Illegitimate birth of the euro

It’s all getting near meltdown out there in the eurozone and the politicians had better come up with something PDQ.  All the talk has been of open-ended ECB funding and/or eurozone bonds (effectively the Germans underwriting the periphery’s debts in perpetuity), which many are saying is the only solution.  The price to be paid in those peripheral countries will be high – loss of fiscal sovereignty, endless austerity and all bowing to Berlin – and the Germans are probably none too enthusiastic about paying off Spanish and Greek debts for ever either.  So nobody wants it and, just for good measure, it’s probably illegal under the EC constitution as well.  Make up or break up, Dave?  The making-up is a non-starter.

But here’s a thing.  Talk to ANYBODY in the eurozone, from Greece to Spain to Finland to Germany, and they ALL want to retain the euro.  Yes, even the Greeks.  What they don’t like of course is the price they have to pay, but nobody has explained to them properly that the two things live together (look at what Syriza has been saying in the Greek election).  The point is that the eurozone lacks democratic legitimacy because the people have never been asked if they support it.  It’s just been rail-roaded through by the politicians and all the people can see is bureaucracy from Brussels and control from Berlin.  The euro, if you like, had an illegitimate birth through the creation of the eurozone.

So here’s my solution to the euro problem.  Ask the people if they want it.  My guess is that the answer will be a very strong yes.  And, whilst they’re being asked, the politicians should explain the price to them – obey the rules, get the budget deficits down, concede fiscal power to the centre, which of course they won’t like. But at least the people can say they’ve been asked and they’ve chosen a path.

Why has this never been done, you might well ask?  It’s because the politicians were afraid the people would say no, of course.  And they would have said (and would today say) no the wrong question, for example, do they want to join the EC (with all the stultifying bureaucracy that accompanies that thought coming out of Brussels)?  But ask if them if they want to keep the euro and at the same time respect their intelligence by explaining what it means and my belief is that you’ll get a resounding affirmative.  I would think it’s a matter of short weeks or months before a bank run in Spain or Greece finishes the whole thing off and then goodness knows what lies ahead.   Get the polling done now and give the euro its legitimacy at last.  It might even mean a few less riots this summer.

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One thought on “Illegitimate birth of the euro

  1. I think it’s a rather fanciful notion that a Greek referendum on Euro membership would somehow endow the whole rotten scheme with a retrospective “legitimacy”. Effectively the Greek nation would be asked to deliver a plebiscite with a gun held to its collective head – more of a Hobson’s Choice than a freely given mandate. Yes – technically the Greek people would have been “asked”, but it would be a gross perversion of the truth to suggest that by dint of a referendum they would have “chosen the path” down which they were being shepherded. Prior events have left them with little choice, although I’m sure a pro-Euro outcome would allow the referendum to be spun in the fashion you suggest – at least to those who are only interested in the cosmetics of democracy rather than the substance. I don’t think the Greek people will be taken in – many who might opt to stay in the Euro will do so reluctantly and with a heavy heart. They fear the collective economic punishment which would follow a default more than the current socially destructive regime of fiscal austerity. If it was “explained” to them properly though perhaps they would use their “intelligence” to realise that the pain of default, though accute, would in the longterm involve less social disintegration than current austerity policies. What is certain is that the Greeks will always recognise the Euro as a bastard – and a German bastard at that.

    Spain currently has unemployment running at 25% (youth unemployment running at a terrible 50%) – no decent humane society should sustain those kinds of statistics for long and an endless regime of fiscal austerity may seem logical to the credit markets and the economists at the ECB but I doubt if the majority of people in Spain will continue to swallow their toxic medicine quite so uncomplainingly. In the long run it might be deemed therapeutic for their economies, but as JM Keynes said: “In the long run… we’re all dead”. Young people need jobs now – not a vague hope of one in ten years time.

    Despite a current tendency towards political apathy (perhaps more so in the UK and Eire than continental Europe) I don’t see many southern European societies remaining supine indefinitely under such pressure. Something has to give and I predict the weakest link will be the Euro (though it may take a lot of civil unrest to finally snap it). National political structures may also be added to the mix – Spains autonomous regions are already refusing to implement many of the cuts to the bloated state sector proposed by the national government.

    There will certainly be no “Euro-Sud” but there might be a renogotiation of a “Euro-Nord” with much closer political integration and loss of sovereignty as the price of continuing membership. Meanwhile, in the Euro dropout club let’s hope that democracy and freedom of speech survive amid the chaos, and that any political consensus moves to a moderate, compassionate Leftist position rather than the extreme right. Let’s also hope that Germany, the ECB and the wider EU have drawn up good plans for the now inevitable transition – I fear that it’s beyond their lumbering unwieldy bureaucracies despite their public rhetoric. Events just move too quickly for them.

    It seems the future will be defined more by anthropology than by econometrics – which is just as it should be.

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