Ed Driscoll

The Great Euro Swindle

As Umberto Eco once wrote, “We are supposed to live in a sceptical age. In fact, we live in an age of outrageous credulity.”

At the Corner, Andrew Stuttaford links to a piece by Peter Oborne and Frances Weaver in the London Spectator on how “the groupthink of a small elite clique in media, politics and the corporatist establishment can distort and suppress debate and set a country — any country — on the path to disaster;” in this case, the British media’s eagerness to rush into the Eurozone. Here are the passages that Stuttaford quotes:

Turning its back on its readers, it was captured by a clique of left-wing journalists. An early sign that something was going wrong came when the FT came out against the Falklands invasion. Naturally it supported Britain’s entry to the Exchange Rate Mechanism in 1990. In 1992, under the slow-witted editorship of Richard Lambert (in a later incarnation, as director general of the Confederation of British Industry, Sir Richard was to become one of the most sycophantic apologists for Gordon Brown’s premiership), it endorsed Neil Kinnock as prime minister. It has been wrong on every single major economic judgment over the past quarter century.The central historical error of the modern Financial Times concerns the euro. The FT flung itself headlong into the pro-euro camp, embracing the cause with an almost religious passion. Doubts were dismissed. Here is the paper’s supposedly sceptical and contrarian Lex column on 8 January 2001, on the subject of Greek entry to the eurozone. ‘With Greece now trading in euros,’ reflected Lex, ‘few will mourn the death of the drachma. Membership of the eurozone offers the prospect of long-term economic stability.’ The FT offered a similar warm welcome to Ireland.

The paper waged a vendetta against those who warned that the euro would not work. Its chief political columnist Philip Stephens consistently mocked the Eurosceptics. ‘Immaturity is the kind explanation,’ sneered Stephens as Tory leader William Hague came out against the single currency.

And then (predictably) there’s the BBC:

As Rod Liddle, then editor of the Radio 4’s Today programme, said: ‘The whole ethos of the BBC and all the staff was that Eurosceptics were xenophobes and there was an end to it. The euro would come up at a meeting and everybody would just burst out laughing about the Eurosceptics.’ Liddle recalls one meeting with a very senior figure at the BBC to deal with Eurosceptic complaints of bias. ‘Rod, the thing you have to understand is that these people are mad. They are mad.’

In truth the Eurosceptics were only too sane. Politicians like Margaret Thatcher, John Redwood, David Owen, William Hague and Bill Cash were mocked — often very cruelly — at the time. But they grasped with stunning clarity the problems the euro would bring. They deserve full credit for their courage and foresight today, and our gratitude too.

As Oborne and Weaver write:

Very rarely in political history has any faction or movement enjoyed such a complete and crushing victory as the Conservative Eurosceptics. The field is theirs. They were not merely right about the single currency, the greatest economic issue of our age — they were right for the right reasons. They foresaw with lucid, prophetic accuracy exactly how and why the euro would bring with it financial devastation and social collapse.

Meanwhile the pro-Europeans find themselves in the same situation as appeasers in 1940, or communists after the fall of the Berlin Wall. They are utterly busted.

But what happens next, at least in terms of its impact on America? Walter Russell Mead postulates that “Global economic events are moving so rapidly that we have no way of foreseeing the economic environment for next year.  It will probably not be very good, but how bad it will be and how it will look to voters cannot yet be foretold:”

More to the point, we need policy discussions more than we need political ones.  This is not just about how big the deficit should be; it is about whether the international financial system will survive the next six months in the form we now know it.  It is about whether the foundations of the postwar order are cracking in Europe.  It is about whether a global financial crash will further destabilize the Middle East and, if so, what we and the Europeans are going to do about it.  It is about whether the incipient signs of a bubble burst in China signal the start of an extended economic and perhaps even political crisis there.  It is about whether the American middle class is about to be knocked off its feet once again and indeed whether the middle class as we’ve known it will survive.  It is about whether sovereign governments can still underwrite economic performance and financial stability in the leading economies of the world.

You can see the future debated in the text of the Photoshop below. Which competing worldview will win in November — not just in Massachusetts but in America as a whole — will reveal much about how the next decade or two will unfold:

Incidentally, Milton Friedman produced his own video prebuttal of of Warren’s screed thirty years ago: