…Catchy monkey, Part II

In honor of Meryl Streep’s performance in the soon-to-be-released The Iron Lady, about which I’ve read Streep (typically) absolutely nails her character while the movie (typically) slights right-of-center policy success.  Here is the Iron Lady – prophetic in 1996! – on the subject of European integration.  (Courtesy of Michael Gerson writing at the WaPo).

But Europe’s division runs deeper than the details of tax policy. The European Union not only encompasses 27 nations but also two distinct economic and social models: Anglo-Saxon liberalism and the Franco-German version of highly regulated capitalism. Britain and a few other nations (such as Denmark, Poland and Hungary) have often defended the former within the councils of Europe — an important, uphill task.

Former prime minister Margaret Thatcher, however, predicted an irrepressible conflict. European federalism, she argued, was inseparable from statism and protectionism. Rather than containing German influence, the European project eventually would be a bureaucratic leviathan dominated by Germany. And Thatcher thought the outcome of such integration would be unstable. She wrote that it would leave German taxpayers to provide “ever greater subsidies for failing regions of foreign countries,” while condemning “the south European countries to debilitating dependency on handouts from German taxpayers.” Smaller nations would eventually resent “economic disruption, rule by remote bureaucracies and the loss of independence.”

For fans of Lady Thatcher, here’s a great compilation from her last (?) question time as PM.  @2:36 for a great exchange on the subject of “Europe.”

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One Response to …Catchy monkey, Part II

  1. Paul Marks says:

    Of course one of the classic ARTIFICIAL ways that ineqality is increased is by monetary expansion (creating new money from NOTHING). Because such money (whether created by Central Banks, or by private banks – if they follow a credit bubble policy) does not appear by magic in the hands of everyone (a “10% increase in the money supply” does not mean that everyone wakes up with 10% more money), it means that some (connected) people get a lot more money (via the banking system) and use it to buy real assets (before the money loses its value). Indeed a magic “10% increase in the money supply” by money appearing (in proportion) everywhere at once would be POINTLESS (as all prices and wages would promply adjust). The distortions and malinvestlment of a monetary expansion are the point of a monetary expansion – they are not side effects of the policy, they are the HEART of the policy.

    This is hardly a new observation (Richard Cantillon wrote it up in the middle 1700s), but a lot of people (including the vast majority of establishment economists) do not understand it. And stand amazed at (for example) the extreme inequality of Latin America (and do not associate it, or more recent events in the United States and so on) with a policy of monetary expansion by governments and banking systems.

    There is nothing wrong with inequality in-its-self – but there is a great deal wrong with an ARTIFICIAL distortion of the capital structure of an economy via monetary expansion.

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