The Real Thing
By George Szamuely
It is not often that the European Commission does something right. But at dawn a couple of weeks ago it raided Coca-Colas offices throughout Europe. Bureaucrats in Germany, Britain, Denmark and Austria seized internal company documents because, according to the Commission, Coca-Cola may have been abusing its dominant position in Europes soft drinks market. One of its favorite tricks, apparently, is to offer retailers and restaurant-owners free refrigerators or soda fountains if they refuse to sell rival soft drinks. A thorough investigation of Coca-Colas marketing practices is promised and the company could face a fine of 10 percent of its sales. This was only the latest of Coca-Colas recent troubles in Europe. A few weeks earlier the company had been forced to recall 17 million cases of Coke. Some Belgian children had reported feeling sick after drinking bottled Coca-Cola; Europes national health authorities immediately banned the sale of the drink. The panic was almost certainly without foundation. Toxicology experts could find no trace of anything anywhere that could explain any sickness. But the scare probably cost Coca-Cola over $100 million. This came on top of loss of sales in Russia and Eastern Europe as a result of NATOs war on Yugoslavia. And in May, the European Commission had stopped Coca-Cola from acquiring Cadbury Schweppes while French authorities blocked its acquisition of Orangina.
Clearly, someone has it in for Coca-Cola. This, of course, is not the first time the company has been under attack in Europe. After the Second World War, the French fought fiercely, but unsuccessfully, to keep the drink out of their country. Coca-Cola was everything they disliked about America: ruthless salesmanship combined with perpetual adolescence. A sweet, sticky, foul-tasting, gaseous drink that destroyed teeth and had no nutritional content, Coca-Cola nonetheless conquered continents. Since no one in his right mind would ever choose to drink Coke given so many vastly superior alternatives, its extraordinary worldwide popularity can only be explained by brilliant American marketing. How else does one explain the craze for Air Jordan sneakers in countries where basketball is sport number five or worse in its priorities? Or the wearing of baseball caps by people who have never watched a game of baseball in their lives? Or the box-office triumph of American movies in countries whose indigenous films are easily superior to anything coming out of Hollywood? (Critics who point to the abysmal quality of most of the films made in Europe today are correct. But Europe has been so thoroughly penetrated by Hollywood that it is hard even to talk about a distinctly European cinema. The best movies today are being made in countries that have been relatively impervious to American influence: Iran and Yugoslavia.)
As far as the Washington elite is concerned, the triumph of American cultural style is a cause for rejoicing. In the first place, it is democratic and egalitarian and therefore preferable to any other cultural style anywhere in the world. And, second, it represents the victory of global market forces. Europe's attempts to place barriers to the free flow of capital and goods appears to be almost an immoral act. Indeed, the very existence of Europe is nothing short of an outrage. Time and again, former Treasury Secretary Robert Rubin has instructed the Europeans to shape up or else: adopt American-style capitalism and become competitive or risk being thrown on the dust-heap of history by "globalism." Yet Europeans continue to reject American dogma. They refuse to "reform" welfare. They mumble about introducing Americas pride and joy -- "flexible labor practices" -- but do nothing about it. They accept double-digit unemployment rates without complaint. Complacency of this sort drives American policymakers up the wall.
But then Americans seem to be unbalanced these days almost as a matter of policy. According to the mad logic of globalism, enunciated with cretinous gusto by Thomas Friedman in his ignorant and illiterate The Lexus and the Olive Tree, people have to sacrifice their jobs, their livelihoods, their homes just so the global economy can function without hindrance. Europeans, according to the Washington consensus, will have to accept regular cuts in pay, work longer hours, take shorter vacations, learn to live with less comprehensive health care coverage or else cease being "competitive." But why on Earth would Europeans allow their culture, their cities, their civilized way of life degenerate to the brutish levels that we take for granted here in America? Why on Earth would they destroy everything that is vital to Europe just so that they can "compete" with the sweatshops of Indonesia and Thailand? And at what point will the Europeans be competitive? When workers are earning $10 an hour? Five dollars an hour? Two dollars an hour? Who came up with this idiotic notion that there is something wrong with economic security? That throwing people out of work in the name of "downsizing" is commendable because it ensures "competitiveness"?
The creation of a bourgeois class with a strong set of moral values -- optimistic, confident, secure in its home, its community, its nation -- was the great triumph of capitalism. If capitalism offered economic insecurity as a permanent way of life, socialism would have won hands down. The ideologists of globalism do not seem to understand this. The Europeans do. Economic insecurity, American-style neuroses, medical debts that take a lifetime to pay off, bad education for almost everyone except the very rich, a vast underclass, a large section of the population permanently behind bars, seem to go together with this American-style capitalism that U.S. policymakers extol wherever they go. This is what lies behind Europe's onslaught on Coca-Cola. Two rival models of capitalism are fighting it out. Or, rather, globalism is being shown up for the infantile fantasy that it is. According to the doctrine, the giant conglomerates should be able to do whatever they want. They can merge, downsize, switch their operations around the world, and there is nothing anyone can do about it. If Coca-Cola gets annoyed with the Germans for some reason, they can simply transfer their bottling plant to Nigeria. The Europeans, however, are demonstrating that they can make life very difficult for any transnational corporation. If the corporation threatens to transfer its main business to some place where it can pay workers two dollars an hour it will face harassment. If it tries to sell in Europe products it made elsewhere at a fraction of the cost it will get clobbered. A health scare can be whipped up overnight, allegedly unfair competitive practices can be investigated for years. And the ultimate sanction is denial of access to the European market. This is already rather a large market and the European Union will expand to include almost every single country in Europe in the next few years. Europe is, in effect, practicing protectionism.
There is nothing wrong with protecting a civilized way of life. Americans dismiss this as a recipe for decline. Europeans, they believe, will continue to suffer a flight of capital while America will be where all the exciting high-tech work will be done. To be sure, the United States is doing well now. Or rather the Dow Jones continues to climb to the stratosphere. Which is all that people actually mean when they say "the United States is doing well." But sooner or later something untoward will happen. It may be a recession; it may be a collapse in the stock market; it may be the Japanese unloading their T-bonds. Then the globalists will discover that "flexible labor practices" are not as appealing to the people who are fired as they were to those who were hired. People who gambled on stock options in lieu of extra earnings or savings will discover that they may have been a little rash. At this point, the European-style capitalism will seem rather attractive. Europe's wealth is not as tied to the stock market as it is in the United States. It is also not burdened by a huge trade deficit that it can suddenly no longer finance.
There is one wrinkle to all of this. Though Europe and America represent two rival versions of capitalism, they are still joined together in this defunct organization called NATO. Europeans are content to remain members, since they thereby can get away with spending next to nothing on defense. Americans like NATO because it enables them to throw their weight around in Europe. Europeans had to go along with Americas demented destruction of Yugoslavia because the alternative was -- as always -- to pay for their own defense. An unacceptable notion, apparently. NATO, in other words, may be the means whereby the United States will prevent the emergence of a rival capitalism. It is one more reason -- as if we needed another one -- to bring this morally and intellectually bankrupt organization to an end.
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Carl