Why the British got things right.

Hey, remember the European Common Market? It worked pretty well, didn’t it? The deutsche Mark was king of the hill; the French had their $0.14 cent little franc to keep them content and quite French.  The Italians had the craaaazy lira; the Spanish their pathetic peseta.  With all the currency differences, no country experienced anything like what is happening today.  The way it used to work is like this: President Papapapapapdopodopolous, to keep his re-election secure, promises (and delivers) a 30 hour work week along with a retirement age of 50.  The next President is faced with a mounting deficit and bankers beating at his door.  So he does what any protector of capitalism would do: well, we now call it “qualitative easing”, but history calls it printing more money.  Tons more money.  This drives the value of the currency down but allows a 100 drachma debt to be paid off with 100 drachmae, even if it’s only worth 1/100th of what it was before the QE.  Old people lose the most, as usual; their savings are wiped out.  Their plan to live the American dream is demolished.  Unions hold protests at rising prices; newspaper headlines trumpet burning cars and smashed windows.  And a week later, all is back to normal.

What we have before us now, in die Eurokrise, is nothing but five or six years of serious economic contraction. Nobody really thinks Greece will stay in the Euro union; and Germans don’t want to work better and harder than anyone else so their paychecks can be sent south. (You might not think the Germans are the best workers, but they do, and that’s all that matters.)  In all likelihood, others will follow Greece.  Germany and France will be left holding the Eurobag; they will then probably realize that the mark and the franc weren’t such bad ideas after all.  Bang!  There goes the EU.

The country most likely to come out best in a worst case scenario is Germany, whose economists reckon with a 10% decline in German GDP.  For comparison, the U.S. experienced a 4% drop over the course of the Great Recession.  We’re talking about something the likes of which nobody has ever witnessed.  What becomes of people who’ve never known discomfort when suddenly they are standing face to face with the harsh crags of uncertainty?

Ahh, the Brits did it right.  They knew a monetary union was pointless without a political union; what they were not honest about was that the British population would never permit a loss of British sovereignty, so any hope for a political union was bound to be dashed.  But they hung on to some strings of the Common Market while keeping their own currency, the British Pound.

Would you rather have Euros or Pounds?  Therein you have the answer to who had the brighter idea.  European political union is absolutely not going to happen soon.  The Swiss will never give up their system.  The Italians will not like German interference in their economic affairs; the Germans don’t want to lose their language and culture.

Different states unite because of two reasons: popular demand or compulsion by a small group.  The small group can be a bunch of bankers, a dictator, or a bunch of three-piece-suited white guys who want to be either bankers or dictators.  At this point, there is no popular demand for union.  And anyone who wants to try the other way, well, good luck — but read your history.

Fortress Britain wins another war.


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