No Reason Appeasers Shouldn't Win

by Geoffrey T. Smith

Wall Street Journal
June 2, 2011

"England has been offered the choice between shame and war; she has chosen shame, and will get war."

Quoting Churchill is the last refuge of the columnist, the ultra-safe haven to which one flees when all alternative forms of verbiage fail. But the parallel between the euro zone's debt crisis and the Appeasement of the 1930s is increasingly inviting. Europe's leaders, given the choice in March between fudge and chaos, chose fudge and look more and more likely to get chaos.

Before going any further, it should be stressed that the stakes are far lower, and, of course, the moral bankruptcy of failing to stand up to Fascism is in no way replicated here. The point of this parallel is that the choices politicians make from one month to the next are often not what they seem at the time; that false or inadequate reasoning leads to policy choices being perceived wrongly; and that what appear to be viable options are not, in fact, viable at all..

This is overwhelmingly an economic issue, and must, as far as possible, be calculated according to the gains and losses realizable, starting from right now. The gleeful I-Told-You-So's of commentators in New York and London don't really add much to the discussion, and if the euro zone should grant them their wish of unravelling in chaos, then they and their economies will live to rue the day.

The choice that Europe and the International Monetary Fund face today is, up to a point, comparable to the choice faced by Chamberlain and Stalin vis-à-vis Hitler and Roosevelt vis-à-vis Japan in the late 1930s. An awful reality—Greek insolvency—will almost certainly have to be faced some time. Can one secure a more favorable outcome in the long term by putting off that reality? And is that favorable outcome worth the reputational and economic cost? In other words, does the end justify the means?

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