Friday, 10 July 2015

Euro-Skeptic William Hague: "I Was Right In 1998, And I Am Right Today" | Zero Hedge

Euro-Skeptic William Hague: "I Was Right In 1998, And I Am Right Today" | Zero Hedge



I well remember the furrowed brow of President Chirac, sitting amid the splendid gilt furnishings of the Elysee Palace, as I explained to him in May 1998 why I thought the euro would not work as Europe's leaders intended. The charm of his welcome had evaporated as I set out not only why joining the euro would be very bad for Britain, but also far from a good idea for some of the countries desperate to sign up to it.
After I gave my speech that night at my alma mater, the European Business School at Fontainebleau, Chirac and many others were appalled. I said that joining the euro would exacerbate recession in some countries, and that some would find themselves "trapped in a burning building with no exits" - a phrase that brought me a fair amount of controversy and abuse.
I was regarded around the EU as a rather eccentric figure, almost pitiable in being unable to see where the great sweep of history and prosperity was heading. One former senior colleague in Britain said I had become "more extreme even than Mrs Thatcher", as if this was an unimaginable horror. Idealistic heads in Brussels were shaken in sorrow that the dreaded eurosceptics were not only growing in the Conservative Party but had now taken it over, with me having become, astonishingly, its leader.
There is no doubt that I was wrong about quite a few things when I was leading my party. But I hope the eurozone leaders meeting today will remember that those of us who criticised the euro at its creation were correct in our forecasts. Otherwise they risk adding to the monumental errors of judgment, analysis and leadership made by their predecessors in 1998.
Those who poured scorn on some of us who predicted "wage cuts, tax hikes, and the creation of vicious unemployment black spots" - all now experienced in abundance by the people of Greece - should at least now make the effort to understand why these predictions were true.
Economics has few laws, which is why economic forecasts are so maddeningly unreliable. If it has one law, it is this: that if you fix together some things which naturally vary, such as interest rates and exchange rates, other things, such as unemployment and wages, will vary more instead. And in a single currency zone, which has exactly this effect, you can only get around these problems by paying big subsidies to poorly performing areas, and expecting workers to move in large numbers to better performing ones.

No comments:

Post a Comment