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COMMENTARY
December 10, 2011
Digging deeper
When you've dug yourself into a hole, so far down you can't see the sky any more, the answer is to dig faster. You never know, you might come out in China.This is the primaeval advice upon which Europe's politicians are now working: to dig their own grave, gratuitously deep. At 5 a.m. Friday, euro time, they reached a deal to solve the mess created by the imposition of a single paper currency on various incompatible sovereign economies. They will impose uniform budgetary practices throughout the eurozone, thus further binding countries left with too little room to manoeuvre. Or rather, as many as 23 of the 27 members of the European Union resolved upon this grand Summit gesture. All will, according to plan, adopt common labour-market regulations, common corporate tax rates, and so on. All for the sake of saving not themselves, but their common currency. Indirectly, the purpose of the scheme is to save the hides of various politicians, especially that of Nicolas Sarkozy of France, a country about to lose its triple-A rating. And, Angela Merkel of Germany - this fine Prussian lady, Bismarck in a skirt, whose instinct for order was explained to me by a Czech connoisseur. Merkel does not seek German leadership for Europe. Rather, she accepts the Prussian destiny of acting out the principle of regimentation. It is a selfless task. It requires indifference to pain. The count of participating eurozone signatories is uncertain, because several half-signatories have reserved the right to consult their respective parliaments - which is death on any 5 a.m. agreement. Britain has definitely opted out, and generally, the British, Scandinavians, and Central Europeans (i.e. east of Germany) would rather watch Merkel and Sarkozy dig, than fetch their shovels. Which means, they would rather take their risks that the European Commission will not try to punish them. In particular, David Cameron of Britain, by decisively rejecting the eurozone, lost all influence over a commission which, by his own account, has been targeting Britain's financial services industry. Perhaps by 5 a.m. he had forgotten one of the great truths of politics: that hell hath no fury like a bureaucracy scorned. At core, to my mind, untutored perhaps in the finer fiscal arts, but possessed of an impudent common sensicality, we have an attempt to overwhelm Nature. The eurozone will try to create a uniformly "hard" paper currency, by means of budgetary discipline imposed upon countries that have never entertained the possibility of such a thing, over the likely objection of their entire electorates. "Put not your faith in man ... your trust in princes." (I am quoting from one of Europe's founding documents.) Place not your confidence in politicians. Economic arrangements which depend upon the goodwill and continuing good behaviour of the political class, must fail. If you really, sincerely want a "hard currency," that will be accepted across any national frontier, and impose fiscal discipline even where it is least wanted, choose gold. Or, choose some equivalent commodity basket of universally recognized value, beyond the capacity of princes or politicians to manipulate. But as I wrote the week before last, when the present farce was already reaching to its crescendo, Europe's politicians are showing leadership all the same, by grappling directly with their self-created problem. The result they achieve will be the precise opposite of the result intended, but leadership often consists of catastrophic failure. And failure is the great liberator. Had the politicians simply ignored their problem, and hoped for it to go away, it would have begun to solve itself by a more gentle and piecemeal collapse of the euro. Greece, and other countries in similar straits, would have begun eurodeflating of their own accord, having no choice; their debts would be resolved in accelerating markdowns. The Greeks and others would have to adapt to the consequences of past profligacy. They could forget about their pensions. There would be riots, of course, but no one, not even Greeks, can riot forever. Country by country, the euro would have had to be abandoned, usually for experiments in the reintroduction of currencies that could be hyperinflated. Once everyone had had a taste of that, the idea of discipline would be more universally subscribed. This would be, politically, very hard to watch, but such was the old pluralistic genius of Europe. One sovereignty goes down, but another remains standing. They learn what does and doesn't work, from each other. They never previously had all to make the same mistake together. Instead, now, the politicians are working to guarantee the catastrophe will be pan-European. The insupportable euro will now, most likely, come down all at once. And it will take the various other pan-European institutions with it. They may not realize yet, but they are working assiduously towards a future where the European Union solves all of its problems, by ceasing to exist. David Warren
© Ottawa Citizen
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