Germany bought Europe on credit, and now she doesn’t want to pay

You can see furniture emporia advertising similar deals on sofas upholstered in genuine vinyl: buy now, pay later, 0% interest, while stocks last. That’s how the EU project was sold to those industrious, ordnung-loving, pfennig-pinching Germans.

They saw, with a bit of prompting from the ruling bureaucrats, the economic advantages of a protectionist block touting a single currency pegged to their beloved deutschmark and a single market dominated by German exports. Deutschmark, deutschmark, über alles – even if it’s called something else now. What’s in a name, as that English precursor of Goethe once put it.

However, the ruling bureaucrats didn’t tell them a few other things, which the Germans are finding out the hard way. The economic advantages, as it turns out, weren’t the furniture emporium. They were its advertising campaign.

Advertising never lies; it deceives by omission. This particular campaign omitted the truly critical datum: the purpose behind the EU is political, not economic. And, if modernity has taught us anything, it’s that politics costs. Sometimes it costs a lot of blood, sometimes it doesn’t. One way or the other, it always costs a lot of money.

The economics of the situation are simple, though perhaps too simple for government economists to understand. A monetary union can’t work even in theory, never mind practice, in the absence of a fiscal union. And no fiscal union is possible without a strong central government allocating resources as it sees fit.

That’s how the South of England pays for the North, the North of Italy pays for the South, and California pays for Mississippi. The mayor of Milan doesn’t tell the mayor of Naples to sack half the police force and tell people who’ve never worked to find a job. Milan pays the central government, and the central government then keeps all those unemployed southerners in spaghetti alle vongole.

Extrapolating this proven arrangement to the EU means, in essence, that the Germans have to pay for everybody else, with the possible exception of the Benelux countries and one or two others. Suddenly it dawns on the Germans that to keep the EU going they’ll have to accept a lower standard of living and a higher rate of inflation. Perhaps not so high that they’ll have to take the old wheelbarrow off the mothballs to collect their weekly pay, but something approaching double digits.

They are understandably unhappy about that, and they’ve already communicated their feelings to the government through local elections. On that basis, most commentators have put a simple syllogism into effect. Thesis: Germany will have to pay for everybody. Antithesis: the Germans won’t wear it. Synthesis: the EU will fall apart.

That’s roughly the Aristotelian structure put together by a famous journalist speaking the other day to a mostly UKIP audience. The chap, endowed with much jolly-hockey-sticks charm but next to no intellectual rigour, more or less preached the Dave line. In the process, he gave the impression of someone who’d happily vote for a bull terrier, provided it sported a blue rosette.

The party line, as enunciated by the pundit, is that the EU is on its last legs, and we shouldn’t worry our pretty little heads about what to do next. There’s no point even talking about leaving this megalomaniac abomination. Loose talk may cost Dave a few votes and what for? All we have to do is sit back and watch the EU implode before our very eyes, all by itself.

That’s wishful thinking that betokens a most unfortunate misreading of the problem. The EU would indeed implode if its powers-that-be were solely driven by economic concerns: one can’t think of another recent example of elementary economic theory receiving such a resounding empirical vindication. The EU may still implode, and good riddance to bad rubbish.

But I’m prepared to bet what’s left of my pension fund, that the Germans and their hangers-on will go to any extreme to prevent this. Had they not been prepared to stake all on an emerging federal state, a sort of EUSSR, or Fourth Reich if you’d rather, they wouldn’t have started the project in the first place.

Angela Merkel will pout for a while and whine about good housekeeping, but then she’ll do what politics demands, and damn the economy. She and her friends won’t let the EU bite the dust until they’ve exhausted every means of its preservation. And their feelings about the crisis just may be different from yours or mine.

History teaches that economic (or military) cataclysms are the steroids on which state Leviathans build their muscle mass. That’s why all Western states acquired unprecedented powers after both great wars, or, more appropriately, the Great Depression. Hence, if there’s an opportunity in every crisis, then the eurocrats must feel that they have in Europe today their greatest opportunity ever.

They’ll try to use the abyss into which they’ve pushed Europe as vindication of federalism – not as irrefutable proof that the whole idea was criminally inept. And if it takes trillions of freshly minted euros to fill the abyss, they’ll eventually do so, after much wringing of hands and gnashing of teeth.

Meanwhile, the only sane thing for us to do would be to leave this madhouse immediately. Instead of paying the lunatics even more than we’ve already paid them, we should use the vast sums earmarked for this to protect our banks against the asylum collapsing on our heads. And because it’s the only sane thing to do, you know HMG won’t do it.

Instead, they’ll sing from the hymn sheet provided by The Sunday Times editorial today. The lyrics extol ‘the trade advantages’ of staying in the asylum – as if a country has to dissolve itself into others in order to trade with them. Britain did reasonably well in that department throughout her history without becoming part of a German-dominated federation. But that was in the old days, when sound economics wasn’t trumped by deranged politics.

The Germans will pay dearly for their ultimately doomed attempt to unite Europe without resorting to panzers. So, one fears, will we.

 

 

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