As the Guardian noted today, there appears to be an enormous price attached to the measures needed to stabilise the Eurozone to meet the demands of bankers:
Last week, the German chancellor, Angela Merkel, and French president, Nicolas Sarkozy, announced that they would push for the creation of a Eurozone economic council to police the austerity measures of governments, to be headed by Herman Van Rompuy, the EU president.
Separately, Germany's economy minister, Philipp Rösler, has proposed the creation of a new, unelected EU institution, a "stability council" that would impose automatic sanctions on countries that do not adhere to rigid budget discipline and pro-business labour policies.
And the head of the ECB, Jean-Claude Trichet, has called for a European finance ministry, charged with dictating to countries their spending policies.
None of those institutions is any way democratic. That is profoundly worrying.
As worrying is the fact that, as I noted last week, these undemocratic moves are associated with demands that all EU countries adopt legislation that outlaws Keynesian economic policies despite these being the only currently available mechanism with any hope at all of dealing with Europe's economic crisis.
And as is now very obvious from the above reports, these same anti-democratic moves have the clear intent of ensure that yet more wealth moves from labour to capital even though the excess return to capital — which is now, according to Nouriel Roubini yielding higher real rates of return than at any time since the 1920s — is clearly one of the major causes of the current crisis as most people now simply cannot afford to meet their perceived needs so far have their real wages fallen and so high have their debt servicing obligations become.
The net result of all this is that the imposition of these budgetary controls across the EU (The UK included - since it is covered by these measures) will simply exacerbate control of the economy by bankers by proxy in their own sole interest and entirely without democratic control.
I am profoundly worried by this. I am by principle a European. I am a citizen of two EU member states. My family and my wife's family came to this country as economic migrants. I believe free movement of people is important. And I know all too well that the risk of Europe falling apart is intensely dangerous to us all and the EU has helped mitigate this risk, to date. The history of disputes being resolved through warfare on this continent is too recent and too strong to be risked again.
And yet all that being said there is also an obligation on all democrats to object to these moves in the strongest possible terms.
We have seen the consequences of economic management by bankers — and it is disastrous.
We know that neoliberalism does not work — and that it is already in its death throes; throes which could all too easily engulf us if these EU measures were to be adopted.
And we already know that the potential for social chaos that cuts create is enormous and yet these moves would be designed to deliver more and more cuts with ever greater risk to social cohesion.
There was already, before reading this, much to make me think that we live in dangerous times. My confidence in democracy has however been the one thing that has afforded me comfort in the face of those risks — inadequate as I know democracy can also be. But if we now abandon democracy in Europe — as these moves do in my opinion demand - then we move towards totalitarianism in the hands of bankers faster than it is almost possible to imagine.
Give me the choice of this unelected form of government by central bankers in Europe and quitting Europe I know where I stand in an instant — I would have no doubt that Britain should leave the EU if these measures are adopted. That would be an ethical imperative.
But I say that with the utmost trepidation, because many states will not have that option. Their subjugation through debt would deny them that choice.
And in that case I fear a Europe divided by the financial crisis, and by an attempt by bankers to retain control when it is all too obvious that they, their feral instincts and their feral economy are the greatest real threat to well-being most of us face.
I don't want to cry wolf: that's never wise. But this is an issue on which the politicians of the UK - all politicians in the UK, not just the usual band of Eurosceptics - have to stand up and say collectively that democracy has to prevail not just in this country but right across Europe if we are to really handle this crisis and the problems it has created.
Right now the EU is moving away from democracy. It cannot be stated less boldly than that. And you have every reason to be worried if our politicians don't object to that, now.
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I don’t believe we have anything approaching democracy now. The population is far too ignorant and ill-informed to be able to make decisions in their best interests. This phony pretence at democracy is being abandoned. What has been covert is now becoming overt. Our true masters, long concealed behind government, reveal themselves. It’s getting uglier by the day.
I take some comfort from the idea these things go in cycles. Societies go through observable stages, turnings, you might say. The next predicted turning, the Fourth Turning, in the cycle we inhabit is predicted for the year 2525, and not because of anything Zaeger and Evans sang about either. So I think it’s all going to turn out for the best, as traditionally it has.
It’ll be an increasingly rough ride till then though.
BB
The sad truth is that the EU is a deeply flawed and undemocratic institution – but ‘the right’ seem to have established a happily monopoly on the ‘anti’ side of that debate, meaning that others seem to shy away from criticism for fear of being labelled along with the little(john)-englanders.
I think we’re getting closer to a more balanced and inclusive debate about what the EU is, what it does, and how that stacks against what it should be/do, and what the people of the member states want it to be/do. I hope that if we have that debate here it will done properly.. and not be just another bout of tribal warfare with the same old camps saying the same old things. I don’t care about EU immigration (I think people should be able to move as freely as money) but I do care if a narrow and unaccountable elite are running things for the benefit themselves, their friends, and their bureaucracy.. not for the benefit of people.
Richard
I fear your normally wonderful blog has succumbed to the general euro gloating / panic that has infused so much of the English (probably London) commentariat. The EU does indeed face a series of difficult hurdles. However I would suggest that most European countries have a stronger commitment to real democracy than one where the prime minister recently suggested that suspending twitter & facebook could be appropriate and who rages against “human rights culture” (there are exceptions, the situation in Hungary is hardly good).
For a sober analysis of some of the issues from a German perspective see http://www.spiegel.de/international/germany/0,1518,781524,00.html. Eurobonds might well be a good idea but it does seem that the constitutional issues in Germany (and elsewhere) could well be insuperable. Democracy is a messy business and not always the ideal system for good governance but it is the least imperfect system we have .
A small example of the sort of self satisfied almost racist drivel churned out by so many whose view of the world struggles to see beyond the M25 http://www.telegraph.co.uk/news/worldnews/europe/greece/8714615/Greece-Its-the-corruption-stupid.html . Greece indeed has all sorts of problems and might be on the verge of even deeper ones but it is hardly unique in its culture of tax avoidance, Mr Randall might care to look somewhat closer to home at his chums in Canary Wharf, he might even read the comments of his fellow Daily Telegraph columnist – Peter Oborne who could hardly be described as on the left http://blogs.telegraph.co.uk/news/peteroborne/100100708/the-moral-decay-of-our-society-is-as-bad-at-the-top-as-the-bottom/
Well I note the compliment that started your post
And I note all you say – and can agree with a lot of it – like Eurobonds are a good idea
But I really think you need to read what I said again
You seem to have entirely missed the point of it
It’s much bigger than the issues you are referring to
Richard
I dont think I have misunderstood your argument.
I personally agree that an attempt to prevent governments undertaking “Keynesian” remedies to economic challenges would be fundamentally flawed – but I also understand German attachment to balanced budgets and the reality of German politics (in a deeply democratic society), ironic in view of the fact that German governments defaulted on it debts on a number of occasions in the 20th century.
I also agree with your views on the behaviour of the financial industry and the disastrous effect its behaviour has had on all of us over the past few years, it is worth pointing out that there is a proposal on the table for a EU wide “Robin Hood tax” (whether serious or not) which is more than can be said elsewhere, which I believe caused a certain amount of mild panic on stock markets.
The EU is an imperfect institution and too much power is concentrated in the heads of government, not enough power with elected politicians (ie to the EU parliament etc not from the individual states) and ironically given the views of many Brits not enough power for the commission.
However do not underestimate the desire for most people and governments in Europe to make the whole thing work. It is a mess and it is easy to say this or that could be better organised. However it does work. The EU remains the basis for the prosperity of all European countries (including the UK and that nest of tax cheats in Switzerland), without it we would be far worse off.
One question to ask is why do so many on the right in the UK loath the EU? If it was so committed to furthering the neo liberal cause why would those in the UK with a stake in such things spend so much time attacking it? One answer is that for all its faults and failings it has been a far move effective regulator than any government in Westminster has been and as such is an object of deep suspicion. It is far less easy for the financial industry to promote their interests in Brussels (though still not difficult enough) than it is in Westminster.
So yes “we” must make sure our voices are heard along with those who always seem to push to the front of the queue and it is all too easy for politicians to fall back on what seems to be easy solutions. However unless we show some faith in the institutions we have painstakingly created over the past 60 years we will be back to the dark dangerous days of the 1930s
There is clear common ground between us
But I think you are wrong: you are ignoring the capture of the EU for the ‘Washington Consensus’ and the enormous harm this will create.
You are also confusing the libertarian right with the neoliberal right – although both claim ownership of the second term. The Eurosceptic branch hate all gov’t. The neoliberals use it for personal gain and so are really rather keen on it.
[…] A longer version is over at Tax Research UK […]
Those of those on the right have been saying the EU is undemocratic since 1972. Welcome to the club – abotu 40 years too late.
Yes, but it’s the way you say it that’s been the problem
In many cases, attack really is the best form of defence. I’m intrigued by the Iceland case where criminal investigations have been launched against many of the key figures in their banking collapse. I don’t how successfully that is working out, but it has been the democratically selected policy. It seems to me that in order to dump the liabilities for our zombie banks on the people and institutions who really should be paying, the criminal investigation card should perhaps be played, along the lines James K Galbraith is angling for in the US. Just look at how the News International investigations are transforming the political-media landscape. Can you shed any light on how effective you think this might be?
I warmly welcome the idea that action might need to be taken
And if banks fail again it undoubtedly can be, I think
Running a company whilst it is insolvent is a serious allegation and one that would need to be pursued
May I suggest that you coin the term “No austerity without representation”?
I mean yes ok it is a pithy line but it is also true, austerity is deeply unpopular across the EU and thus the mechanisms to implement austerity are being shifted away from democratic bodies that are liable to be affected by popular protest to insulated bodies that can do the finance industry’s will without risk of oversight.
With your permission it may get an airing very soon
The liberalisations being set into law both within the EU and in its legalised dealings with the rest of the world, inherently prevent any Keynesian measures.
A govt spending situmulus is an impossiblity when the country is committed to legal frameworks by which any public procurement must be offered to transnational firms – who can then also bring in their own workers. There can be no stimulus, no job creation under those circumstances. It would be pouring money into a bucket with holes.
And as commitments to ‘liberalisation’ become hard international law (international trade law is hard, economically-enforceable law, in contrast to e.g. UN Conventions, whereby countries are just ‘shamed’), it ensures that this holds regardless of what any future govt, of any shade, wants to do.
Other states acting on behalf of their corporations can hold a country to them, in law.
Even worse the EU is setting up ‘investor protection’ whereby a transnational corporation can sue a state directly if it cant get its snout in the public procurement trough and its future earnings are negatively affected.
So – sorry no cycle – this is being fixed up for good, unless there is fundamental revolution.
Richard – This ‘my family were economic migrants’ logic that you cling to is annoying. If I invite you into my house because you need help, is it so virtuous and morally justifiable to then ignore me and insist on bringing in everyone else till my house is destroyed for me (in this case completely handed over to corporate capital) and indeed for everyone? It just doesn’t hold up.
The world is a strange place full of contradictions but the EU is a worrying.
Others have asked will the ECB print when its capital is exhausted or will we all the members have to put in (inc UK?). It looks like the latter which seems to me to have the same effect as federal union via central banks and monetary policy.
It is interesting to note that democracy in Switzerland via referism seems to work, although morally maybe it has been captured in other ways.
I do not see the EU as a panacea
But at least unlike Switzerland it does not blatantly go out to sell the handling of stolen property as the basis for its economy