Professional politicians with any semblance of a democratic mandate do not work in Brussels but run the nation states that comprise the union. We can criticise national politicians for their ignorance on what makes their electorates wealthier and happier. They are elected by the ignorant for their own ignorance, but soon learn the political ropes that keep them in power. Or they fail and are rapidly ejected, often ending up in Brussels.
The EU is divorced from the need for realistic political representation. It is the collective dustbin for the power-seekers who have either been ejected by their own national electorates, or who are simply unelectable. It is heaven for power wannabes unwilling to face the consequences of their actions. And as the body of these dangerously inept individuals has grown, they have ensured a bureaucratic cancer has spread into national administrations. You can’t do this minister, because Brussels over-rules it. A bureaucratic statis has spread throughout the administrations of member states.
This was what Brexit challenged and exposed. The establishments in Whitehall and Westminster have become full-on eurocrats, dismissive of Britain’s own parliamentary democracy and remain fully committed to the European project.
Our dictionaries tell us that a moral statis is a condition where things do not change, move or adapt, which is definitely true of the EU’s economic policies. Other than the one change, which is its relentless acquisition of power to intervene and distort, this describes Brussels to a tee. The Eurocrats despise free markets, the source of external change, and seek to control them through mountains of suffocating regulations. As arch-protectionists they find it impossible to permit free trade except under duress. The overwhelming majority of the EU’s free trade agreements are with small insignificant states which are immaterial to the bigger picture. As an entrepôt, Britain’s escape will show by comparison just how much the EU has become a socialising command economy. It has too much in common with the old, centralising USSR and its satellites, a lighter touch perhaps and without the gulags.
However, change is a fundamental part of the human condition, and it is coming from a wholly unexpected direction. The spread of the coronavirus is shutting down the European economy. In increasing numbers people are no longer travelling. The spread of the virus, whether through fear or fact, is sharply reducing both production and demand. Indebted businesses will not have the cashflow to pay debt interest and supply chains will be riddled with payment failures. Previously acceptable debt is becoming junk. Banks will need to be rescued from defaulting customers and the euro’s future will be increasingly questioned.
For the moment, eurocrats might be able to get tables in their favoured restaurants more easily while national governments take it on the chin. But this is a temporary situation, which could easily evolve into a threat against the union, serious enough to either end or emasculate it when diametrically opposed interests are enhanced by the course of events and become unreconcilable.
Following Britain’s exit, the squabbling will now begin. Germany, with some commonality with the Netherlands, Austria and Finland has suffered the pain of unsound money to see its citizens’ savings taxed by negative interest rates and having them recycled into supporting bad debtors in the Mediterranean states. The Mediterranean states will demand even more money, taking their debt-to-GDP ratios into the stratosphere. The new boys in the East, Poland, Hungary, the Czechs, Slovaks, Bulgarians, and Romanians, who still think they can change Brussels will realise that as the subsidies from Brussels dry up, they have been sold a pup.
The eurocrats in Brussels lunching on their langoustines will conclude nothing need change and the ECB can deal with it.
If only it was so simple.
- Source, Goldmoney
