Politics: An economy killed with kindness

About ten thousand years ago, man learned to control fire. That was one of the most important events in pre-history: a crucial part of the transition from a humanoid past to a human future. But the flames were domesticated, not tamed. Ten millennia later, fire is still a killer and a destroyer. In our cities, the sirens of the fire engine are part of the symphony of daily life. For fire, read credit, a more recent development, but one which is the economic equivalent of fire. Without it and its handmaiden, paper money, humanity would be much less prosperous: governments, less powerful. So which is more destructive — fire which has leapt free from the fireplace, or credit which has leapt free from reality?

It took several decades before academics reached a consensus about the causes of the Great Depression. It will be many years before there is an agreement on the causes of the current degringolade (probably just in time for the next one). There are two separate though related crises: that of the euro-zone, and the Anglo-American one. In the case of the eurozone, the implosion was predicted. Many British Eurosceps are entitled to say ‘I told you so’.

Not that it was hard to diagnose the euro-nonsense. The European single currency is similar to apartheid. Both could have worked, but only through an unattainable transformation in human nature. It would have been possible to solve the problem of black political rights by apart-ness: a fair division of South Africa between the different racial groups. As the whites would never have agreed to that, apartheid became an oppressive hypocrisy. The single currency might have succeeded, if monetary union had been reinforced by fiscal union and the richer nations had been willing to subsidise the poorer ones, just as Mayfair subsidises Motherwell and Manhattan supports Mississippi.