Monnet’s Myth: European post-war economic growth

June 13, 2016

One of the persistent founding stories about the EU concerns the Coal & Steel Community. The tale goes like this: The Coal & Steel Community and subsequently the European Economic Community were the cause of not only the western European economic recovery after the Second World War but are also the cause of the German economic rise to greatness.

The Brexit dissidents, as I like to call them and here I include myself, call this constant attribution of prosperity and peace “myopia”. This is because these analyses rarely look at the wider picture, or in some cases, simply associate the European project with universal benevolence.

The simplest approach but one in which we can see the various changes in prosperity is by a comparative measure of GDP. In 1946, the British economy was almost twice as large at the French economy and more than twice as large as what was left of the German economy in the British, French and US Army zones of occupation.

By 1955, the West German economy had grown by 283% compared to 1946. Indeed by 1950, when the Coal & Steel pact was agreed, the West German economy had grown by 55% compared with 1946. It was already larger than the French economy before the first steps of Europeanist integration had taken place, which it had overtaken in size by 1948. From then on, at no point was the French economy to ever exceed in size the West German economy.

This should alert us to an essential fact in considering the economics of Western Europe: the German economy contained huge potential for economic expansion and continued to expand on the back of political stability, the excellent German school system and the existing expertise of German engineering and manufacturing. Another factor related to myself a long time before at university was that after the war with the major industrial cities and plants in ruins and with industrial machinery confiscated as part of the post-war settlement, West Germany replanned both its cities and the industrial plants. Sites were cleared and rationally laid out – this had long term benefits in creating smooth access to and from manufacturing sites.

Another aspect to consider is the international dimension. The post-war drive to facilitate trade and reduce tariff barriers under GATT also made it possible for international trade to flourish in a way not seen since the British trade expansion of the 19th Century.

The really damaged economy from the Second World War was that of France. The French economy in 1944 was 46% of the size it had been in 1939. It was not until 1949 that France returned to pre-war levels of prosperity.

Again, we can see that the economic recovery was well and dramatically under way before even the first steps of Jean Monnet’s project were adopted.

As we can see above, the West German economy had grown by 283% compared to 1946 but it had also exceeded the size of the British economy. By 1962, the West German economy was 28% larger than that of Britain. By 1981, it had become 54% larger than the British economy. Thereafter the British economy steady grew in size and reduced the gap with West Germany to 1989 and with the unified Germany in the years after until by 2008, the gap was 18%.

The French economy today is about 80% of the size of the German economy. The ratio has varied from 60% to 75% until the 1990s. This matches the ratios from the first half of the 20th Century with the exception of wartime figures.

What about the United Kingdom?

According to the story told by Europeanists, Britain struggled because it was locked out of the EEC until 1973. But the figures tell a different story.

The British economy shrank noticeably from 1944-1946 by 4% per year. Today this would be considered a major depression but this was the point at which the British government was gearing down from wartime spending levels.

By 1948, the economy recovered 3% on 1947, when it shrank by 1%. Thereafter until 1972, the British economy grew by an average of 3% per year. This was mild growth compared with French or German growth rates in the period, which were 7% and 6% respectively.

However, we should bare in mind that the problems with the British economy were a great deal more self-inflicted than due to geopolitical relationships. For much of the period into the 1950s for instance, the British government was spending heavily on defence. There were problems with industrial policy, increasingly with industrial unrest and the problem that British industry was not replaced or rebuilt as was German industry.

Yet, even with all the trouble and disruption of the 1970s, the economy still grew by 2% on average per year until 1980, when the economy entered a serious recession with the start of the liberalisation of the British economy and the closing of state-subsided industries. 2% per year was average growth until 2000 – 2008 which was 3% per year.

Compared to French and German growth rates in the 1980s & 1990s, Britain matched both countries and exceed both in the 2000-2008 period, where France experienced 2% average growth and Germany 1% average growth.

We cannot see in the data series any noticeable effect of EEC entry for Britain but we can see that Britain went from 7% growth in 1973 to -1% in 1974 and 0% in 1975 before returning to 2% growth in 1976. We could associate the return to growth with the end of EEC transition except that we also know this was the point at which Labour Party economic policy began to change with an reduction in subsidies, heavy cuts in welfare spending and the IMF Crisis.

Together with the Thatcher government of 1979-90’s supply side reforms and closure of inefficient industries, we can see that membership of the EC, as it was, was neither a noticeable help or hindrance to British economic performance. What was critical in Britain was the reintroduction of market economics and the end of the post-war economic consensus. Indeed, we can argue that Germany’s success was due much more to its effective labour and industrial policies and the economic stability and growth these enabled.

The last major recession in the British economy was partly caused by an overheated housing market (the result of market-liberalisation) but above all by the monetary dislocation of the ERM debaclé. Once the British currency floated again, the economy retuned in 1993 to 2% growth. On a side note, what is remarkable about the ERM is that the Europeanists attempted to return to a form of 1920s economics with exchange rate controls.

What this demonstrates is that economies have a “natural” size to which they return and from which they grow with the right policy mix from governments. What the Europeanists claim is the result of the European experiment is actually this natural tendency reasserting itself amidst political stability.

Links:
GDP Summary
Data Series as Analysed


The West’s reaction to Russia’s aggression

August 10, 2008

There are only two possible broad reactions to the aggression by Russia against Georgia, which appears in design and intent to be that of an imperialist aggression with the intent of subjugating the Georgians.
The first is to ignore it and blame Georgia for getting into the current situation, in other words, how dare you make us have to choose! This reaction is typified by the Guardian newspaper.
The second is to calmly state to Russia that the aggression will not stand and that unless Russian troops are withdrawn by a certain date and time, then the military nations of the West (USA, Britain, France and those reliable allies) will declare war.

In my view, the second is absolutely necessary and that we should begin preparations for a long war at the moment of the refusal of the ultimatum. In Britain this will mean moving to a war footing in finance so as we can double the size of the army over the next five years, doing the same with the Royal Navy and the RAF. At the same time, we should use our existing resources to strike hard against the vulnerable points in Russia: its civilian infrastructure, the military bases and above all hit the oil and petrol industry to shut down the Russian ability to wage war.
Even if Georgia is lost, we must declare firmly that we will recover that nation’s independence by force unless regular and paramilitary Russian forces and administrators withdraw from Georgia in its entirety. Russia right now is a cross between Tsarist Russia in the 19th Century and the Soviet Union; it is an aggressive, paranoid but vulnerable nation and we must be prepared to pay the price in blood and treasure to defeat that aggression.


Defeatism in the West

July 13, 2008

At this moment, Israel is about to cave into Hezbollah and Hamas on virtually every demand made by those two groups in return for the bodies of two soldiers (and probably Gilad Schalit’s body too). There is a malaise of defeatism in the West that has been spread by the left-leaning intelligensia and sourced back to the religious pacifists, the collaspe of cultural identities (see Natan Sharansky) and the continued efforts of the communist and fellow-traveller groups in western academia to demoralize and disempower the west in favour of an assumed “revolutionary” movement from Islam.
The model for the current time can be found in the late 1970s and the collaspe of Iran from a forward looking state (admittedly a tyranny) to a backwards, anti-progressive Islamist tyranny that outdid the Shah’s regime for physical and mental butchery. At the time the western elites refused to believe what the Islamists led by Khomenei were both writing and proclaiming in public speeches, prefering the safety of their own assumptions and wishes. Michel Foucault slobbered over a man who would have put him to death faster than if one could say “Jack Robinson” if he had been an Iranian subject. Why? Because they were following what they wanted to see, not what was in front of them.

Now we find the same path being trodden again. We have a growing Islamist movement in the west that is emboldened by appeasement and accomadation, a left-leaning intelligensia whose imagined enemies are the working class, the right wing and apostates from a pseudo-communist correct line of thought (mulitcultural political correctness) and who see virtue as inherently located outside of their own culture. A negative, plaintive attitude has emasculated and embarressed the west and left it soft and weak.
We need a new idea of ourselves and the best people saying what this might be are the left-wing apostates such as Christopher Hitchens, Nick Cohen and David Aaronovitch. We need to mobilise the huge economic potential in the west and reawaken our shared values of equality before the law, the importance of the individual against the group and the humanisation of our society. What I mean by the last statement is that throughout history, we as human beings, as a species have slowly in parts and places moved from a tribal and group based identity that excluded, punished and was demarcated by taboo, towards a state of awareness that comes out of the fallout from the European religious wars and the Enlightenment.
Today, the Enlightment is under attack and accused of being the root of 20th Century fascism and 19th Century racist ideologies, ignoring the fact that the values at the centre of the fascist and communist movements were anti-modernanti-intellectual and anti-individual (as opposed to the group). These were movements against the Enlightment and modernity – and today, so is Islamism.
Islamism and it’s left-wing fellow travellers in the west seeks to impose a new order of racism, genocide and tyranny on the world. There is no place in Islamist philosophy for free-thought, free-speech, or the mere existence of difference beyond that mandated in a collection of thoughts and sayings from the 7th and 8th Centuries AD. Why do the left-wing affect to believe more in the virtue of this fascist creed than in their own culture?
Because they have abandoned reason and logic as their own beliefs have attained the trappings of religion, since reason and logic (those gifts of radical Christianity, but above all the Greeks) can be used to question and dismantle those beliefs. By finding nothing but fault in the west for the last half-century, by despising the working classes of the west for not being good revolutionaries or humble new-age serfs, the left-wing intelligensia (and here I use the word in a derogotary sense) have been left with nothing of value inside themselves, excepting their own sense of absolute virtue. They recognise the wickedness of the Islamists, but fool themselves into believing that the wickedness is a product of western mistakes, rather than a poison nutured outside of themselves. Far easier to blame the west for being attacked than to defend it.
So we now have winter solstice festivals, instead of Christmas. We now no longer teach our history, except for those bits where our ancestors can be painted as devils attacking angels out of spite or greed. We blame assaults on us as the result of our political opponants or yesteryear, or increasingly the result of wicked and greed machinations by secret elites, which leads rapidly into conspiracy theories and the revival of anti-Jewish rhetoric.
We have an intellectual culture that is so anti-militarist, that it would deprive us of the means to defend ourselves or prevent harm against others in the world, while the BBC tells us to weep crocodile tears as one tyrant or movement massacres the helpless in the name of fascist ideologies – or sometimes out of greed.
We have become complacent, self-loathing and corpulent. Our intellectual culture has been labelled as worthless by its’ own practitioners and instead of treating the ideas of our enemies as anything like better, we opt for a standard of “difference” that implicitly makes them better while seeming “equal”.
As Lord Lawson put it in another context, I leave the last words with Euripides (or rather his 19th Century admirers). “Those whom the gods wished to destroy, they first made mad.”


Match Report

March 26, 2008

Having just watched the France – England football friendly, I will offer these thoughts on the game played. The game ended 1-0 to France, courtesy of a David James screw up and a consequent penalty.
Overall, while the performance, especially in the second half, was not capable of overcoming a French side soon confident of our inability to defeat them, there are positives to offer to one who has seen many of the McClaren matches that so embarrassed our nation. Firstly, the team, even following the substitutions at half-time, did not fragment, lose shape or discipline but continued doggedly while retaining a tactical scheme. The tactical scheme did not work, but the team remained professional, if second-rate.
Secondly, the defence remained solid, even with the substitutions. This can be attributed (at an educated guess) to improved coaching, improved morale and better leadership, as well as the competent support of the central midfielders.
Third, the only goal was conceded via a penalty; not a handsome cause but one less injurious than concession from open play. This ties in with the point about the robust shape of the team and the defence.

As for the negative aspects of tonight’s performance, we had better start with the fundamental and the particular.
The particular error was the choice of David James for goalkeeper. A well-founded keeper for club, he is known to lose his head on the big occasion (meaning a failure of nerves when put to the supreme test). This was proven again by his incompetent handling of the Nicholas Anelka breakthrough, clumsily colliding with the player, while completely misreading the movement and timing of both ball and player. Otherwise, it might be said that he had a good night, not committing other stupid errors, but it does remain salient that his abilities fail under the stress of the immediate and nerve-wracking at the highest levels.
The fundamental error was located in the balance of the midfield. I was impressed by the opening formation, seeming to possess considerable potential for both cohesive strength and aggressive movement. However, I underestimated the consequences of the inclusion of Hargreaves and Barry in the central midfield; while both performed on the defensive with their usual tenacity and excellence, their attacking performances were woeful, to say the least. A consistent pattern established itself, the interplay between right/left back and the midfield leading to the ball being pushed out to the wings: a penetrating run followed by a swift cross into the box. The defensiveness, even exaggerated defensiveness of the central midfielders consistently allowed the French (playing deep) to concentrate in space and time to either smother attacks from the wings or to overwhelm the few players getting forwards. That said, even with these disadvantages, the team looked capable of eventually scoring as half-time arrived. I believe this must be a testament to the excellent quality of much of the play and of the players in question, consisting of much of the cream of English football.
It seems that Gerrard was not playing in quite the right role, though I could be mistaken, as I believe the primary cause of the attacking dysfunction was the lack of support, consequent on playing too deep. I would sincerely hope that was Beckham’s last game for England: while his performance was by no means inadequate, he seems to play in a role that is too old-fashioned for the sort of game required to beat modern sides. If the game was to be played along the flanks, then a better attacking midfielder would have been required: someone possessing more pace, penetration and understanding than Beckham.
On the substitutions, I would state that the players were simply not quite good enough, especially the two forwards: the ever predictable and clumsy Michael Owen and Peter Crouch. Those two seemed lost upfront, trying to pierce a French defensive screen too strong and capable to be intimidated by two second-class substitutes. Again the problem not addressed was the reticence of the central midfielders to come forwards in good time.
Overall, it seemed the game-plan as developed on the pitch was too inflexible and by the second half, too predictable, with not enough options to cut back into the middle towards the penalty area being developed. I would ascribe this to the relative freshness of the team and the manager being in a process of developing his plan for the team he plans to take to the World Cup qualifiers.

Analyzing the substitutions, I must state that I believe that Capello recognised the as the game was a friendly, it was not worth risking the key players overstretching for what in the final sense is a game without true result. His purpose in the substitutions was probably multiple: he meant to test the resolve of both substitutes and players present on the pitch, see how the team reacted to changes against a capable side while behind, and to test the abilities of the substitutes in the trying circumstances. While I believe that Johnson and Bentley were not good enough on the night, they should not be precluded from further choice; Downing was quite excellent as the substitutes went, pushing hard and creating opportunities and space. The two forwards were lumpish and near-useless, though I may be prepared to give Crouch a benefit of the doubt.
Rooney needs to play behind a fellow striker, more attuned to hanging forward, yet capable of playing in the sort of partnership that Rooney excels in at Manchester United with Saha and Tevez. It is possible to develop the sort of partnership with Gerrard that he enjoys with Ronaldo, but I remain uncertain on that point, especially given Gerrard’s free ranging role in which he enjoys such devastation at Liverpool (har, har, 3-0!).

Overall, a good performance in many ways and one with much remaining to develop. I look forwards to the next match and seeing how Capello’s schemes are developing.