We’d like to welcome an excellent new blog, Philip Pilkington’s Fixing the Economists, which aims to provide a view of international economics from an Irish perspective to the Irish web-oh-sphere. Just cross-posting this from his blog today to give a flavour.
In 1919, just after WWI, the great British economist John Maynard Keynes published a book entitled ‘The Economic Consequences of Peace’. The book was a response to the proposed reparations that were being imposed on post-war Germany. The general opinion in the Allied countries at the time – one, no doubt, fueled by the hangover effects of the greatest wartime propaganda campaign the world had, at that point, ever seen – was that Germany should bleed. No quarter should be given; the German economy should be cut down like those British and French men that were cut down by German machine-gun fire as they poured over the trenches.
Keynes argued that these reparations would be the beginning of the end for Europe. He argued – as any salient macroeconomist would – that reparations shouldn’t be seen as a zero-sum game. If the British and the French plundered Germany they would destroy her economy – this would then have long term consequences for the European economy as a whole. This was not even to mention the political consequences that would result from these reparations – consequences attested to today by the greatest disaster European man has ever known.
Fast-forward to today and a new nationalism is on the rise. The German people, this time in the position of the aggressor. Because they are Europe’s main creditor nation, the German’s see themselves as the arbiters of European fiscal policy. It is the Germans that hold the sway at meetings that try to deal with the debt crises arising in the so called PIIGS (Portugal, Ireland, Italy, Greece and Spain). The Germans – riled by crass nationalism – see themselves as the unwitting victim of these ignoble countries who expanded their national debt too far, too fast. “It’s unfair,” say the Germans, “That we should have to support these economies.”
Yet, this is no zero-sum game either. Indeed, where is that European spirit gone now that it is invoked as anything but a friendly ghost? Why is it that the Germans – and the other countries that support their general stance – fail to note that perhaps what is good for the PIIGS is good for the whole of Europe? Well, it would seem that there is a new specter haunting Europe – the specter of crass fiscal nationalism. “To each European according to his central bank; to each Irishman according to his failed national banking system,” they cry.
After WW2, Germany was once again in ruins. Of course, the international community could again have said, “Well, it’s their fault, isn’t it? They geared their entire economy toward war and conquest – indeed, they even tried to eradicate certain elements in their population. They are not just an irresponsible, but an evil people!” The international community had every right to take this stance – but they didn’t. They had learnt their lesson the hard way. As the smoke from the bombs and the tank fire cleared across Europe many began to realise that Keynes had been right in 1919. An economically strong Germany benefits the whole of Europe. Shortly after huge debts were extended to Germany to rebuild her frayed economy under the Marshall Plan. This ushered in a new age for Europe; an age of prosperity and cooperative national expansion.
Today the situation is different. European brotherhood is nothing but a ghost, only to be summoned up when key European leaders meet for fancy dinners. And while Germany’s Merkel puts on an austere face, the Irish politicians and economists curl up in a ball to receive their telling-off – readying their tuxedos for their next meal in Brussels, where praise of fraternal inter-European relations will be sung to the rafters.
Meanwhile, the anti-EU lobby – made up of a queer hotch-potch of shady business interests, nationalists, socialists and traditionalists – have seen all their worst fears realised. The EU is not now based on all-for-one and one-for-all – it’s still based on crass nationalism and one-sided bias. The propaganda may have changed, but the nationalist sentiments remain – threatening, no less, to once again destroy Europe.
Latest posts by Philip Pilkington (see all)
- Busted: The Fall in Profits and the Rise of Finance – Part I - November 1, 2010
- In God We… Don’t Really Trust That Much, But Kind Of Hope That He’ll Do The Right Thing… - October 28, 2010
- The Devil and Bailiff McGlynn - October 26, 2010
- The Reaper Cometh! - October 23, 2010
- The Economic Consequences of German Fiscal Aggression - October 21, 2010