Source: Simon Jenkins, The Guardian.
The eurozone suffers from the same folly that, in the 14th century, saw the Black Death blamed on everything bar its cause.
The coming of the Black Death to 14th-century Europe meant the church needed someone to blame. Since God was exonerated ex officio, the obvious culprit was human sin, though some theologians favoured Mongol hordes, the waning power of Rome, not enough austerity and the alarming junction of Mars and Saturn in Aquarius. No one thought it was just a plague.
The same is true of today's Black Death: the euro crisis. Pundits attribute its woes to wicked debt, insufficient austerity and the need for more power to Brussels. Were Geoffrey de Meaux alive today he would also blame Venus's transit of the sun. As in the 14th century, these wiseacres assure us that redemption will come from giving more control to superior authority and from a more drastic austerity than any yet attempted. National self-flagellation is also much recommended.
As for the euro, like the black rat it gets off scot-free. It survives every debacle as that apogee of dogma, a "good idea in principle". A generation of European politicians have worshipped at its shrine and they are now too old to recant. To be "for" the euro was to be progressive, international, indulgent of the rich and munificent to the poor. It was a symbol of futurist sophistication, waved like a holy rood in the face of crabby, narrow-minded Eurosceptics.
I remember attending an EU conference in Luxembourg in the early 1990s and questioning the aptness of a common currency to a continent of widely diverging economies. A look of horror crossed every face, as if I had questioned the virgin birth and resurrection in one. Could I not understand that a single currency would "level up" the whole European economy to match German efficiency? It would force the weak to become competitive. It was the cement that would bind a European superstate.
Those whom history proves right are warned never to cheer. It is always "too soon to tell". But when I think back to the smugness of those well-fed, unaccountable, untaxed Eurocrats, I am not surprised at their aloofness in still wanting to inflict their dogma on hapless Greece and Spain. How else could the untaxed Christine Lagarde, now head of the IMF, stand up and accuse Greeks of not paying taxes?
A currency fashioned to enrich German exporters and ensnare Mediterranean nations in German credit was never going to work. Single currency zones are fragile, short-lived constructs. Their supranational governors must enforce equalisation of labour costs, or tax and cross-subsidise on a massive scale. It is a short route to Angela Merkel's fatal concept of German commissars in Athens ministries.
From the moment the euro entered circulation in 2002, the eurozone's collapse was only a matter of time. Yet its authors still deny its faults, intoning the need for more austerity and more indebtedness through new eurobonds. At its core remains the heaving ghost of an undervalued deutschmark. The German financial-industrial complex is as dependent on the euro as the US military-industrial is on war.
Humankind, said TS Eliot, cannot stand too much reality. An intriguing debate on the euro took place last week on the BBC's Newsnight, between two American economists, Paul Krugman in London and Ken Rogoff in Harvard. Once the BBC's in-house pundits had departed screeching "inconceivable … catastrophe … disaster", the two men got down to business.
Both conceded that the euro had not worked in practice and that the scale of European debt was unmanageable. It had to be written off or down, or eroded by inflation. Demand had to be stimulated if growth was to return. Then Rogoff headed for the hills. He demanded a fiscally "united states of Europe" to force competitiveness on weaker states. This is the current American answer to every world problem – "if only" everywhere were more like America. For Rogoff, a Napoleonic statism was the only answer to Europe's woes.
Krugman asked what was the point of advocating something that was simply not going to happen. Even if the Greeks next week vote for a pro-bailout government and the Germans tolerate a Spanish rescue, this would not save the situation. The Mediterranean economies were wholly uncompetitive. Spanish wage rates would have to halve. No amount of annual bailouts would save millions from economic strangulation.
Krugman's answer was to accept what has, until recently, been called "unthinkable" – the departure of Greece and perhaps Spain from the euro. They should revert to their pre-2002 status, free to devalue and adjust their prices to reality, as does Britain. They should inflate their way back to growth. Since the same might sooner or later apply to Italy, Portugal and Ireland, a reconfiguration of the euro must be contemplated, warts and all. Code for this is that it be "orderly", which is like a man adjusting his dress before execution. Krugman won the day for realism.
There is no point in pundits moaning about Europe's interdependence, its open borders, its migrants, its grants and its cross-subsidies. They were handled before the euro came into existence 10 years ago. Nor should the euro be blamed for indebtedness as such, though its supposed security made debt more available and its insecurity now makes debt awesomely expensive. The reality is that a quarter of the Greek and Spanish labour forces are unemployed, with other states possibly to follow. The euro stands four square across the path to devaluation and recovery.
This is a dreadful price for any country to pay for the ambitions and dogmas of a generation of European leaders so detached from accountability that no national referendum on the euro would pass. Nor is it a price that another bailout will do more than postpone. There will be no end to these annual fiascos unless debts can be devalued and national economies brought into stable equilibrium. Do ministers really want these weekly summits to go on forever?
To enslave the peoples of southern Europe in perpetual poverty for 10 years of sin and slothfulness under the euro is not just cruel, it is an economic sanction more savage than anything visited on Iran, Syria or Zimbabwe. It is now hurting us all. As the historian of folly, Barbara Tuchman, once said, even intelligent people seem incapable of learning from the errors of the past. The euro was a ghastly mistake, yet no one in power has the guts to say so – let alone make amends.
