There's
an eclipse of the sun today - British clouds permitting - and
there are endless warnings on TV about using special glasses to avoid eye
damage. These are said to reduce the effect of the sun's rays by
100,000 times. 'Back in the day', when I was at primary school, we
used photograph negatives but this probably wouldn't be considered
wise nowadays. And you'd sued if you suggested them.
Which
reminds me . . . It's not only in Galicia that fiestas are at the
whim of the weather. This is a risk even as far south as Valencia,
where the grand finale of this year's fiery Fallas festival was disrupted
by gales and downpours. Details here. Gallegos should avoid
schadenfreude.
Just
going back to the retrospective 'back in the day', there's a
corresponding prospective phrase - 'going forward'. Equally
irritating to some of us. Basically anyone over 40.
The
Brits: I overheard this exchange between my mother and her neighbour
last night:
I
was going to call you but I didn't want to bother you.
Oh.
I was going to call you but I didn't want to bother you.
No
wonder the Spanish think we're crazy. And a few others, no doubt.
The
EU: I've always believed that, though founded for the best of reasons
and although admirable in its aims, the EU is doomed to collapse
under the weight of its internal incongruities. This is a prelude to
the article at the end of this post. This appeared in El País a week
or so ago and comes from Timothy Gorton Ash, a regular contributor to
the left-of-centre Guardian. I have the feeling it marks a (sad) change of heart on his part, though it chimes with my own view. I
wouldn't include it otherwise, would I?
Finally
. . . Startled by the rapidity at which my podcasts downloaded, I
checked the internet speed at my mother's house. Yep, ten times
faster (at half the cost) of my Pontevedra service. In case it's not
obvious, I'm not always happy with life in Spain.
Europe is being torn
apart – but the torture will be slow
“If the euro fails,
Europe fails”: thus spake Angela Merkel. Unfortunately, the euro is
failing, but it is failing slowly. Even if Greece grexits, the
eurozone seems unlikely to fall apart in the near future, although
there is still a chance that it will. There is a much higher chance
that it will grind along like a badly designed Kazakh tractor,
producing slower growth, fewer jobs and more human suffering than the
same countries would have experienced without monetary union.
However, the misery will be unevenly distributed between debtor and
creditor countries, struggling south and still prospering north.
These different
national experiences will be reflected through elections, creating
more tensions of the kind we have already seen between Germany and
Greece. Eventually something will give, but that process may take a
long time. “There is a great deal of ruin in a nation,” said Adam
Smith. Given the extraordinary achievements of the 70 years since
1945, and the memories and hopes still invested in the European
project, there is a lot of ruin still left in our continent.
I recently participated
in an event in Frankfurt attended by representatives of leading
European investors. A multiple-choice instant poll was taken,
offering a number of scenarios for how the eurozone would look in
five years’ time, and asking which we found most probable. Nearly
half those present opted, as I did, for “Japan in the 1990s”.
Around 20% voted for “what eurozone?”; 18% went for “the UK
after Thatcher”, by which they presumably meant a leaner, meaner
economy, with the policies of austerity and structural reform
producing growth, but also dislocation and inequality.
The catch is that even
in this last, “best” case, the inequality would not be within one
country, such as Britain, but unevenly distributed between different
countries. Germans and a few other north European nations would go on
taking most of the gain, others the pain.
To say this is to
endorse an economic analysis that mainstream German politicians and
economists will fiercely dispute. Austerity and structural reform are
the one true way to salvation, they insist. As Merkel put it in 2013:
“What we have done, everyone else can do.”
There are at least
three problems with this. First, as every wise doctor knows, even the
theoretically right medicine can be disastrous if administered in too
strong a dose to a weakened patient.
Second, Greeks,
Italians and French are not Germans. Their economies certainly need
structural reforms, which have, for example, boosted exports from
Spain, but their societies and companies simply do not respond in the
same way.
Third, even if the
whole eurozone becomes one giant German-style Exportweltmeister, who
will be the consumer? Some of the demand must come from inside the
eurozone, and especially from richer countries such as Germany. If
everyone else is to behave more like Germany, then Germany must
behave a bit less like Germany. But Germany is not prepared to do
that.
In the long term,
Germany will suffer from the consequences, but not in the short term.
Walk around most German cities and the feeling is: crisis? What
crisis? While Germany has had to bail out countries such as Greece,
much of that money went straight back to imprudent lenders, including
German banks. Meanwhile, German export business has benefited greatly
from the eurozone.
In Frankfurt, the
misery of Athens seems very far away. Reflecting on austerity
policies in southern Europe, one German banker said: “The problem
with Greece is that they never tried.” This of a country where
previously middle-class people are reduced to using soup kitchens,
one in every two young people is unemployed and, according to the
Financial Times’s Martin Wolf, since 2008 “spending by Greeks on
goods and services has in fact fallen by at least 40%”.
The structural problem
here is that the monetary area is European but the democratic
politics are still national. It is not that there is nothing that
could be done, if the politics allowed it. Everyone admits in private
that Greece cannot repay its mountain of debt, so let Berlin parlay
explicit debt forgiveness for continued meaningful reform by the new
Greek government.
Or let German wages and
prices rise, thus helping to rebalance the eurozone internally. Or
agree on the kind of fiscal transfers from richer states to poorer
ones that you have inside a proper federal union such as the United
States, where nobody expects Alabama to perform like Silicon Valley
any time soon.
But in creating a
monetary union without a fiscal or political one, Europeans put the
cart before the horse – and now the horse is not ready to get in
front of the cart. National democracy therefore stands in a growing
tension with European integration. Some leaders of the European
institutions in Brussels see this. France’s European commissioner,
Pierre Moscovici, talks of “the commission of the last chance”.
But there is not much they can do about it, because power mainly lies
with democratically elected national governments.
Let me be clear: given
the choice between democracy and a paternalistic, top-down,
Euro-Leninist version of European integration, I will choose
democracy every time. The Finnish vice president of the European
commission, Jyrki Katainen, responded to Syriza’s election victory
by saying, “We don’t change policies depending on elections.”
Oh yes you bloody well do. It’s called democracy and it’s
Europe’s greatest political invention. The trouble is that the
structural problems of the eurozone require a transnational European
democratic solidarity of fellow citizens which does not exist between
different nationalities in the eurozone, and is not in prospect any
time soon.
And so we will struggle
on, torn between national politics and European policies, while the
monetary union that was meant to unite Europe pulls it apart. But the
torture will be slow.
In the countries that
are suffering most from this “machine from hell”, as one senior
German official has described the eurozone, there is still a
passionate determination to stay “in Europe”. For all its
radicalism, Syriza has shown a remarkable readiness to compromise so
as to stay in Europe. I suspect the same would be true of Podemos in
Spain.
Domestically, these
countries still have the safety net provided even by a much reduced
welfare state. For unemployed young people, a further buffer is
provided by the fact that their baby-boomer parents still have a
place for them to live, and some life savings to help them out –
aka the Bank of Mama and Papa.
The labour mobility
guaranteed by the EU also provides an important safety valve, as
young Spaniards with two university degrees come to work as waiters
in London or Berlin. However, that migration in turn fuels the
anti-EU rhetoric of parties such as Ukip and Alternative für
Deutschland, which hitch their Euroscepticism to popular fears about
immigration. And gradually these material and cultural reserves will
be exhausted.
What
then? My heart does not like what my head is telling me. But it is
still up to us, and there is still time to reverse the trend. Can
Europe’s 89ers – those born around and after 1989 – generate
the political imagination and will that our current politics
are failing to produce?
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