The high priests of austerity

To an EU elite determined to push harmful economic policies, democracy is an inconvenience.

Jean-Claude Trichet could have enjoyed a comfortable retirement after stepping down as president of the European Central Bank in 2011.  Commanding an annual salary of €370,000 in his old job, the Frenchman is now paid a pension of up to 70 per cent that amount.

Instead, Trichet has been kept busy playing a game of musical chairs with Italy's technocrat former prime minister Mario Monti. In one of his final acts as ECB chief, Trichet spearheaded the downfall of Silvio Berlusconi by insisting that the lascivious rogue introduce unpalatable economic "reforms" in Italy as a condition of emergency "assistance". 

The diktat helped Monti replace Berlusconi as prime minister (without an election). It also allowed Trichet to fill two posts that Monti had to vacate: those of European chairman with the Trilateral Commission, that secretive club for political and business leaders, and chairman of Bruegel, a think tank based in Brussels.  Trichet combines these responsibilities with overseeing the Group of 30, a Washington-based institution dominated by bankers.  

All this hyper-activity might explain why Trichet has been sending out some muddled messages.  During an interview on French television earlier this month, he blamed mass unemployment for the killing of a far-left activist by skinheads before advocating deep cuts to public expenditure: a recipe for mass unemployment.

Suave and confident,  Trichet probably didn't realise he was contradicting himself.  So I'd recommend that he reads a paper published by his minions at Bruegel in May.  An assessment of measures taken in embattled eurozone economies, it stated that austerity has caused "very high unemployment" in Greece and "record unemployment levels" in Portugal.

This was a rare admission from Bruegel that its preferred prescriptions are counterproductive.

Funded by Goldman Sachs (another one-time Monti employer), Deutsche Bank, Pfizer and Microsoft, the think tank has helped cloak the crude politics of austerity with intellectual gravitas. It is treated with reverence among the elite in Brussels and beyond. Top-ranking EU officials regularly attend its events, while opinion pieces by its staff grace such newspapers as Le Monde and The Financial Times.

Bruegel was established by Jean Pisani-Ferry, who was hired as an economic adviser by François Hollande, the French president, in April. The appointment indicates that Hollande, nominally a socialist, is shifting  to the right. In a syndicated column from December 2012, Pisani-Ferry parroted Margaret Thatcher's argument that "there is no alternative" to eviscerating the welfare state. "Rather than flirting with illusions, governments should confront the hard choices ahead of them," he stated.

Pisani-Ferry's new responsibilities have not caused him to be more reticent. When flaws were recently pinpointed in a by now infamous paper from the economists Carmen Reinhart and Kenneth Rogoff, he claimed it was "never a celebrated piece of economic research". The shortcomings did not undermine the case for austerity, he suggested.

One common misperception is that the EU's most powerful figures have made up their response to the economic crisis as it went along. The truth is that they have exploited the situation to dust down plans hatched earlier but which would have been difficult to implement under less straitened circumstances.

André Sapir, a senior fellow at Bruegel, was tasked with drawing up a series of recommendations for the European Commission nearly a decade ago.  The 2004 Sapir report advocated that the Brussels authorities be given greater powers to monitor the budgets of EU countries. 

Known to policy wonks as the "European semester", his proposal urged meddling in areas of responsibility that national governments guarded jealously.  The concept has been turned into reality over the past few years, leading to a situation where details of Ireland's budgets are sent to other European capitals before law-makers in Dublin get to see them.

Bruegel is part of a mushrooming network of corporate-financed think tanks dedicated to influencing debate.  A video posted on Bruegel's website about Latvia's bid to join the euro illustrates this point.  It tells the viewer that there is "wide consensus" that signing up to the single currency would be "the right move for the country". 

That must be news to the people of Latvia, most of whom don't want the euro, according to opinion polls. Such inconvenient details can, of course, be glossed over. More than likely, the Riga government won't be calling a referendum on this matter.

Democracy does not gatecrash the cheese and wine receptions that happen almost nightly in the world of think tanks. Without scrutiny, their "experts" can mould the outside world in the way that the wealthy and influential want. 

David Cronin's "Corporate Europe: How Big Business Sets Policies on Food, Climate and War" will be published by Pluto in August. Follow him on Twitter @dvcronin

A recent debate at the European Parliament in Strasbourg. (Photo: Getty.)
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United States of Emergency: will the North Carolina riots stain Obama's legacy?

The latest flare up of violence in the US is a reminder that the election of the first black president did not herald a new age of post-racial harmony.

Last April I travelled to Baltimore the morning after the Governor of Maryland had declared a state of emergency in the city, following riots that erupted after the death of Freddie Gray in police custody. Time had just published a poignant article comparing images of disorder on America's streets in 2015 with those 50 years earlier, during the struggles of the civil rights era. However, the scene that greeted my companion and I as we looped round the I-95 into the inner harbour looked more like photos we had seen of Helmand in 2001, or Mosul in 2003. Except this wasn't Baghdad, it was Baltimore – the birthplace of Edgar Allen Poe, Babe Ruth and The Star Spangled Banner. And yet it was clearly a warzone, for how else could you explain the presence of 4,000 national guardsmen, either poking out of armoured vehicles or patrolling the streets with automatic weapons?

During the protests that have erupted in Charlotte, and elsewhere, following the shooting of yet another black man by the police, US Attorney General Loretta Lynch has warned against this kind of violence becoming the “new normal”. As North Carolina governor Pat McCrory declared a state of emergency on Thursday morning, the horrible truth was that the normalcy of it all was plain to see. Such is the frequency with which riot police and even soldiers have been deployed on America's streets over the past few years, that the “United States of Emergency” would not seem like an inaccurate rebranding. Of course all of this civil disobedience plays into the hands of a Republican presidential candidate who is making the restoration of “law and order” one of the central tenets in his bid for power.

It is not hard to see the desperation on Obama's face as he reaches the denouement of his own tenure. While the 44th President's political legacy will be debated for years to come, it is now obvious that one thing it did not herald was a new era of post-racial harmony. America's obsession with symbolism almost willed him to the White House but as so often is the case with US politics: the higher the pretensions, the harder the fall. 

Charlotte doesn't represent anything particularly unique in this long struggle against police racism. It's just another place name to be added to Ferguson, Baton Rouge, St. Paul and dozens of others that could form a particularly grim tourist trail. The horrible truth is that as long as there have been black men in America – especially in places like Charlotte – they have always been unfairly targeted by police. For decades in the South these same forces were the “thin white line” promulgating a form of apartheid against the black majority. The difference now is that 21st century technology allows witnesses to capture and disseminate proof of this worldwide. The power of images to expose racial violence is unquestionable. The campaigner Mamie Till, mother of Emmett, knew this when she published photos of her son's mutilated corpse in 1955. As did George Holliday when he filmed Rodney King's beating in 1991.

There is a kind of despair when it comes to trying to find solutions to America's devastating gun and racial problems. Unfortunately neither presidential candidate seems to offer much hope of significant change. One is perceived as being in thrall to big business (of which the gun lobby represents a significant part) and the other, well, it is not hard to imagine Trump's glee at further proof of how “broken” and disorderly the country is under the Democrats. Both of their reactions to this latest incident have been muted. If either of them care at all about fixing this problem they need to take action and it needs to be drastic. The late comedian Robin Williams once quipped that in Britain the police shout: “Stop! Or I'll shout Stop again”. In America that first “stop” is all too often followed by a much louder sound.

The problem is that whenever a “taskforce” is created to fix the problem – such as Obama's 21st century policing initiative – its recommendations are always non-binding. On top of this is the fact that there are nearly 20,000 distinct police departments in the US representing a myriad of vested interests and demographic differences, and all adhering to slightly different codes of conduct. American police need to revert from a militarised occupying force to a pacific consensual one, perhaps by sending officers out unarmed. Unfortunately the likelihood of this happening with either a Trump, or even Clinton, presidency is sadly close to none. 

Alexis Self is a writer based in New York City.