Surely nobody thought “Fiscal Union” was really a good idea?

Far from being an Orwellian nightmare, I love the idea of greater fiscal and political union with our neighbours. Maybe it could even work… in 100-500 years?

But right now, as long as different countries within Europe teach different versions of history, value different types of trade, have different climates that affect their vastly diverse national identities – and not to mention different politics – I believe a single currency is a terrible idea.

Why? A given generation’s workforce in a given country (or ‘economic zone’) depends on the social values of its predecessor generation(s).

Example: let’s talk dinner parties. Your average dinner party of middle-aged professionals in Germany would hold an ‘engineer type’ in the same esteem we Brits hold ‘artist types’ (i.e. high esteem). The UK is largely numerically illiterate and, with the possible exception of medical professionals, we pretty much like to make fun of scientists.*

* I attend dinner parties (not with the middle-aged) with people who do like scientists. I am basing this on media representation, proportion of elected MPs who are actual scientists, the take-up of science subjects at ‘A’ Level or degree, school results in science and maths, and other soft statistics / observations.

If, within the global economy, money is to be made from science rather than art, then Germany is going to whip our asses, whichever metric you use to define economic success (GDP, GPI, etc.)

Now let’s say Germany and the UK were in some kind of hypothetical fiscal union. Given the above, the UK would need to become more competitive on a global scale, otherwise it would run out of money and not be able to buy drugs for the NHS or pay teachers to maintain a decent education system. It would have to ask Germany for a loan. Of course, it could go elsewhere looking for a loan, but I’m pretty sure Germany might have something to say about that.

Sure – in the short term, the ailing UK would benefit from being in the fiscal union, as it would mean it could pay for those drugs, teachers, police, prisons – and maintain some kind of status quo. But it really will need to buck-up its ideas. The problem is: how can it become more competitive? The UK can’t simply change its interest rates – they no longer exclusively control the bank! Businesses can’t magically pay their employees more to attract more talent.

British people won’t magically decide they suddenly like scientists over artists. Worse still, the position of Germany would ironically make Brits dislike scientists even more.

(Aren’t we already seeing the above phenomenon, where although a country is benefiting from being in union with stronger country, they are ironically resenting them at the same time?)

Eventually Germany would have to say to Britain, “right. You need to become more numerically literate if this is going to work”. Germany would invest in education programmes in the UK for decades, but this wouldn’t address the core issue.

This scenario can only end in one of two ways:

1) an amicable break-up of the fiscal union
2) full-scale … wait, don’t mention the war …

The above is of course a hypothetical, over-simplified version of the truth.

But tell me dear readers, do you agree with the basic analysis?

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