Friday, 25 May 2012

Popular economics

I don't really expect to see any particularly cogent comment on the letters pages of Metro, but today's crop of letters about the euro crisis are particularly meretricious. The first is a poorly extended shipping metaphor. "Greece is an anchor pulling down the eurozone ship. If you cut the anchor free the ship will not sink." What? Maintaining the shipping metaphor, the writer compares the eurozone to The Titanic. The eurozone's iceberg is "debt created by greed'".

So the Titanic (eurozone) has struck its iceberg (debt/greed) but it will not sink if its anchor (Greece) is cut free (presumably removed from or allowed to leave the euro. I don't actually think the Titanic's anchor was a significant factor in its sinking. It was the ingress of water through the hole made by the iceberg.

Next up - "The reason the whole of Europe is in financial distress is because throughout the continent the public sector is far too large. ... because of hundreds of thousands of EU-introduced laws and regulations." Remember the assumption that more private sector jobs is good, but more public sector jobs is bad. More phone shops, £1 shops, fried chicken shops, coffee shops? Yay!

Let's get to the nub of this. The vast majority of money is created by private banks and lent out at interest. The interest cannot all be paid back, because the money to pay it back does not exist. Therefore people / organisations / countries have to go bust.

That writer continues "Mr Brown [the previous UK Prime Minister and before that finance minister] reckons it's up to us to get us out of the mess he drove us into." I'm not here to defend Gordon Brown, but we can't lay the entire national debt at his feet. And even if he did drive us into this mess all by himself, he can't get us out of it.

Next: "I would have thought that the former Chancellor [Gordon Brown] would have been well advised to keep his mouth shut on the subject of debt.". This is practically straight out of a common comedy line: 'Oh, just ome other thing. Shut up!'

Finally: "What a cheek for Gordon Brown to say that Europe can't save itself. This from a man who acted like he saved the world a few years ago." Setting aside the non seqitur (GB did a, therefore he cannot say B), we have to examine whether what GB said is correct or not. If it's true, why shouldn't he say it?

None of this carping from the sidelines shows any understanding of the actual causes of Europe's or the world's problems, nor (unsurprisingly) does it provide even the slightest suggestion of any solution or ameloration.

OK, one write says there's too much EU legislation, but you can't just weigh legislation and neither can you arbitrarily decide how much is too much. Is the writer suggesting we randomly remove legislation until the "financial distress" stops? Presumably not and therefore we have to look at each piece of legislation. The writer does not cite any example, making his comment just rhetoric.

Picking up the Titanic theme, I would say that what is happening is rearranging the deck chairs on the Titanic, that is pointlesly solving or ameliorating a problem that will become irrelevant in the event of the impending disaster. Moving money from one fund to another does not solve the problem that all the money that exists is owed to banks, and then some.

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