Just to prove that there is some meat to this weblog, the working thinker has been active again. In the wake of the mess with the European economy I’ve been thinking about economics and especially fiscal systems.
The conclusion? The whole problem is politicians.
Our current crop of Politicians are wedded to the idea of a free market economy which is all well and good as the Communist-style totally regulated and controlled approach seems to have been tried and found wanting.
But the politicians aren’t prepared to allow the free market to develop and work unhindered. To do so would mean allowing some to prosper and others to go to the wall. And that is as true of countries as much as it is of the shops on the High Street.
What the politicians seem to want is a centralised monetary system while allowing countries local control. And as we’ve seen with Greece, Ireland, et al. when this happens some will go to the wall. But politicians can’t allow this to happen so they have to fiddle with the system. So we end up with a gilded pile of ordure.
As with many things there are only two ways to make the economy work (anything like) successfully and they are at the opposite ends of the spectrum. Either one has a free market economy with no controls and Devil take the hindmost. Or one has a totally regulated Communist-style economy. Our current beliefs are in favour of the former.
What is currently happening in Europe and elsewhere is that a unified monetary system has been imposed without a properly unified monetary policy and control mechanism to back it up. Consequently we have a mess where the system has run but no-one can be allowed to fail. In other words it’s a free market but without the freedoms and consequences.
A federal system doesn’t work where there is local control of the really major, outward-looking policy matters: fiscal, monetary, defence, foreign affairs. There has to be some overarching and effective method of the whole system telling the same story and doing the same things.
Looking at the USA a federal system works OK where the component parts are allowed freedom to manage personal, lower-level, inward-looking policy, eg. traffic management, public transportation, administration of justice; things which by and large don’t have a major effect on the monetary etc. systems of central government.
As in other spheres, if we want something which works with any level of apparent success then we have to operate at one or other end of the spectrum. Anything in between and we are guaranteed to end up with everything all over the floor — which actually means we’re worse off all round because unreasonable amounts of money and effort have to go into patching the system.
Consequently monetary union without political union seems to be doomed to failure. So either we have to have a Europe of full political and monetary union (effectively a United States of Europe) or it has to remain a club of individually empowered component parts with their chosen monetary systems allowed to float against each other (and fail if they get things wrong).
Essentially I don’t much care which we have as long as it isn’t some completely bastardised mess like the present. Although my inclination is in favour of the more fragmented approach as full union soon becomes over regulated, artificially stifles freedom and feel like a quicker path to Communism or dictatorship.
Discuss.
I actually called LBC a couple of nights ago and said exactly the same thing, throwing made-up money at the Euro problem is just like moving the turds around from one place to another or polishing them where they stand, but nothing can actually change.The EU, Euro and any other such empire cannot work as people at heart value individual freedom and although the psychopaths at the top get their jollies playing toy soldiers with the masses in the end the masses must rise up, the sad thing is they have to be dying in hordes before a finger is lifted and a voice is raised. But the EU itself is innately corrupt and my other comment was if you see them as the Mafia you will then understand everything they do perfectly.