The Transatlantic Tragedy

Sep 28, 2020 Joschka Fischer

While today's mounting global disruptions have accelerated an ongoing shift in global power dynamics, neither China's rise nor the emergence of COVID-19 can be blamed for the West's lost primacy. The United States and the United Kingdom took care of that on their own, with a complacent Europe watching it happen.

BERLIN – Between the intensifying Sino-American drama and the persistent COVID-19 crisis, the world is undeniably undergoing fundamental, historic change. Seemingly immutable structures built up over many decades are suddenly exhibiting a high degree of malleability, or simply disappearing altogether.

In the ancient past, today’s unprecedented developments would have put people on guard for signs of a coming apocalypse. In addition to the pandemic and geopolitical tensions, the world is also confronting the climate crisis, the balkanization of the global economy, and the far-reaching technological disruptions brought on by digitization and artificial intelligence.

Gone are the days when the West – led by the United States, with the support of its European and other allies – enjoyed unchallenged political, military, economic, and technological primacy. Thirty years after the end of the Cold War – when Germany was reunified and the US emerged as the world’s sole superpower – the case for Western leadership is no longer credible, and East Asia, with an increasingly authoritarian and nationalistic China at the helm, is moving swiftly to replace it.

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US President-elect Joe Biden may have promised a “return to normalcy,” but the truth is that there is no going back. The world is changing in fundamental ways, and the actions the world takes in the next few years will be critical to lay the groundwork for a sustainable, secure, and prosperous future.

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alex Finch Sep 30, 2020

I just retired, in Socialist Europe, after having lived for three decades in Capitalist Australia. Perhaps the best advice is what billionaire fund manager Bill Miller recently wrote in his quarterly report: “the world, economy and markets are far more complex than we have any idea, so predicting anything is a complete waste of time, because nobody has any idea, so don’t worry about anything, be long term positive, because usually it always comes good”. I find this strangely calming. Cheers!
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Bernhard Kopp Sep 29, 2020

The diversity of the European economies has indeed become a mounting problem. For insiders it was already known at the time of the Maastricht Treaty that the rules for the currency union were too weak to substitute for the common policies you refer to. We could rescue the situation with a Maastricht-II. Newly defined criteria for budget deficits and public debt become a constitutional requirement in all Euro-member countries. If the national politics cannot stay within those criteria, the government must resign with the public admission that they are unable to stay within constitutional guard rails. A new government must be formed following snap election and the country must be back within the rules before 12 months have elapsed. Liabilities to the ECB must be interest bearing and must be collateralised, including the target-2-balances. I am not optimistic that there will ever be a Maastricht-II. They will rather let it fall apart, or, change course to a high-inflation period reducing the burden of debt for the indebted.
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Henk Crop Sep 29, 2020

Over the period 2009 - 2017: the US economy grew by 39 %, the Chinese by 139 %.
The economy of the Eurozone declined by 2,4 %.
So it is obvious where improvements are needed.
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zebbrad Sep 29, 2020

The writer misses some very big points in his commentary. The US has been drifting away from Europe for quite some time as WWII and Cold War memories fade for a great majority of the population and demographically Americans with roots in Europe become a smaller and smaller part of the population. Other than elites over a certain age there just is not a lot of interest in Europe. Add to this Europe's inexplicable inability to pay for it's own defense which has been an issue for many many years as well as Germany's misguided funding of the main opponent of NATO with gas purchases which indirectly allows Russia to continue to maintain it's military and troublemaking abroad. This has been a withering relationship for quite some time.

I say this with great regret as I am half German, have lived there for a number of years in the past and whose father served at NATO military headquarters during the Cold War. I'm one of those in the minority who still cares about the relationship!

Side note: Please see Secretary Gates's farewell speech to the Europeans in 2011 (https://www.washingtonpost.com/world/gates-rebukes-european-allies-in-farewell-speech/2011/06/10/AG9tKeOH_story.html). Gates is a good Transatlantic supporter begging the Allies to do more to maintain the relationship.
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Henk Crop Sep 29, 2020

When you look at the Global Competitiveness Index you have to conclude that mainly the EU and not the US has trouble keeping up to developments in the World.
The rankings of 2019 are: the US 1, the Netherlands 4, Japan 6, Germany 7, Sweden 8, United Kingdom 9,............. France 15, Spain 23, Italy 30.

The trouble with the EU is that it has introduced the EURO in 19 dissimilar economies.
A sustainable EURO would require a full integration ( economically, fiscally, socially, culturaly, legally ) of the Eurozone. This is what the Europhiles want ( France, Brussles). However many EU members ( the Netherlands, Germany, Poland ) are opposed to that. Also the Commission is overestimating itself and repeatedly fails to produce results ( Schengen, Immigration).
Another issue is that France, a minority member, is seeking control over the entire EU by means of the unelected officials of the EU Commission. France is not building the EU as a team, but rather as an extension of France.
As long as these problems are not solved the EU will be a strugling giant.

The solution is simple. Go back to the so successful common market of sovereign members.
The EURO could be used only for transfers between the Central Banks.
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Ariel Tejera Sep 29, 2020

Regarding German large defense spending, well... Ask the French if they long for it. Maybe not.
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j. von Hettlingen Sep 28, 2020

Joschka Fischer deplores the poor state of the Transatlantic relationship, and the loss of the West’s “primacy”. With the resurgence of Anglo-Saxonism in the UK and the US, conservatives and right-wing populists have become nationalistic. Indulging in nostalgia, they “long for a return to a mythical imperial golden age.” Assuming their sovereignty is under attack, they rail against multilateral treaties and alliances, undermining the very Western global order they built up and used to uphold. All the while a “complacent” Europe is watching,
The UK and the US were global and political giants. But in recent decades their leadership is in decline, with both grudgingly adjusting to their loss of influence. Apart from geopolitical conflicts in many parts of the world, and the US-China trade war, disruptions like climate change and the Covid-19 pandemic have taken a toll on Europe, which has to grapple with forging new ties with the post-Brexit UK and avoid breaking with the Trump administration. Caught between the US-China rivalry over tech leadership, European leaders may well soon be forced to take sides.
According to the author, “the founders of an international order that enshrines democracy, the rule of law, collective security, and universal values are now dismantling it from within, thereby undercutting their own power. And this Anglo-Saxon self-destruction has created a vacuum, leading not to a new order but to chaos.” Sadly, Europeans – especially the Germans – “are in no position to…..point the finger at the Anglo-Saxons. By free-riding on security matters and simply shrugging their shoulders at persistently high trade surpluses, they, too, bear responsibility for today’s nationalist resurgence.”
European trust in the US has declined sharply since Trump took office. His relationship with key European allies are in shambles, and many Europeans can not name a time in recent history when the Transatlantic relationship was in worse shape. “If the West – as an idea and as a political bloc – is to survive,” there is no time to lose. Atlanticists like the author call for unity, because the US and the EU “will each be weaker alone than as a united front.”
According to the author, “Europeans now have no other choice but to transform the EU into a genuine power player in its own right. A deep rift has opened up between continental Europeans – who must hold on to the traditional Western construct – and increasingly nationalistic Anglo-Saxons.” In the UK regaining control is more important than trading with the EU. In the US, Trump panders to his white, conservative, nationalistic base to garner electoral support.
Now Europe is watching the November 3 elections closely. If Trump is re-elected, the Transatlantic West “almost certainly would not survive the next four years, and NATO would probably face an existential crisis, even if Europeans increase their defense spending in response to US demands. For Trump and his followers, the money isn’t really the issue. Their primary concern is with American supremacy and European fealty.”
However, if Joe Biden wins, “the tone of transatlantic relations would certainly become friendlier. But there is no going back to the pre-Trump era. Even under a Biden administration, Europeans would not quickly forget the deep distrust that has been sown” over the past four years. Whoever wins, the US “will have to deal with a Europe that puts much greater stock in its own sovereignty – particularly on technological matters – than it has in the past.” The question is whether Europe has learnt a lesson.
We, Europeans can not afford to be nostalgic because those “cozy interdependencies of the immediate post-Cold War years are long gone.” We would be well-advised to re-invent the Transatlantic relationship, and both sides need to adapt to the new reality. Most of all we will “have to do much more to safeguard" our own interests, and "America would do well to understand that Europe’s interests may diverge from its own.”
Thanks to decades-long ties, Europe and the US can keep their relationship from deteriorating further while still being able to leverage the global crises to recalibrate their cooperation for the future.
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alex Finch Sep 28, 2020

Decades of Socialism and promises in Europe has resulted in 50% of German households having virtually no financial assets saved for retirement, and remaining lifelong renters of tiny apartments. While Europeans have been busy spending and enjoying life, Anglo-Saxon households in Australia, UK, Canada and USA have been accumulating wealth for their retirement. The wealth that UK households have accumulated would have only been used to further finance the poor allocation of funds in the EU. That’s why the UK left. As Margaret Thatcher once said, Socialism spends other people’s money, till nothing is left. One hundred years after WW1, Europe is once again sleepwalking into the future. The EU should stop trying to get the world to follow their lead, it’s embarrassing.
- Mirek Fatyga Sep 28, 2020
  
  is this an attempt at humor?
  - alex Finch Sep 29, 2020
    
    You can find all the details in the OECD HFCS SURVEY 2017 (Household Finances). Most household wealth in Europe is inherited wealth, mostly real estate. It’s not a joke. Europeans have a primitive tax system where young people can’t save because high taxes are needed to pay for the large pensions that socialist governments promised for decades. Most Europeans seem unaware that America and China are far ahead. Europe runs the real risk of becoming an embarrassment. Is my opinion.
    - Michael James Oct 1, 2020
      
      I don't know what you are looking at to support your statements but I'm looking at the OECD data in this file which is marked 2019.
      https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/
      
      Figure 1. Wealth inequality is much higher as well as much more dispersed across countries than income inequality.
      It shows that the US is an extreme outlier for both the top 10% (panel B) and the vast middle group (panel A). Panel B shows that the top 10% owns 80% of the wealth and approx. 30% of the income. With that extreme skew it is impossible for the rest to show anything but low shares, and sure enough Panel A shows the middle 60% (the 2nd, 3rd & 4th quintiles; ie. 20% to 80%) has about 10% of the wealth and about 50% of income. The OECD median is 32.75% of net wealth by this middle 60%. The UK is also one of the worst in this distribution. Among the best are Sweden, Nordics, France ...
      
      These analyses measure wealth in the same terms you are discussing. What they miss is almost as important. Healthcare is much better and on average twofold less expensive in those European social-democracies. No accident that the biggest cause of bankruptcies amongst the American middle-class is a health crisis. This is reflected in an actual declining lifespan in the US, the first time this has happened in a modern country outside of warfare. Then there is infrastructure which is excellent and well maintained in most of Europe while in the US a lot of it is >50 years old and poorly maintained.
      
      If it were anything remotely like you say, why do you think there is such dissatisfaction in both the USA and UK to vote for Trump and BJ? In Europe the middle class remains prosperous while in the USA it has been in decline since Reagan. A clutch of Zuckerbergs, Bezos and Bloombergs don't make it any better and indeed are a symptom of the problem.
      - alex Finch Oct 1, 2020
        
        So You believe healthcare is much better and less expensive in European social-democracies. Well so did I until I recently moved to Europe. This is the lie that Socialism has always been getting away with. I now pay about US$5.000 per year for health insurance in Austria (a country where the median net wage is quite low), double what I would pay in Australia (as a dual citizen). In Germany it’s worse. But here’s the thing..... I’ve recently had to sit for up to 5 hours in hospital waiting rooms in Austria with my very ill 88 yr old mother, even with an appointment,... department of dermatology, with one toilet for up to 40 patients, standing in a cue for 30mins just to register at the front office each time, where the disgruntled doctors actually asked me to make written complaints to management and told me things would get much worse in the next 10 years (not enough qualified doctors). To my written questions to management in relation to certain procedures at the hospital, I got no answer (for example why was just one person processing the queue of patients at front, while I counted at least 10 staff sitting around waiting for them to be processed?). That’s another thing I discovered in socialist Europe, blatant corruption and mismanagement are simply accepted by most people as part of socialism (a bit like in Russia), but the brainwashing government-controlled media keeps a lid on any criticism. Yes the healthcare system in America needs fixing, but if you think socialism is the answer, then you are in for a very rude surprise. Look, the Democrats will probably win the election. My advice to you, learn to shut up, relax and become a sheep, with people like AOC and her cronies controlling everything. Welcome to the club, centrally government-controlled economies like the EU and China, that’s your future in America under Biden. The wealth will be more evenly distributed, but the cake being shared will only be half the size. People will feel happier knowing they get a bigger share, even though in absolute terms it’s less. That’s the magic of socialism, you get less, but think you are getting more. One more thing, the youth in Europe have no drive, no goals; they say why bother having ambitions when I’d hardly be better off than the lazy 10% at the bottom? When in Rome, do like the Romans do.
        
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    - Mirek Fatyga Sep 29, 2020
      
      https://www.census.gov/content/dam/Census/library/publications/2019/demo/p70br-166.pdf
      
      https://www.sciencedaily.com/releases/2020/08/200806203656.htm
      
      https://www.marketwatch.com/story/one-in-five-american-households-have-zero-or-negative-wealth-2017-11-11
      
      https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States
      
      just some reality checks on the wealth accumulation in the United States.
      - alex Finch Sep 30, 2020
        
        Allianz Global Wealth Report 2018: North America with a population of 360M has roughly double the financial assets (gross and net) of Western Europe with a population of 420M. Most Europeans own virtually no stocks and just a small amount of cash - take away the inherited home and there is not much wealth left. Socialist governments told people for decades to spend, not save, because “we’ll look after you in retirement”. Decades of wealth accumulation have been lost in Europe. Yes, one in five households in America have no wealth but at least the middle class has some savings. In Europe even the middle class has virtually only some real estate, nothing else. Allianz is a German company..... telling you America has 2x the wealth of Europe, exactly what I said. What part don’t you understand?
        
        Mirek Fatyga Sep 30, 2020
        
        what you need to understand is where that wealth is. It does not help the country, certainly the majority that live there, if few people have a lot of wealth.
        
        alex Finch Sep 30, 2020
        
        Socialists can often only recognize the bottom 10% of society, and the top 10%. They generally leave the middle 80% of society completely out of their point of view. Yes, the bottom 10% in America are too poor, the top 10% are perhaps too rich, BUT THE MIDDLE 80% IN AMERICA ARE MUCH WEALTHIER THAN THE MIDDLE 80% IN SOCIALIST EUROPE. Yes socialism in Europe has raised the standard of living of the bottom 10% compared to America, but at a huge cost to the other 90% (who I estimate would otherwise on average have at least 25% more wealth for their retirement needs). This “missing” wealth in Europe will become a big problem going forward, FOR ALL 100% of Europeans.
        
        Michael James Oct 1, 2020
        
        Alex Finch wrote: "BUT THE MIDDLE 80% IN AMERICA ARE MUCH WEALTHIER THAN THE MIDDLE 80% IN SOCIALIST EUROPE. "
        
        Shouting this (like Trump) as many times as you want will not eliminate the real facts. It is the exact opposite of your 'alternative facts'.
        
        From my earlier post:
        Figure 1. Wealth inequality is much higher as well as much more dispersed across countries than income inequality.
        Panel A shows the middle 60% (the 2nd, 3rd & 4th quintiles; ie. 20% to 80%) has about 10% of the wealth and about 50% of income. The OECD median is 32.75% of net wealth by this middle 60%.
        
        alex Finch Oct 3, 2020
        
        You are making the wrong comparison. I wrote the middle 80% of America has more wealth COMPARED TO THE MIDDLE 80% OF EUROPE (in absolute terms $US equivalent), and I’m talking about FINANCIAL wealth (excluding housing). You are talking about wealth inequality WITHIN America and Europe, and I’m saying the median household in America has double the FINANCIAL Assets of the median in Europe. Median household net wealth in America is $104.000 but of that $40.000 is Stocks and Mutual Fund Shares (US Census Bureau „Wealth, Asset Ownership Households Details Tables 2017). Median household net financial assets (Stocks and Mutual Fund Shares) in Austria for example (considered a rich EU country) is just $20.000 (Eurosystem HFCS SURVEY 2017 for Austria). Yes, the middle of Europe has a greater share of the pie than in America, BUT THE PIE IN AMERICA IS TWICE AS BIG. Higher relative valuations on your housing doesn’t make you richer, so leave ‚equity in the home‘ out of the comparison between countries! Australian Households are about the richest in the World, but that’s only because their housing valuations are off the charts.
        
        Michael James Oct 4, 2020
        
        You are free to wear your MAGA cap under the peculiar fudge of omitting the largest asset of most people around the world. I'm sure you have an equally Trumpian explanation of why the US covid case and death incidence isn't the worst in the world.
        As to Australia they happen to have one of the world's largest investment funds (superannuation, ie. private retirement funds) not just per capita but in absolute terms too, about $3 trillion (that has to be at least a quarter million per household).
        But really that is just money and in the US it doesn't buy you good health. No one is arguing that the US doesn't have immense wealth but it appears to be squandering it, as perhaps all empires do in their terminal decline. If you stray off the Disney tour you'd see a shocking obscene first-world mixed with third-world conditions. Your Austrian story is a single anecdote but national statistics don't lie. The hospitalisation of POTUS isn't a conspiracy theory. But perhaps you perceive things differently because Europeans clearly value things beyond those measured by a dollar pricetag.
        
        alex Finch Oct 4, 2020
        
        This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
        
        alex Finch Oct 7, 2020
        
        This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
        
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        Mirek Fatyga Sep 30, 2020
        
        we will agree to disagree. You can have the last word.
        
        Here is a more realistic view of the retirement situation in the US for an average person:
        
        https://www.fool.com/retirement/2017/06/19/does-the-average-american-have-a-401k.aspx
        
        Only ~30% of US population has 401K, and the amount of money in this 401K is not that great, also subject to stock market fluctuations which can be large, given that the markets are being pumped up currently by money printing. The remaining 70% have very little in private savings for retirement.
        
        US is heading into a retirement crisis as well. Private pensions are pretty much gone, and those that remain are at risk, as companies can dump these obligations through bankruptcy or liquidation. Social Security is there, but is underfunded and does not provide much in retirement income (though it is better than nothing). Health care for retirees (65+) in the US is "Socialist" as you put it, also underfunded, but still functional. State pensions are at risk, since states overpromised and made too optimistic assumptions about stock market returns.
        
        The bottom line, in my view, is this: the world population tripled in my lifetime. This population is now competing for resources with us, "the West". What this means is that opportunities for traditional growth, in extractive and manufacturing industries, is limited because growth of consumption in advanced societies cannot go on forever. This is putting pressure on advanced societies, on both sides of the Atlantic. Some degree of innovation and adjustment is needed. Growing the economy by having everyone buy a new car every three years is just not feasible. This situation requires social and economic innovation and I do not pretend to have all the answers. Resource limitations may lift, over time, with innovation, but today they are here. My approach and advice about this: don't be dogmatic. These distinctions, "Socialism" "Capitalism" are kind of XIX-th and XX-th Century, they may still be a useful reference, maybe, but something in between is probably the only feasible way to have a decent society.
        
        Final word about the US: do not underestimate the present day advantage of the US$. This advantage will not last. The US$ will not disappear, but neither will it be as dominant as it is today, which will pull US living standards down further. I am not looking forward to this, as my retirement depends on the US, and I am close to this time (unless I am lucky enough to just drop dead). It is what it is, though.
        
        alex Finch Sep 30, 2020
        
        As Greenspan once said, predicting exchange rates is like gambling at a casino. The one thing Europe fears is a weaker greenback. Druckenmiller has said for years the Euro is overvalued. Time will tell.
        
        Mirek Fatyga Sep 30, 2020
        
        I promised to give you the last word, and I will, sorry for breaking my word here, I am genuinely done. I found this link that you may find interesting:
        
        https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult
        
        this shows that the US is 22-nd in the median wealth per adult, but 2-nd in the mean wealth per adult. This illustrates the US dilemma. Mean is skewed by the rich, median reflects the state of the society more realistically.
        
        It also shows that EU as a whole is pulled down quite substantially by the newest members. Germany does not look good there, but this could be the result of reunification.
        
        I am done.
        
        alex Finch Oct 1, 2020
        
        So, looking at the bottom 50%. When I study the OECD Eurosystem HFCS 2017 for Austria (considered one of Europe’s richest countries) median net wealth €95.000, median FINANCIAL net wealth just €15.000. THAT WOULD LAST ONE YEAR. Germany is worse. Leave the value of the mostly inherited home away and there is practically no wealth. This €15.000 has basically come from high social transfers from the upper 50%, who as a consequence are much worse off than the US upper 50%. Socialism slightly raises the median at huge cost to society. There’s no incentive to work, no need to save, people are lazy. Europe’s harsh Antitrust laws have left them with no FAANG companies what so ever, falling even way behind China. If you think Europeans are better off than Americans because of that €15.000 then you are as delusional as the Europeans themselves. Sorry, as a whole, I can’t see Americans worse off. And don’t get me started on the cronyism and corruption in Europe - a Huge side effect of Socialism, and the missallocation of resources (wasting of taxpayers money to please some minority interests). One more thing, the Media is manipulated in Europe, people are kept stupid. The Media in Austria ist completely controlled by the government. Socialism has some serious side effects. Make the Rich poorer..... AOC‘s solution to everything. It’s just a psychological Trick to win votes.
        
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