Will History Trump Economics?


By: Randy AtaideImage

I recall last fall a meeting in Paris with our PLNU MBA Europe group and a prominent European economist, who discussed with us the future of the European Union. During an exchange with her, she asked us why we thought the Union existed in the first place. We offered the usual answers—more trade, a common currency, competitive strength, etc. She shot back and said that “the E.U. was created to stop war among European nations.” I must admit, this had not been in my list of responses.

What occurred that day underscores the limitations of being an American attempting to understand what is happening in the E.U., with its grave political, social and of course, economic turmoil. Perhaps the recent Greek elections solved some things, but I fear that the road ahead is going to be even more difficult than what we have seen so far. 2011 was tough on the European stock and real estate sectors with huge losses in the Greek, Italian and Spanish markets. Even the much stronger northern European countries had difficulty, for the German DAX was down 14.7% in 2011 and France’s CAC fell over 15%. 2012 looks even worse as values continue to plummet and significant European companies are now trading at around 50% of their value of just a year or so ago. Just the other day, it was noted that U.S. grocer Whole Foods was worth more than all of the publicly traded companies of the entire nation of Portugal. Wow!

In a blog post dated December 2, 2011, I wrote about “The Death of Europe.” My thoughts in that post, along with the Parisian economist’s comments and other conversations I continue to have with Europeans of all walks of life, has led me to read more of European history. In a current volume I am nearly completed with, I came across this note from the Prime Minister of Portugal in 1941 written to one of his advisor’s: “Ignoring the fact that, beyond the economic organization or reordering or Europe, there are other factors of equal or higher value—independence, national personality, culture, freedom, religion…I am very much afraid that this new Europe is simply the organized exploitation of the agricultural economies by the super-industrialized countries, in this case, principally, Germany.”

These words written over 70 years ago, before the European Union as we know it today could have even been conceived, underscore the primacy of history and the deep rooted differences and diversity existing in Europe. It is an oft-quoted piece of wisdom from our European cousins ‘across the pond’ to the U.S., that while there is much to admire of the American experience, we are much too young as a nation to have “any history.” While somewhat of an exaggeration, there is indeed mounting evidence to show that when it comes to the E.U., history may well indeed trump economics, regardless of the high price the nation members may pay.

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