Wednesday 21 January 2015

The euro and the strange blinkers of power

Now that the eurozone appears to be about to be bailed out, very controversially, by the European Central Bank - I've been looking back through the things I used to write about the euro back when everyone was divided about it.

In the Lib Dem spring conference (or was it the autumn conference) of 2001, I threatened to torpedo my reputation in the party - such as it was - by urging the reps to reject the idea of joining it.  Because, as I put it then: "single currencies tend to favour the rich and impoverish the poor".

They do so because changing the value of your currency, and varying your interest rate, is the way that disadvantaged places are able to make their goods more affordable. When you prevent them from doing that, you trap whole cities and regions – the poorest people in the poorest places – without being able to trade their way out.

I don't say this because I'm bragging - I get enough wrong, heaven knows.  But it is a way of saying that the disaster of the euro was predictable and predicted.  And don't let's be in any doubt about it - the single currency was a disaster which may yet tear Europe apart.

But the really scary bit is the predicted political implications.  This is what I said back then:

"That’s the danger of the euro as presently arranged, and don’t underestimate it. It means success for the cities that are already successful. It means a real struggle for the great Lib Dem cities of Liverpool and Sheffield. It means a potent recruiting ground for the next generation of fascists in the regions that no longer count."

And what do we have all over Europe, and particularly in the unsuccessful places?  The rise of fascism and other varieties of the intolerant right and left.  Jews murdered in supermarkets.  Anti-semitic salutes.  Once again, it was predicted and it was predictable.

So I find myself wondering what it is about the political system that these decisions can be taken like this.  They went ahead with the euro, even though there was no mechanism to transfer wealth between regions that they knew they needed.  And even though the member nations had not met the basic economic requirements.

That was a continental problem.  We might add that our own government at the time invaded Iraq although they knew the Americans were wrong about linking it to 9/11.  They sent our own forces into Afghanistan, under-resourced and under-equipped, desperate to keep up with the Americans, but assuming somehow that - what? - it wouldn't matter because they said it wouldn't.

In fact, I'm been reading a fascinating review of recent books on UK involvement in Afghanistan in the London Review of Books: it turns out that many ordinary Afghans believed the British had arrived to wreak vengeance for their last defeat in 1874 - we were the last nation who ought to have been there, and should have known it.

I must admit I'm confused about all this.  It isn't about 'evidence-based policy', which is another ideological construct designed to avoid political action.  But somehow - the less room for manoeuvre our politicians have, the more they have convinced themselves that they can simply avoid predictable problems simply by making sure they are not discussed.

It is the strange blinkers that appear to go with power.  They have always been there to some extent, but the last decade - particularly under Blair and Brown - they were powerful blinkers indeed.  Yet the euro demonstrates that this was not just a UK problem.

They are also staggeringly expensive - the euro, the bank bail-out, Iraq, Afghanistan have cost us unimaginable sums.  And they are just the tip of the iceberg.  The coalition's treatment of disabled people springs to mind: as long as it keeps out of the headlines, ministers seem to feel it isn't real.

Is it too much to hope that the next government might include politicians who can see clearly, and act on what they see?

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