• What Brexit Is Really About

     

    The current turmoil in British politics, with leading Cabinet members resigning over the progress, or lack of it, in the talks over Brexit, will have left many readers in this part of the world confused as to what it is all about. Any attempt to clarify the issues will, of course, be greatly influenced by the views and prejudices of the person making the attempt, but what follows is my explanation – based on my close involvement in the unfolding saga over many decades.

     

    The modern story must begin, of course, with the unexpected result of the referendum conducted in Britain in 2016, when the British people – asked if they wanted to remain in the European Union – replied with a narrow but clear majority for leaving. That verdict on over 40 years of membership no doubt owes much to the fact that, as I and many others had argued at the time, the original deal offered to Britain was a very bad one.

    The Common Market, as it was then known, had been formed on the basis of a Franco-German deal, which offered the French the huge advantage of the Common Agricultural Policy in return for free trade in manufactured goods which was of great benefit to German manufacturing. The deal was so advantageous to those two original members that General de Gaulle was determined to make it stick and therefore vetoed Britain’s belated application to join until it had been concreted into place.

    The result was always going to be a disaster for Britain (as I could see by virtue of a birds-eye view from my role, first, in the Foreign Office and then from my desk in the British Embassy in Brussels); instead of a rational trading pattern in which they imported efficiently produced food and raw materials from countries that offered them in return preferential treatment for British manufactures, the British taxpayer was required to subsidise inefficient French agriculture and then to pay again as a consumer by way of higher food prices – thereby negating Britain’s one major cost advantage as a manufacturing economy – while British manufacturers lost their preferential markets and had to compete in the same market as powerful and efficient German producers.

    The outcomes were inevitable (although ignored by those enthusiasts for whom “Europe” had become the promised land). The British “trade gap” widened alarmingly, British manufacturing was decimated, the British taxpayer continued to pay large sums into the EU coffers, and Britain’s links with its traditional trading partners were weakened. These burdens bore most heavily on working people who found, in addition, that their employment prospects, available housing, and public services were greatly reduced and weakened by the influx of migrants from eastern Europe who were keen to exercise their right as EU citizens to settle in the UK.

    The outcome of the referendum should not really, therefore, have come as a surprise – but it did. The bien-pensants – those who “know best” – were greatly attached to the notion of a Europe that carried with it a kind of cultural cachet, and they were remarkably insouciant about the price that was being paid. They were reluctant to accept the result of the referendum which they attributed to the “ignorance” and “racism” of those who “didn’t really understand” what a wonderful ideal “Europe” (which they conflated with the particular arrangement known as the European Union) really was.

    They therefore set about doing all they could to reverse the result, through a sustained campaign (particularly in the pages of The Guardian, which gave up all pretence of impartiality on the issue) to hold a second referendum in which the “mistake” could be rectified. In doing so, they gave of course great comfort to the EU bureaucracy which was encouraged to believe that Brexit wouldn’t really happen.

    That bureaucracy of course had its own agenda. They were terrified that other countries – like Greece and Spain, even now Italy – that had suffered terribly as a result of the undemocratic and banker-driven intransigence of EU rules and institutions might also want to leave. They determined therefore to show other backsliders that exit was not an easy option.

    The result? The “Europe” held up as the key to a wonderful future proved to be remarkably impervious to the ideal of unity and more concerned with protecting its own structures and institutions than with building a cooperative arrangement with a departing Britain. The combination of a misguided rearguard action at home and a determination in Brussels to punish the British for their temerity in leaving has made the negotiation of a sensible arrangement almost impossible.

    If these problems are to be overcome, the answers are to be found at least as much in Brussels as in Westminster and Whitehall. Those with hearts and minds that are big enough could take the Brexit talks as an opportunity to build a new “Europe” that could fix its many current failings by becoming more democratic and less wedded to the neo-liberal prescriptions of its central banks and bureaucracies. But, on the evidence so far, sadly, that seems unlikely and a goal that had seemed so inspiring looks certain to become mired in its own short-sightedness.

    Bryan Gould
    11 July 2018

     

  • Why Does the Left So Often Disappoint?

    Political commentators have long been puzzled by the fact that, right across the globe and for several decades, the political left has been in retreat and – more than that – has apparently been unable to mount any significant challenge to the growing neo-liberal hegemony which has dominated western democracies since the 1980s.

    Many attempts have been made to find an explanation for this phenomenon, which has been marked not only by the difficulty that politicians of the left have met in getting themselves elected, but also by their apparent failure – when they are elected – to take the opportunity to put alternative policies in place.

    Even on those relatively rare occasions when the left secures victory, it seems that it is delivered only when the voters tire of an incumbent right-wing government and, even then, only when the left assures the voters that it will behave in a way that is little different from what its right-wing rivals would have done.  The consequence is that, when the left finally is able to form a government, it seems to feel compelled to provide as good a surrogate for a right-wing administration as it can muster.

    The stance usually adopted by left governments is that they accept that they must operate within the framework of policy and principle that they inherit and that no challenge to existing power structures is either possible or desirable.  It is believed that any attempt to make such a challenge would be a recipe for disaster and a guarantee of electoral rejection. This reluctant acceptance of the orthodox is the classic attitude of the unconfident outsider – an indicator of how much the left accepts the right’s narrative that the right are where they naturally and properly should be – at the centre – and that the left, by contrast, are – or at least run the risk of being seen as – literally eccentric.

    The consequence is that the left limit their ambitions to administering essentially the same set of policies, but with – it is hoped – a few tweaks that will show the voters that a left government will be more competent and compassionate.  Greater competence and compassion are of course worth having, but the voters quickly recognise that nothing much changes and are easily persuaded that it makes more sense to entrust those essentially unchanged policies to the right-wing parties that positively believe in, and proselytise for, them.

    Left politicians, in other words, are – or at least feel themselves to be – ill-equipped to argue for, and to deliver, a serious alternative to the neo-liberal orthodoxy or a serious challenge to existing power structures.  The most they feel able to offer, if we are lucky and provided they do not positively endorse their right-wing opponents’ support for the “free market” (as the Blair government in the UK did), is some minor mitigation of the free market’s excesses.

    One of the central issues – in fact, the central issue – in democratic politics is, who should run the economy and in whose interests?  Economic policy therefore becomes the most important political battleground, where the expected differences in approach are likely to be at their most acute; it is therefore disappointing that it is precisely here that left politicians are most ready to throw in the towel.

    It is not too much to say that it is precisely on matters of economic policy that, time and again, and in country after country, elections are lost – lost by a left that has no confidence in its ability to resist the assaults of the right.  The left constantly finds itself on the back foot, unable to answer convincingly questions about how it can responsibly manage the government’s finances or struggling to explain how they intend to finance their spending plans or as to how they can avoid raising taxes if they are to fulfil their promises.

    The right have available to them, in other words, a fail-safe strategy for wrong-footing their opponents.  Not all right-wing leaders are quite as direct as New Zealand’s former Prime Minister, John Key, who won an election when he shouted over and over again in the main television debate of the campaign – and in his best barrow-boy fashion – “show me the money”.  But the strategy is always the same, whether or not delivered with more or less decorum.

    The basis of the strategy is a piece of sleight-of-hand that politicians on the left seem incapable of recognising, let alone exposing or countering.  Right-wing politicians – and Mrs Thatcher was an arch-exponent – always proceed on the basis, both explicit and implicit, that running a country’s or a government’s finances is just the same as running a household budget.  They know that most people will instinctively accept that this is so – and the rest is then easy.

    As soon as the proposition is accepted, or at least becomes common ground, it is game over.  The questions then come thick and fast – “how will you pay for it?’ – “where is the money to come from?” – “won’t you have to raise taxes to do all the things you say you will do?”  And so too the nostrums  – “you can’t spend what you haven’t got” and “you must keep within your means” and (a Thatcher favourite) the frequent parallels drawn with the prudent housewife.  The average voter will nod sagely when each of these points is made; left politicians, struggling to find answers, are left looking incompetent at best, dishonest at worst.

    This means that when the left does somehow overcome the odds, and wins power (perhaps by promising not to “tax and spend”), they spend most of their time trying to prove that they are just as cautious and “responsible” as the most doctrinaire of free-marketeers.  Ministers of finance in left governments, from Michael Cullen in New Zealand to Gordon Brown in the UK, have almost always staked their reputations on “earning the trust” of the business community, thereby foregoing the possibility of implementing a left programme that would serve the interests of working people.  Grant Robertson, Finance Minister in Labour’s incoming New Zealand government, has committed himself in exactly these terms.

    So, the left – not daring to say that running the country is absolutely different from managing a family budget – is always pushed on to the defensive.  Yet the two are indeed quite different, and in a way that the left seems scarcely to understand, let alone try to explain, or even less, act upon.

    Why are they so different and where does that difference lie?  Because a household, or, for that matter, a business or individual has, as we all know, a defined and limited income.  They must always tailor their expenditure so as to stay within the money available to them.  If they spend more than they should, they will have to borrow, and – if they cannot repay their borrowings – they will be bankrupted.

    A country – a sovereign country, at least – is, however, in a quite different position.  The one thing it need never be short of is money.  It is in the end the government of that country, usually through the agency of the central bank, that decides how much money there should be in that economy.  There may be all sorts of inhibitions on what a government can do, but we should never – and nor should left ministers – accept the excuse that “there is not enough money”.  Governments can always create the money that is needed – that is, indeed, one of their main responsibilities.

    There are of course consequences – some possibly adverse – of creating more money and it should not be done without assessing what those consequences might be.  The usual constraint is thought to be that creating more money is likely to be inflationary, and will therefore lead to a devaluation of the currency – and that is especially undesirable for a country, like New Zealand or the UK, that is perennially living beyond its means and consequently has to borrow, since repaying loans in a depreciated currency is never easy.

    But the doomsayers’ constant warnings of this kind now need to be looked at in the light of important recent developments.  The story starts, at least in its most recent form, with the now almost universal recognition that the vast majority of money in circulation is not – as most people once believed – notes and coins issued on behalf of the government by the central bank, but is actually created by the commercial banks through the credit they advance, usually on mortgage, and using bank entries rather than cash.

    The truth of this proposition, so long denied, is now explicitly accepted by both the Bank of England and the German central bank, and was – as long ago as 1994 – explained in a letter written by the New Zealand central bank to an enquirer, and stating in terms that 97% of the money included in the usually used definition of money known as M3 is created in this way by the commercial banks.

    The truth of this explanation is endorsed by the world’s leading monetary economists – Lord Adair Turner, the former chair of the UK’s Financial Services Authority and Professor Richard Werner of Southampton University, to name but two – and they are joined by leading financial journalists, such as Martin Wolf of the Financial Times.

    The second development was the use by western governments around the world of “quantitative easing” in the aftermath of the Global Financial Crisis.  “Quantitative easing” has usually (and pejoratively) been termed “printing money” but the term applied to it has now been sanitised, necessitated by the fact it was new money created at the behest of the government and applied in this instance to bailing out the banks by adding it to their balance sheets.

    These two developments, not surprisingly, generated a number of obvious questions – except, it seems, in the minds of our leading politicians.  If banks could create – year in, year out – billions in new money for their own profit-making purposes, (making their profits by charging interest on the money they create), why could governments not also create money, but for public purposes, such as investment in new infrastructure and productive capacity?

    And if governments can and do indeed create new money through “quantitative easing”, why could that new money not be applied to purposes other than shoring up the banks?

    The conventional answer to such questions (and one apparently and unthinkingly accepted by left politicians) is that “printing money” will inevitably be inflationary – though it is never explained why it is miraculously not inflationary when the new money is created not  by the government but by bank loans on mortgage, or is applied to bail out the banks.  Those who support the status quo, and who want to inhibit a left government from enlarging the role of government, are of course more than happy to perpetuate this useful cautionary tale.

    But, in any case, the great economist, John Maynard Keynes, had long ago explained that new money could not be inflationary if it is applied to productive purposes (like investment capital from any other source) so that new output matches the increased money supply.  Nor is there any reason, Keynes said, why the new money should not precede the increased output, provided that the increased output materialises in due course.

    These arguments are borne out by practical experience.  President Roosevelt used exactly this technique, in the face of conventional opposition, to boost investment in American industry in the couple of years before the US entered the Second World War. The substantial increase in American industrial output as a result was the decisive factor in equipping the Allies to win the war.

    The great Japanese economist, Osamu Shimomura, (who is virtually unknown in the West), then took the same approach in advising the post-war Japanese government on how to re-build a Japanese industry devastated by defeat and nuclear bombs.  The result?  The post-war Japanese economic and manufacturing miracle.

    Today’s Japanese Prime Minister, Shinzo Abe, is a follower of Shimomura.  Shimomuran policies, re-applied today, have Japan growing, after years of stagnation, at 4% per annum and with minimal inflation.

    And in New Zealand, the great Labour Prime Minister of the 1930s, Michael Joseph Savage, created new money with which he built thousands of state houses, thereby helping to bring an end to the Great Depression in New Zealand and providing decent houses for young families (including the one I grew up in).

    And ask yourself a simple question.  When, during the Second World War, Britain was being assailed from sea and air by Nazi forces, was the huge effort being made in British factories to build the tanks and planes and ships and guns with which to repel the invader called off for lack of money?  And if not, where did the money come from?  Or was it just created because it was needed?

    It is the incomprehension of, or rather, the refusal to comprehend, these precedents and the views of experts and braver and better informed leaders elsewhere and at other times that is the most damaging inhibition to the ambitions of left leaders across the globe, and especially in countries like the UK and New Zealand.  If they cannot bring themselves to understand how money is created, and in whose interests it is done, they will never escape the “household fallacy” and they will always be on the back foot in the battle for public support.

    Worse, since they appear to accept the legitimacy of the right-wing demand that they must explain “where the money is to come from”, they are always held back from doing what they seek election to do.  And, even more importantly, their failure to understand the role of money means that they are never able, however radical they may wish to be, to challenge the most important power structure of all – the power to create money that lies in the hands, under current and long-standing policies, of those who know how to use that power to advance their own interests.

    Those interests are those of asset-holders and speculators.  The status quo – one that the left seems so reluctant to challenge – is one in which monetary policy is entirely left in the hands of the banks to deliver.  The commercial banks are allowed to create virtually all the new money in the economy, and the rate of growth in the money supply is regulated only by its price – and that in turn is decided by another bank through the Reserve Bank’s power to adjust the Official Cash Rate.

    Monetary policy currently determines therefore  not only how money is created – that is, by the commercial banks – and sub-contracts (beyond the reach of democratic control) to another bank the power to decide the rate at which it is created.  But it also has a major influence over the purposes to which it is put – and those purposes are not those that would promote better productivity and higher wages, but are those which offer, by underpinning and lifting asset values, untaxed capital gains to rentiers and speculators.  At the same time, the productive sector constantly has the odds stacked against it by the consequences of asset inflation such as the overvaluation of the currency.

    The bias in such a policy is surely evident.  It ensures a significant and virtually constant asset inflation (mainly in housing but also in other real property and in share values) and greatly distorts the economy by diverting the greater part of new money into the accumulation of assets and speculation rather than into new productive capacity.

    By requiring higher interest rates than would be necessary if new money creation were not proceeding at such a rapid rate, it imposes a further disincentive to investment and ensures, as “hot money” pours in from overseas to take advantage of high interest rates, a damaging over-valuation of the dollar that further handicaps our exporting industries.  It is, it seems, this double-whammy – so damaging to our exporters but essential we are told to “earning the trust of business” – for which the left is apparently persuaded that it must abandon its ambitions for a more productive and fairer economy.  Surely the “business” (both sides – employers and workers) whose interests matter most are our producers, manufacturers and exporters.

    Little wonder that the share of the economy accounted for by wages has fallen, whereas that accounted for by profits has risen. The successful obfuscation practised for decades as to how, by whom and for what purposes money is created has allowed monetary policy in its present form to serve as a vital bulwark for the rich and privileged against the ability of democratic politics to bring about a fairer distribution of wealth and power in our society – yet it was precisely that purpose that was sought by those who fought for our democracy in the first place.

    Left leaders, in other words, may be ready to fight the political and electoral battle but they have always shied away from taking on the real battle – that between money power on the one hand and democratic principles on the other.  In a democratic country, there should be no question as to whose interests should be served by the state’s power to create money.

    A left government that created money for productive and infrastructure purposes could revolutionise the country’s prospects, by serving the whole country’s interests, rather than those of the already rich.

    A “lack of money” should, in other words, never be accepted as a valid excuse for inaction by a government.  There may of course be other constraints – shortages or deficiencies of raw materials or skills or technology, or of markets for what is produced – and there may be social or environmental factors to be taken into account, but none of these does more than demonstrate how important it would be that money creation by government should be aligned with an agreed industrial strategy.

    Money is a man-made construct; it does what we want it to do – and, in a democracy, that should mean that it enables those outcomes that serve the wider interest.  Money is, or should be, merely an enabler, a facilitator.  As the eminent economist, Ann Pettifor, has observed, “we can afford what we can do.”

    It is the failure to understand these simple truths that has disabled the left.  They have allowed themselves to be ensnared by the spider’s webs spun by their opponents, and they have lacked the will and intellectual fortitude to disentangle themselves.  Far from debunking the fairy stories, they have even been half-convinced by them themselves.

    Democracy is intended to place the power of government in the hands of the people.  That power includes the ability, and the responsibility, to create the money that is needed to achieve the people’s purposes.  When the left realises the truth of this, they will have taken a major step towards making democracy a reality.

    Bryan Gould

    18 October 2017

     

     

  • The Truth about Brexit, As seen from New Zealand

    It is very hard, at 12,000 miles distance, for Kiwis to get a good handle on the Brexit issue – particularly if their source of information is a newspaper like The Guardian, the self-appointed standard-bearer of the Remainers’ cause.

    You would be hard put to find a Guardian front page over recent months that did not carry at least a couple of anti-Brexit stories, predictions of Brexit disaster, and exhortations to Remainers to campaign to reverse or sidestep the referendum decision.

    Those unwise enough to be guided by this unbalanced coverage would conclude that Brexiteers were misled by lies and propaganda, were motivated by bigotry and racism, and are already repenting in large numbers their earlier decision.

    There is no hint of the many perfectly rational considerations that led Brexiteers to vote as they did, or of the fact that recent polls show that opinion since the referendum has moved to confirm further the Brexit decision.  Guardian readers are instead encouraged to believe that the only rational position to take is to stick with “Europe”, come what may.

    Sharp-eyed readers will immediately recognise the quotation marks around “Europe”.  For the Remainers, “Europe” is equated with the European Union.  How, it is asked, can Britain turn its back on “Europe”?

    The European Union, though, is not “Europe” but a particular political and economic construct which represents only a fragment of what Europe really means, both to Britain and to every other European country.

    The Common Market itself was merely a trade deal, originally struck between France and Germany – admittedly, with the high-minded and worthwhile purpose of binding the two countries together so that they would not plunge Europe into yet another world war.

    The deal itself may have been high-minded but it was also hard-headed; it represented a trade-off between the French interest in protecting their inefficient agriculture, and the German interest in tariff-free trade for their relatively efficient manufacturing industry.

    The former goal was secured by the hugely expensive Common Agricultural Policy and the latter by the commitment to industrial free trade within a customs union.

    The British were allowed to join only once these goals were set in concrete.  The Common Market could not have been more inimical to British interests.  It required the British to give up significant competitive advantages; first, their access to efficiently produced Commonwealth food which made possible a cheap food policy at home – and therefore lower industrial costs – and, secondly, their preferential markets in Commonwealth countries for relatively expensive British manufactures.

    And so it proved in practice.  British taxpayers found themselves subsidising inefficient French farmers, British consumers had to pay higher food prices and therefore required higher wages just to stand still, and British manufacturers and their workforces faced lost output and jobs as they were outgunned in their own market and in Europe by the post-war revival of German industry.

    By the time the referendum opportunity came, voters were fed up with high food prices, with lost jobs, with a trade deficit that threatened the destruction of British manufacturing, and with the seemingly unstoppable inflow of cheap labour from Eastern Europe.

    Most of all, they wanted to regain control over their own affairs – to reclaim the self-government and democracy that their forefathers had fought for, often against the threat posed by European despots.

    These were all sensible sentiments, underpinned – as the Guardian and other organs of received wisdom would have it – by the sense ordinary people had that their concerns were simply brushed aside by those who not only “know better” but were “doing better”.

    On this view, the Brexiteers were motivated by ignorance and grievance, and had failed to understand the argument.  The way to remedy these failings, it is asserted, is to “listen to them more”, but that mysteriously seems to mean that it is the Brexiteers – best described, it seems, as cretins and bigots – who should listen more carefully so that they can be enlightened as to how they got it wrong.

    We in New Zealand at least have the chance to make up our own minds.  We shouldn’t have much trouble in understanding why our British cousins prefer to run their own affairs and why, having made an important decision, they should want to stick to it.

     

    Bryan Gould

    16 April 2017

     

     

  • Religious Fervour Can Be A Bad Guide

    When Tony Blair first came to my attention, and I brought him on to the Front Bench as a promising young MP, he gave no sign of religious fervour.  Like many others, therefore, I was surprised when he later revealed the strength of his religious beliefs, and the part they seem to have played in some of the more momentous decisions he took, not least over the decision to invade Iraq.

    Some of his critics have claimed that his religious faith takes a particular form, in that he suffers a Messiah complex that impels him to see himself as the central figure in any great issue of the day.  If that is so, then he seems to be at it again, with his announcement that he is prepared to offer himself as the saviour of the remain campaign, and ready to lead the lost tribes back to the EU’s promised land.

    The immediate response to his easy assumption that his renewed intervention will prove decisive is to wonder why it should be any different this time.  His persuasive skills seemed less than fully effective the first time round, during the referendum campaign; there were even those who feared that his endorsement of the remain campaign might actually have been counter-productive.

    My purpose, however, is not to speculate as to whether or not there will be another round at some future date, and – if so – what part Tony Blair might play in it, but rather, to point up an impact he is sure to have on the critical situation faced by the British people right here and now.

    As we are constantly told, the Brexit vote will require a prolonged and difficult negotiation between the UK and our former partners in the EU.  Much will depend on the attitudes taken by the negotiators on either side as to whether Europe – whose fortunes are supposedly so dear to the hearts of so many remainers – will emerge in good order, with relations in good shape, and with a constructive future before it.  Each party will nevertheless, no doubt, strive might and main in the search for an advantage.

    In these respects, the stance of our European partners will matter just as much as our own and, on that score, the omens are not promising.  The prevailing attitude of leading EU figures seems to be that the UK must be made to pay a price for our temerity in deciding our own future and that there will be no easy deal or constructive relationship as the former partners ride off separately into the sunset.

    This attitude is usually explained and excused by its supporters as a necessary piece of self-protection, for fear that otherwise others might also be tempted to leave the club – so much for any thought that lessons might be learnt so that the future health of European cooperation might take priority over the immediate and particular requirements of the cabal that currently runs the EU.

    But what this certainly means is that the EU negotiators will be looking intently for anything that could be exploited in the negotiations – for any weakening of the British position or any lessening of their resolve.  Any suggestion from within the UK that the Brexit decision might be reversed or that opinion is moving in favour of remain will be meat and drink to those engaged, from the other side of the table, in trying to nail us to the worst possible deal.

    Never mind that the polls seem to suggest that any movement in opinion since the referendum has been to confirm the Brexit decision.  When a former Prime Minister proclaims his readiness to lead an uprising in favour of reversing Brexit, the EU negotiators are bound to sit up and take notice and to redouble their efforts.

    There is, in other words, an unfortunate shared interest between the EU at the negotiating table and the remainers at home.  Both want the UK to end up with a bad deal, both pour encourager les autres in Europe, on the one hand, and to persuade British voters to re-consider on the other.  The sad truth for remainers is that some of their leading champions are not only campaigning to negate a democratic decision at home but are acting against our national interests in a crucial negotiation abroad.

    It is in that precise context that Tony Blair’s intervention should be seen.  Whether deliberately or carelessly, he seems happy to give comfort to those who would do us down, and to increase the chances that the UK and the EU will part on bad terms, following a bad-tempered negotiation, and to their common disadvantage.

    Religious fervour can be a dangerous and uncaring guide and taskmaster.  When our self-proclaimed leaders take sides, it’s good to know whose side they are on.

    Bryan Gould

    20 February 2017.

  • Who’s for Paella?

    Amidst all the wailing and tearing of hair and gnashing of teeth on the part of those who bemoan the UK’s decision to set its own course with Brexit, how many of those who regret the apparent breach with “Europe” have paused to consider the real identity of the “Europe” they seem to hold so dear?

    To hear the way they tell it, the “Europe” they long for and feel such affinity with is the fons et origo of all that is good about our culture and civilisation.  “Outside” this “Europe”, we will apparently be cut off from, and disqualified from enjoying, European food, art, music, literature and architecture – no more than a few lonely offshore islands, devoid of anything approaching  European culture and unable to claim to have contributed anything to it.

    I recall seeing during the referendum campaign a Facebook posting, from an emotional remainer, of an attractive picture of a paella, with the caption “And they say we should leave Europe!”  Oh, the sophistication of the argument!  No wonder mere plebs had trouble following it.

    The truth is, of course, that British involvement in Europe has been with us for centuries – a multi-way traffic of great value to all parties, a continuing contribution from all sides to the continuing warp and woof of the fabric of European civilisation, and of particular value at critical moments in our common history when British intervention has been especially significant.  As part of that Europe, Britain is not about to leave and British involvement is unlikely to cease any time soon.

    The “Europe” whose loss so many appear to fear is not, in other words, the Europe of which we have been a part for centuries, but the European Union or EU – a quite different animal that is merely an economic arrangement, originally framed on the basis of a Franco-German deal to put together a Common Agricultural Policy to suit inefficient French agriculture and free trade in manufactures to suit efficient German industry.  This different animal has unfortunately grown to display an increasingly mangy appearance.

    Yes, it is true that the original impetus towards what became the European Union was the noble and commendable aim of saving Europe from yet another re-run of the German attempt to dominate the continent by military force.  But so self-congratulatory has been the legend created around this deal that it is virtually no longer possible to identify or even remark upon what has been the actual, and unfortunate, outcome.  The “European ideal” precludes, it seems, a discussion of anything so indelicate.

    When the Second World War ended, the victors were determined to avoid the mistakes made after the First World War, and went to great lengths to welcome Germany back into the comity of civilised nations; and they eventually went further, by ensuring that the divided nation was reunited so that the full weight of a united Germany’s economic success could be brought to bear.

    The deal the Germans were offered under the EU was that they should restrain themselves from future adventures on the condition that they would be free to exert such economic power as they could muster.  The Germans magnanimously accepted the arrangement.

    We need speculate for only a moment as to the different Europe we would all now live in if victors and vanquished had swapped identities.  Fortunately for us, it was the far-sighted victors of 1945 who ensured that, with the exception of regrettable episodes of great violence and cruelty, as in the Balkans, Europe has enjoyed substantial peace and prosperity in the post-war period.

    The outcome of their efforts, however, has not been quite what they had presumably foreseen or intended – a Europe at ease with itself.  Instead, they have brought about a thorough-going German hegemony – a greater German economy calling the economic shots across Europe – without a shot being fired.

    No student of today’s European Union could or should fail to notice the German domination of the European polity.  Some – like the Greeks and other weaker economies – have had particularly good reason to take note.

    It is German economic dominance that dictates policy to EU countries and institutions – and, for the Greeks, the consequences have been disastrous.

    Encouraged by the apparent security of euro membership to borrow, the Greeks found themselves unable to repay when the debts were called in.  Successive bail-outs have allowed them to ward off forced departure from the euro zone and bankruptcy, but the savage cuts demanded by the creditors have created emergency levels of poverty and unemployment and have so weakened and reduced the size of the Greek economy as to make it impossible for them to service or repay the borrowings.

    The usual remedy of devaluation for such a plight is simply not available to the Greeks, for as long as they are part of the euro – and the masters of the euro are determined to allow no backsliding.  All potential escape routes are closed, and the Greeks have been hung out to dry.

    The Germans accept no responsibility for their initial eagerness to lend and they continue to rack up huge trade surpluses which by definition must be matched by deficits on the part of smaller and less developed economies.  But the Germans insist that there can be no debt relief.

    The only options offered the Greeks are further “structural reforms” – a euphemism for “free-market” measures designed to increase privatisation and provide opportunities to bargain-hunters – and further reductions in social costs such as pensions which have already been cruelly slashed below survival level.

    The “Europe” in which Greece – and other weaker economies, especially in Eastern Europe – find themselves struggling to survive is the same “Europe” as we are invited to lament.  It is a Europe prepared to inflict the most draconian of austerity measures on some of its most defenceless citizens, in the interests of a pitiless application of financial orthodoxy and at the behest of its dominant economic power whose self-defined interests are given priority over all else.

    Perhaps it’s time we cast off our rose-tinted spectacles.  Let’s just enjoy the paella.

    Bryan Gould

    7 February 2017