Interventionist Libertarianism is what’s needed for Europe now
In business it is not necessarily a bad thing to fail. But only if you fail fast and make sure that you learn from it. You need to get to that failure as fast as possible, realize the mistakes, learn from them, and move on. The theory says that if you are not making mistakes, you are not innovating hard enough and you will eventually be left behind. It’s clearly not practical for countries to be as risk-embracing as an enterprise because the stakes are too high, but companies and countries do have one thing in common in this regard.
It’s that the worst thing of all is to make mistakes and not acknowledge and digest the failure quickly. As this column likes to point out, bad ideas are punished quickly in business, but linger for a very long time in politics and the public sector.
The Euro has become a wrecking ball not only for the countries that are suffering debt issues, but also it turns out for the Euro core. If debt is the hand-grenade with the pin pulled, the constraints of the Euro are forcing countries to cling tightly to the grenade hoping not to drop it.
Instead, they need to throw it as far as they can understanding that they will need to suffer some of the damage.
That applies as much to Germany as it does to Greece.
Like a company that is tweaking the features on a soon-to-be-defunct product, the Eurozone countries don’t want to admit that, under the pressure of a debt crisis that they slowly brought on themselves, the whole construct has to go.
At this point all the remaining “bazooka” fixes do not seem to be viable – deeper financial integration requires treaty changes and popular votes that won’t materialize, even if the changes could be proposed in time. The EFSF leveraging plan is dead and buried. The ECB won’t be allowed to
be a bond-buyer of last resort, even if it could afford to do so in quantities that would make a difference. Printing Euros is another political non-starter and is unlikely to do enough in any case.
It is understandable that people don’t want to say that the Euro project has failed. It doesn’t mean that it could never have succeeded – if, for example, the countries had rigidly stuck to the rules on debt and deficits – but that doesn’t matter now. It’s a “coulda, woulda, shoulda” learning
moment that may be useful somewhere down the road. Under the current stresses the Euro has got to be unwound.
It is not trivial, of course. Capital flights, instability, pain for individuals and companies alike. Further austerity. Countries contorted by
inflation or stagnation – rising unemployment.
But, it has got to beat a slow, painful, slide to the same conclusion with more good money going after bad.
Like a love affair that you spend years too long trying to save, it is always better to fail quickly, pick yourself up and start over.
In doing so we need to find the bottom quickly, and in a way that will protect the most vulnerable in our societies (we could start by using some of that money being handed over to undeserving gambling hedge funds for a start…).
I don’t trust the market on its own to keep our food safe or our drinking water clean or our countries competitive for the long haul. But we have to let the market now act on the debts of Europe, picking the winners and losers, and quickly. No bailouts to bankers who should suffer personally and professionally with everyone else. Only then can we clean the slate and start again. When we do, we need to remember that the financialisation of our economies and our politics is what got us here. We learn, we move on, and we do it better next time.