Any creative proposal based on a correct diagnosis of the euro crisis has no chance of being accepted, writes JOHN WATERS
A READER writes with a “republican” solution to the euro crisis. He proposes the creation of a second, parallel euro currency, “the type 2 euro”. His initiative, he proposes, would appeal to administrations seeking to treat all their citizens equally – hence the “republican” bit.
His proposal is that, on a designated day, every citizen of the euro zone would wake up €50,000 better off than at bedtime the night before. This money would be created out of nothing – in the same way, as for example, the money used to bail out Anglo Irish Bank, but would be somewhat different, hence “type 2”.
The parallel currency would have the same values as conventional euro but could be used only in two strictly defined ways: to pay off mortgages, or, in the absence of such borrowings, to be placed in special accounts and invested in pensions when citizens reached the age of 70. Type 2 euro could not be used for buying things.
This is, of necessity, a simplistic summary of the idea. My correspondent has already written to the ECB, outlining his scheme in greater detail and disposing of manifold potential queries and objections. I say this to discourage posters from wasting their precious time nitpicking the idea. Believe me, this guy has thought of everything.
His proposal has, however, one major flaw: it is based on a correct diagnosis of the present crisis as relating to the nature and workings of the euro. The type 2 euro solution identifies the problem as an imposition on the individual citizen arising from forces beyond his control: namely, the distortion of private debt by hyper-inflation generated by a dysfunctional currency.
Like any creative proposal for dealing with this crisis, therefore, it has no chance of being adopted in any form whatever.
Normally, in searching for explanations for the failure of imagination in European politics, we need look no further than the block-like heads of European politicians. But here the failure of creativity is rooted not in the usual stupidity but in the self-serving blindness of a generation of politicians that cannot bear to declare its project in ruins and contemplate that it might have to go back to the beginning at the very time when it expected to be taking a lap of honour.
This is the meaning and purpose of the fiscal compact treaty.
Following an uncertain period in which it seemed that the very nature of the euro might come under review, a new climate of normalisation is asserting itself, with the compact as its cutting edge.
Once in place, this measure will confirm that the problems in the euro zone have arisen solely from the recklessness and profligacy of small nations.
The true problem has long been so obvious that the imposition of this fictitious analysis will amount to a miraculous achievement of public indoctrination.
In spite of street protests, universal economistic wisdom and pretty much all the available evidence, the new self-appointed leaders of the EU are now on the point of imposing a self-interested view of the crisis on the entire community.
The fiscal compact is a symbolic ritual designed to put an end to argument. It is analogous to the conjurer’s act of misdirection, by which he distracts the audience from the workings of his trick. In practice the compact will be toothless, since it is illogical to threaten struggling economies – as a way of keeping them in line – with massive financial penalties that can only make their situations worse.
But the act of misdirection is vital to ensure widespread acquiescence in the idea that the core nations of the EU should suffer minimal consequences for the failure of the euro zone project, while citizens of other EU member countries pay the full price.
Germany and France have achieved this impressive outcome on their own behalf by appropriating the levers of the EU and suspending its already weakened democratic instruments, using their newfound hegemony to insinuate that the EU is entirely the creature of German and French philanthropy. Having hijacked the key EU institutions, they have proceeded to bully and intimidate the feeble leaderships of peripheral countries, and where necessary replaced them.
In this the Merkozy initiative has been assisted by the fears and inadequacies of the leaderships of said peripheral nations, and also by inevitable political dynamics governing such democracies, whereby party political rivalry and citizen rage against domestic politicians have occluded the true and complete nature of the problem.
It has been tempting for citizens to place the blame on their own leaders, and this interpretation has been propelled by a short-sighted journalism that contrived to downplay broader, deeper analyses in favour of a cynical populism. Together, these circumstances have ensured the suppression of any possibility of creative solutions.
The forthcoming referendum on the fiscal compact is therefore designed as a salutary drama, in which the message of fiscal discipline will be reinforced in the Irish mind.
When, as is virtually inevitable, the compact is approved by an electorate cowed by fear and lack of other options, the trick will be complete.