12 Nov 2011, 3:11pm
economy:
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  • Where are the leaders who will save Democracy in Europe

    Across Europe we are seeing democracy suspended for technocracy. Papandreou in Greece, Berlusconi in Italy, where will the next democratic leader be ejected for the sake of holding the party line on the euro?

    For several decades in the West we have become soft and failed to adapt our democracies to modern conditions of a more interdependent world. At the moment we seem to favour suspending elected leaders for imposed ones who can press through ‘reforms’. In the immortal words of Herman van Rompuy

    Rompuy to Italians: You need reforms, not elections. Italians to Rompuy: Remind me again, when did we vote you in?

    when speaking in Florence, “the country needs reforms, not elections

    Now Herman Van Rompuy may well be right, but he’s right in the wrong way, because it’s not his call. It is the citizens of Italy to make that call, thanks very much. In the end if the Italians want to make a right cod’s of their economy, that’s their prerogative. Obviously if they want to borrow other people’s money then there are limits to what they can do, but the decision should always rest with the Italians. They could use reform. They could do with not electing septuagenerian bunga-bunga hosts again and again, but in the end if that’s really what they want to do then so be it.

    As for Rompuy, he begs the question Josef Stalin asked about the Pope’s power base. “Where are his divisions?”

    Clearly something has gone wrong with democracy in the modern world, and it’s not just limited to Europe. Politicians have discovered they can get voted in more easily by promising more than they can deliver with the resources they can tax. So they simply bung this on the national credit card and hope they’re in the right place when the music stops. Maybe we need to work out a new form of democracy, where a second chamber is voted in for ten year terms, but half are up for re-election every five years. This could be tasked with balancing the long term economic future over the multi-parliament term, things like pensions and energy/pollution/climate change that require thinking over decades rather than years, and controlling say 25% of the tax take. Plus a British version of the Stability and Growth Pact to go into the Constitution that we don’t have. The European SGP isn’t worth the steam off a cup of tea because of the aforementioned lack of divisions to enforce it, but on a national scale it would work well – or highlight that something irregular was going on.

    One way or another, we need to improve the way democracy interacts with the long and the short term, so we don’t overburden our grandchildren with the debts to pay for jam today. Outsourcing the problem to unelected technocrats who can dictate solutions without having to face the poor saps that will be working to resource the solutions is a very bad alternative.

    As a callow youth I voted for Britain’s continued membership of the EEC in 1975. Faced with the same information I’d do the same again – the freedom of movement and trade I am all for. However, I am not for the United States of Europe. Nor, it seems, are many of those even in the Eurozone. There isn’t enough common cause between the Germans and the Greeks for the Germans to want to sponsor the difference in lifestyle. I heard enough of my grandmother in Germany grousing about the extra taxes levied on her pension to sponsor the unification of  West and East Germany (she was from West Germany). They just ain’t going to do it for the Italians, and Spanish, and the Portuguese. Yes, Germany has benefited from having Southern Europe as ballast to keep the Euro down a little. And the Germans probably did loan a lot of what Southern Europe owe, and they aren’t going to be getting that back. That’s capitalism for you.

    It wasn’t apparent at the time to many people, but harnessing the disparate cultures and people of Europe to a single currency was going to cause stresses where they didn’t match up with each other. They got away with it for 10 years, but the tide went out with the credit crunch and we could see who was caught short. It’s time to accept the mistake, and then back off. Carefully. We don’t have to then throw our toys out of the pram and dismantle the Common Market, as some of the EU technocrats opine, let’s hear it once again from Herman van Rompuy:

    Let us be clear: we will not “prune” the Eurozone to a more selective club. That would be contrary to the letter and the spirit of the European political pact, as embodied in the Treaties. If the Eurozone’s integrity would not be preserved, one should not take the continued functioning of the Internal Market for granted.

    Herman, old boy, sometimes there are no good options. I would rather be free and skint than enslaved and wealthy. If we need to suspend the working of the Internal Market while the eurozone sorts itself out, then so be it. Far better to do that, than to suspend the working of democracy while the technocrats ‘fix’ the economy. For the record, the EU transcript of the text of Herman’s speech is here. There is a lot of good stuff, and I came a way with a greater respect for van Rompuy’s intelligence. However, leading people is not all about intelligence. You have to take people with you, and here the EU leadership seem desperately out of their depth.

    Finally, lest we forget what happens when we prize efficiency over freedom, the last time there was humongous economic turmoil in Europe efficiency was brought to bear on the subject with extreme prejudice by one of the most capable of European nations. The trains did run on time but a lot of people died, and this sort of thing happened

    German troops march through the Arc de Triomphe, Paris, August 10th, 1940

    More recently, Germany has also had experience of a tranferunion, when West Germany raised taxes to buy out the East German mark at par, vastly overpaying by about three to one. The cost of unification caused some grumbling in West German taxpayers who paid for it, and at least there was common cause, family and historic ties and a common language. Inflating the money supply or continual transfer of money to Club Med may well fix the probelms of the Euro, but unique among European nations, Germany had experienced the pain of both courses of action before.

    So before the technocrats of Europe badger Angela Merkel to pay up or to permit the ECB to become the lender of last resort that the eurozone so desperately needs, they should remind themselves how it was that the Germans became so good at running an economy, indeed pulling themselves out from the ashes of WW2, with a big hat-tip to the statesmanship of the Marshall Plan.

    It is because they experienced what happens when the government borrows on the never never and prints money to make up the difference. I heard my great-grandmother describe what life was like then, and this scar runs deep within the German psyche, that you just don’t print money because no good will come of it.

    There are some kinds of knowledge that are won at great cost through experience. This is why the Germans, who are the only nation in the Eurozone that can credibly resource a stop of the bloodletting, is unlikely to release the dead hand of historical experience and go ‘hell, yeah’ to the technocrats advocating a transferunion or ECB unlimited bond purchases.

    The technocrats should be careful what they wish for. It is easy for technocratically designed utopias to become dystopias when the simplistic technocratic assumptions about people get smashed on the rocks of human nature in its irrational form.

    We need leadership that can acknowledge past mistakes and seek an orderly solution to the strains ripping the eurozone apart. Yesterday, on the 11th hour of the eleventh month, we held a two minutes’ silence in the memory of the Fallen on all sides. I hope that we do not hear the sound of gunfire in Europe in my lifetime, all because some jumped-up unelected twits couldn’t let go of their idea of the United States of Europe, and force the Germans to impose Germanic austerity on Club Med, which will cause horrific social discord and people will fall for the siren song of ‘strong leadership’. Let’s just all accept we cocked up here, roll back to the last known good state and take things slowly forward at their own pace.

    The flame of self-determination and democracy is flickering in the wind of technocratic expedience. It needs some hands put around it and some TLC. We’re going to be a lot poorer in future, but we will still have a very good quality of life. Let’s try and make sure we are still free to determine our future, even screw it up royally like the Greeks, rather than be enslaved to economic expediency.

     
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