwhile, the US is boosting its own military budget, much of it with an eye on deterring China and, yes, Russia. For all Trump’s unsettling, even flirtatious attitudes to some of the world’s hard men, an America that is “great again” is not going to be pushed around, a theme that rarely plays poorly on the right.

When it comes to policy, the greatest difference between the Trump administration and its GOP predecessors may be over immigration. Divisions within the Congressional Republican party over this topic have meant that the only route to tighter control has been through administrative action. Bureaucracies — consider the Home Office — are not known for their light touch. The harshest aspects of the administration’s approach (most notably the deservedly notorious and highly unpopular “family separation” policy at the border) — have proved highly contentious. But the Democrats’ increasingly sharp shift on immigration (as in so many other matters, ever further to the left) has meant that those favouring a tougher approach to immigration — and that is most rank and file Republicans, even before a several-thousand-strong “caravan” of migrants started to move north from Central America in mid-October — have nowhere else to turn.

But will they turn out to vote? Traditionally Republicans have been more willing to make their way to midterm voting stations than have their opponents. For a while, it had looked as if this would not be the case in 2018. Enraged by Trump, Democrats have been turning out in more force than usual for “off-year” (elections held in an odd-numbered year) and “special” (by) elections. In themselves the results, whether slimmer victory margins or outright losses, particularly at the state level, do not make pleasant reading for the Republicans, but the pickup in Democratic turnout may be a dark omen, made darker still by signs that fewer Republicans were bothering to vote.

It may be, however, that the brawl over the Kavanaugh nomination — a brawl so nasty that, even despite America’s short attention span, it is unlikely to have been forgotten by election day — has brightened the picture for the GOP. Although the Kavanaugh drama widened a huge gender gap even further in the Democrats’ direction (according to a mid-October NBC News/Wall Street Journal poll of likely voters, women favoured the Democrats by a 57-32 margin, while the GOP’s lead with men was 52-38), it seemed to have energised some previously somnolent Republicans.

A mid-October CBS survey of “battleground states” revealed a jump in the number of Republicans who were “very enthusiastic” about voting to 62 per cent (compared to 51 per cent the month before). This trend was backed by a poll revealing that roughly equal numbers (80 per cent or so) of Republicans and Democrats considered that the midterms were “very important”. In earlier surveys this year, considerably more Democrats than Republicans had felt that way. The National Republican Congressional Committee reported that low-dollar giving, a characteristic sign of grassroots enthusiasm, has also perked up. It may be telling that, in eight key states, early voting (something permitted to varying degrees in 38 states and the District of Columbia) appeared to show the Republicans ahead in seven.

The bad news for the GOP is that six out of ten Democrats were already enthused about voting (more evidence that the Republicans will not see any turnout advantage this time round). Democratic fundraising, including those weathervane low-donations, has also been running strongly all year — and still is. In the third quarter, Democrats raised more than three times as much (in total) for their campaigns in the 30 “toss-up” states than Republicans could drum up, something that could easily tip a number of those seats the Democrats’ way, and is clearly a concern for the White House.

The even worse news for the party of Trump? It looks from a CNN poll, released on October 10, as if women will turn out to vote in just as large numbers as men. That is not normally the case. It is no coincidence that there has been a surge in the number of women running for office this year, a surge, for the most part, accounted for by, you guessed it, Democrats. Then again, 53 per cent of white women — including 45 per cent of white women with college degrees — voted for Trump in 2016, suggesting that some of the gender gap may be exaggerated. Perhaps there is a reason to believe (largely) anecdotal evidence that the onslaught on Kavanaugh may have persuaded some Republican women to (once again) overcome their doubts about the pussy-grabber and stick with their party.

Latinos may also fail the Democrats. They constitute just under 13 per cent of the electorate, and heavily favour the Democrats (a widely-quoted national exit poll showing that 29 per cent of Hispanics opted for Trump in 2016 looks to have been a substantial overestimate that — familiar story — failed to reflect regional disparities). It is striking then that, despite (if that’s the right word — feelings on this issue are more nuanced than often assumed) all the controversies over immigration, a late September poll showed that 41 per cent of Latinos “approved” of Trump’s job performance (and that was not so much of an outlier as might be thought). That does not necessarily mean that they will vote for him, but it may make them less determined to come out to vote against him. With Latino turnout customarily low (27 per cent in the 2014 midterms), that matters. One of the explanations for that reluctance to vote, incidentally, is that over 40 per cent of eligible Latino voters are under 35, an age range in which far fewer Americans of any kind are interested in voting. The data miners at FiveThirtyEight, a website known for its polling analysis, have found signs, including relatively high turnout by younger voters in 2017’s off-year elections, that hint that in 2018 this will be different.

So what is going to happen? In the absence of — and with this president this is a big “absence” — some new scandal catching fire (currently the New York Times is doing its best to create some kindling out of the Trump family’s tax “planning”), an unusually unfortunate tweet, a major development in Special Counsel Robert Mueller’s investigation or, to steal Harold Macmillan’s useful word, “events” (I am writing this a few hours after news broke that pipe bombs had been sent to some leading Democrats), there’s a chance that Republicans may actually increase their 51-49 Senate majority. They start with a strong defensive position. Only 9 of the 35 contested seats are currently in GOP hands. Moreover, thanks to Vice President Pence having a casting vote, they only need to hang on to 50 seats to keep control.

What’s more, Democratic hopes that a would-be Obama 2.0, Robert “Beto” O’Rourke, a likeable and extraordinarily well-funded Irish-American congressman from El Paso with a handy Latino nickname, might defeat Texas’s Rafael “Ted” Cruz, a pantomime villain Latino senator with a handy Anglo middle name, look likely to be disappointed. So does Phil Bredesen, Taylor Swift’s pick to upset the Republicans in Tennessee. The GOP is still on the defensive in Nevada and, particularly, Arizona, but there are signs that the tide is turning its way in both states. Republicans, meanwhile, are greedily eyeing a handful of possible gains too, including Florida, Indiana, Missouri and North Dakota, the latter two both states where the Kavanaugh wars may have helped the GOP.

It looks, however, as if Republicans will lose the House. The scale of defeat will probably be modest (perhaps very modest), a good way short of those more than 60 seats lost by the Democrats in 2010, not least because any sort of landslide would need Democrats to win a lot of Republican or Republican-leaning seats, not easy at the best of times, and these are not the best of times.

But any Democratic majority, however slim, will be enough to enable the party to launch the investigations that it hopes will enmesh and eventually strangle Trump. To win control of the House the Democrats will need 218 seats. They currently have a little under 200. If they reach the magic 218, the rules of the game will change in a way that is likely to influence politics more than policy. Democrats will have proper cards of their own — rather than those that chance or the cackhandedness of the president sling their way — to play. And, in the shape of investigations (directly or indirectly) of the president launched by congressional committees they would then control, they will play them aggressively.

Quite what these investigations will turn up is anyone’s guess, as is the way in which Trump, not always at his best under pressure, will react to their mere existence, let alone to any adverse conclusions they may draw. Meanwhile Mueller’s probe drags menacingly on. He has already gathered an impressive collection of scalps, and there will be more. Whether, by encouraging a Democratic House to try its luck with impeachment, one might eventually come with orange hair may define the next two years.

In the unlikely event that the Republicans lose the Senate as well as the House, their leaders’ most likely response will be to try to distance the GOP from the president who led them to disaster. That will be no easy task with so many of the party faithful on the Trump train. And it was not just the GOPeons. A good number of the GOP elite also hitched a ride: To take one example among many, just this past summer, former Trump foe, Senator “little Marco” Rubio was proclaiming the need for “a new nationalism”. “Make America Great Again” had, I suppose, been taken.

And if Republicans hold both Senate and House, the film director Rob Reiner, one of the most vocal of Hollywood’s maddened liberal herd, has tweeted a warning of what to expect: “A fascist autocracy.”

Oh.