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April 20, 2004


Andrew Ian Dodge

Never mind the Lib Dems, the Yes side will have such cretins as Ted Heath, Michael Heseltine, Sir Leon Brittan and then there is Neil Kinnock.


Like Oliver, I remain entirely undecided on the Euro and will wait until the referendum and the proper debates on the issue. Whatever side I take, I can guarantee that I will be siding with some people I can't stand.

David Collins

I went to the Alistair Campbell gig in Bristol yesterday (Tuesday) evening. Being that We were in Edmund Burke's former constituency I asked him what he thought Burke would have said about new Labour's enthusiam for referenda and whether it wasn't an abrogation of parliament's and government's responsibility to take tough, and sometimes unpopular decisions in the national interest.

In fairness to him AC answered that in the 18th Century when Burke ennunciated the doctrine of the independence of MPs, referenda were absolutely unheard of and impracticable. Now in the 21st Century they have a role in legitimating, or checking the policies of elected government's, particularly in relation to major constitutional matters such as devolution or relations with the EU (he didn't touch on the question of elected mayors). While he felt the Swiss approach was too much, they had a place and could be beneficial in terms of raising the level of public debate and awareness.

I have to say i'm not convinced and would prefer our elected representatives to do their job rather than pass toss the job of dealing with hot potatoes, such as the European "Constitution" on to people who are largely ignorant of the complexities and the possible consequences of such decisions.

I would be fascinated however to discover Oliver's opinion on this issue, which he has understandably skated over in favour of an analysis of the decision we shall all, regrettably, be forced to make in due course.


Oliver, one of the arguments I have heard against the euro is that it is impractical to conduct a single monetary policy covering all of the eurozone economies. This line of thought goes that the ECB's inflation target is set with the higher inflationary tendencies of some eurozone economies in mind (Spain, Greece, Portugal I believe), but this has the effect of dampening growth in the stagnant larger economies at the eurozone's core (i.e. Germany and France). This strikes me as plausible but I am not informed enough to form my own judgment. Are you familiar with this argument, and do you have any comments on it?


In a later post, Oliver points out that "Keynes's central insight was that market economies were cyclically unstable, and that those fluctuations needed to be countered by the operation of fiscal and monetary policy."
A single currency requires a common interest rate and fixed exchange rates for different countries, thereby removing two of the mechanisms for stabilising unstable economies. The third, fiscal policy, is neatly ruled out by the Stability Pact. The consequences are visible in Euroland already. Germany, stuck in recession, cannot devalue, cut interest rates or cut taxes. Ireland, enjoying a boom, cannot revalue its currency or raise interest rates, and the politicians lack the will to create a large budget surplus.

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