Somewhere between two-thirds and three-fourths of the British think we should leave the EU with immediate effect. (I realise the figure is imprecise, but it would take a referendum for me to be accurate, and you know we aren’t going to get one.) That, according to Nick, testifies to a collective mental deficiency, something only correctable by clever chaps like him.
Talking about the catastrophic consequences of ‘Grexit’, this voice of reason explained things in a language even silly we can understand: ‘No rational person interested in the wealth and wellbeing of Europe’s citizens could advocate taking such a risk; not with Greece’s future, or our own.’
Meanwhile Dave is in Brussels, antagonising his continental colleagues with pleas to do something decisive about the euro. This is countered with variations on the theme ‘you don’t play the game, you don’t make the rules’, and no, I don’t know the Flemish for it.
Meanwhile, the markets continue to prove that they too are irrational. Yesterday they closed 3.7 percent down in Italy and 3.3 percent in Spain. Our own FTSE 100 was down 136 points, which means our top companies lost 2.5 percent of their value. That may not sound like a lot of percent, but it definitely is a lot of billions.
Irrationality is no longer just an epidemic – it’s a pandemic. The ECB irrationally admits that perhaps Greece exiting the euro wouldn’t be such a bad thing. Not to be outdone in the irrationality stakes, the Greek government says it’s preparing for such an exit. Angela Merkel is irrationally refusing to underwrite Greece’s continuing presence in the EU by issuing eurobonds. And, just to prove that she’s teetering at the edge of madness, Angela claims she can’t understand what’s wrong with the idea of not spending more money than one has. Just goes to show to what depths of lunacy an irrational person can plunge.
But trust Nick to sort them all out. He knows the rational thing to do: throw a few more trillions at Greece to keep her in. And then, once the euro has been stabilised, we’ll be able to join it, which Nick still thinks would be a perfectly sane step to take.
Since on this issue I’m with the irrational majority, I can’t for the life of me follow the logic. That is, I can follow the intermediate steps – it’s the conclusion that defeats me. Yes, of course, Greece heading for the exit may, and probably will, cause a stampede of others trying to get out through the same door. Yes, that’ll spell the end of the euro, which in turn is likely to reduce the EU to the union of France and Germany, giving rise to a new political entity presumably called Germance. What I don’t understand is why such a development would be catastrophic for us.
Obviously, there will be much short-term pain all over the world. The short term may well last until 2015, when Britain will go to the polls, with the likely consequence of Nick’s influence being scaled down to a level commensurate with his share of the vote. So what’s the down side? More important, what’s the alternative?
One realises that expecting a rational politician like Nick to think beyond the next election is like expecting a Labrador retriever to ponder Kant’s categorical imperative. Still, since you and I aren’t planning to stand for public office in 2015, perhaps we should take a longer view, irrational as it may be.
What long-tern consequences would we suffer as a result of the EU’s demise? Or us leaving it? Nick has all the figures on the tip of his tongue: 40 percent or some such proportion of our trade is with EU countries. The assumption is that, should we revert to being governed by laws passed by our sovereign parliament, the remaining EU members will stop doing business with us. They’ll treat us the way we are treating Iran, banging it on the head with sanctions.
But they’ll do nothing of the sort, for that would be cutting off their collective nose to spite their face. The EU has a huge trade surplus with Britain, which means they get more money from us than we from them. Surely they won’t want to lose it at a time when their own house is tumbling down? The notion that a country has to pool its sovereignty with others in order to trade with them is preposterous.
However, even supposing for the sake of argument that the remaining EU members will wish to submit themselves to the aforementioned nasal surgery and start a trade war, we’ll have the means of fighting back. To do so we’ll have to deploy the kind of weapons Nick, rational lad that he is, would probably disavow.
We could eliminate or drastically lower corporate tax, a measure that would instantly attract foreign manufacturers to our shores. We could eliminate the capital gains tax, which would turn London into the world’s second biggest French city (it’s currently seventh). We could get rid of inheritance tax, which would act like a magnet for foreign pension funds. We could turn ourselves into a tax haven for foreign investors, strengthening no end the City of London, whose current strength is already a burr under the EU’s blanket. We could do these and many other things that would improve our long-term prospects.
However, there will be much pain first. A collapse of that magnitude would mean a few lean years, many a twinge where it hurts. But here we should rise and thunder with a conviction that would further testify to our irrationality: no painless way out of this mess exists. Either we suffer for a couple of years in a good cause or we’ll live tortuous lives for ever in a bad cause.
I know what my choice is, and I can guess what yours may be. But then we are irrational.