…and throwing good money after bad
I’ve just spent an unedifying hour in the Unemployment Committee. With the EU’s manic six-month rotating presidency, we’re treated twice a year to the prospect of seeing the relevant ministers from the country holding the presidency, who come to present their sparkly new plans, only to retire hurt a few months later. The system seems designed to prevent any continuity or medium-term strategy. It’s a recipe for constant policy churning, and a total lack of direction.
Just now, it’s Denmark, and they sent two Ministers, both (I have to say) rather attractive young women. Neither seemed, however, to have any new ideas about the very serious employment problems facing the EU. Ms. Frederikksen said we must “Stick to the values of the EU labour market”. But hang on a minute — aren’t those the very values that got us into this mess in the first place? She went on to admit, generously, that “Jobs are not created by employment and social policies”. Quite right, Minister. But you didn’t notice that jobs are destroyed by them? Don’t you ever go and talk to employers? Or is that too much to ask of an Employment Minister?
Ask any employer, and they will tell you that EU employment legislation adds to costs, massively increases administration, reduces competitiveness, prevents flexibility, and disincentivises investment, employment and growth.
All too often, the EU responds to a problem by doing more of the same — which merely reinforces failure. Unemployment caused by over-regulation? We need more regulation! Job protection stopping employers hiring? We need more job protection!
And it’s not just employment. Problems of debt? Borrow more! Problems with the €uro? Spend more supporting it! There’s too much political will invested in it! We must prop it up even if it destroys us! As, of course, it will.
Merkozy talks of “fiscal union”, though that seems to mean no more than applying German rules to Greece. The ECB has a clandestine Quantitative Easing programme — and is therefore stacked up with worthless paper from failing economies. There are calls for debt mutualisation and big-bazooka bail-out funds. These measures might buy time, they might stave off the evil day temporarily, but at huge expense. The €uro is a bankruptcy machine. Attempts to save it are misguided, and destroy value. None of these approaches addresses the fundamental imbalance of competitiveness between North & South, which is now clearly and palpably unsustainable.
The eurocrats blame the banks. They blame the rating agencies. They blame the Anglo-Saxons. The blame anyone and anything, in fact, except the real culprit — the €uro itself.
But perhaps the realisation is starting to dawn, at least in the UK. A few weeks ago, Cameron and Osborne were arguing that a €uro break-up would be bad for Britain, and therefore that it was in our interest to support efforts to save it. Even today there is talk of re-financing the IMF, even though it’s now run by a poacher-turned-gamekeeper, French Catherine Lagarde, whose main object seems to be to have the IMF subsidise the EU.
But we’ve seen serious voices recently, like economist Ruth Lea, commentator John O’Sullivan and former Tory leadership contender David Davis, who’ve been saying (I paraphrase) that the €uro is the problem, not the solution; that support for the €uro is vastly expensive and doomed to failure; and that recovery cannot start until there is a realignment of currencies in the eurozone — which of course means an orderly dismantling of the currency union.
We in Britain have our own experience of the salutary effect of breaking out of an unsustainable currency alignment. Recovery starts with a competitive currency — and not without. So it’s time to stop talking about “Saving the €uro”, and to start talking about orderly deconstruction.