In saying this, I am not suggesting that the present century is in any way different from previous centuries; only that one would have thought we had had sufficient experience of economic crises in the 20th century to be equipped to recognise reality in the 21st. Not so, it seems.
We have witnessed the phenomenon in action in our own country ever since the coalition Government came to office and the ghastly George Osborne moved into the Treasury. But nowhere has it been in plainer evidence than in the capitals of the eurozone, in the parliament building in Athens, and in the headquarters of the International Monetary Fund in Washington as the Greek debt crisis has trundled relentlessly onwards.
Like all true classical Greek tragedies, the audience knows the protagonists are heading for inevitable doom; only the actors on the stage seem unable to see the truth, and play out their parts to the grim and bitter end. But alas, the actors include pretty well everyone with any degree of influence on events in the eurozone – including Angela Merkel, Nicolas Sarkozy, Greek Prime Minister George Papandreou and the dreadful American free-market maniac who has – only temporarily, thank God – taken over the running of the International Monetary Fund.
In their desperation to prop up the European single currency in all its insane glory, and also to protect the bankers – yes, the bankers again – from the consequences of their incontinence in lending so much to Greece, these people seem ready to strangle any remaining hope of a recovery in the Greek economy. Yet no one of any political significance here or in Europe seems willing to tell them to stop.Except, amazingly, the Mayor of London, Boris Johnson, who happens to be both very right wing and also to possess the largest democratic mandate of any politician in Britain.
Writing in the Daily Telegraph, the newspaper which he represented in Brussels before he took to politics, he came out this week fiercely against the establishment’s continuing attempts to please the IMF by making the Greek government impose still more draconian austerity measures on its people. All the IMF and the rest wanted from Athens, Johnson wrote, was for the Greeks to “sack a few thousand more public sector workers, lop a few billions more off their pensions, chop more benefits, collect more taxes, and perhaps the problem will go away… All it would take, say the European elite, is for the government of George Papandreou to discover a crazed Thatcherite zeal that inspires them to sell off every Greek asset from the Port of Piraeus to Olympic Airways to the remaining marbles of the Parthenon. That should do it, they say.” And would it? I doubt it, says Boris.
By a happy coincidence, Boris’s outburst came on the same day as another magisterial onslaught on the whole austerity strategy, but from the opposite end of the political scale. Larry Elliott, The Guardian’s increasingly left-wing economics editor, reached much the same conclusion in his weekly column. Although more sympathetic than Boris in his assessment of the motives of the founders of the European single currency, he dismembers it with ruthless logic. Meant to be a one-size-fits-all economic regime, he says, it turned out to be “one-size-fits-nobody” because of the disparity between the economic performance of its members. What is needed, says Elliott, is a Plan B in which the eurozone shrinks to just Germany, France, Austria, Holland and a couple more. The alternative is an uncontrolled break-up, with dire consequences. But Europe’s leaders have no Plan B because they are still committed to the original Plan A: the European dream of fraternity and solidarity, which must be defended at all costs. So Greece must suffer deflation, and lots of it. It is a crackpot idea, he argues, because deflation has already made Greece’s debt problem far worse. More will make it worse still.
At the time of writing, it still was not clear whether the leaders of the eurozone were going ahead with their so-called “rescue package” for Greece, including their monstrous austerity programme for its people. But it looked an odds-on chance that they would. If so, the IMF will be able to hang yet another scalp on its belt, to join the endless list of governments it has wrecked, political leaders it has destroyed, and populations it has reduced to penury. And all in the service of an economic theory which was comprehensively demolished by John Maynard Keynes way back in the 1930s in the aftermath of the Wall Street crash and the Great Depression.
The ultimate irony of this is that the IMF was launched as part of Keynes’ post-war world economic settlement. It was meant to do pretty well the exact opposite of what it is doing now.But before we shake our heads sadly over the plight of Greece and move on, it is worth reminding ourselves that Chancellor Osborne is committed to the same primitive economic thinking which underpins the IMF’s programme for Greece. What he is doing to the British economy is only a diluted version of what is being done to the Greeks. Boris Johnson’s words quoted earlier, about cuts and privatisations, could just as well be said about Britain – as the public service unions are trying to tell us
