I was planning to have another pop today at Louise Mensch MP for being so thick but I shall save that treat for another time. Instead my mind wanders to Spain where the Prime Minister, Mariana Rajoy is implementing austerity measures with vigour in return for another bailout or twenty. This is not going to be fun. It is sheer madness but we are talking about the EU here so I guess that is par for the course.
In today’s news we hear that VAT is to be increased by 3% (that is going to do wonders for increasing retail volumes), to axe thousands of state jobs ( good – but with unemployment at c25% and youth unemployment at 50% where will these folks get new jobs?) and to stop subsidizing lots of loss making industrial operations. And that brings me to the miners who have marched in Jarrow style to Madrid to protest. Because the problem is that nearly all of Spain’s mines are (like the Yorkshire pits of 30 years ago) running out of coal, etc so totally uneconomic. Cutting the subsidy means these pits will shut.
That does not make it wrong. Spain is bust and cannot afford to subsidise loss making industries. So Rajoy is right just as Baroness Thatcher was 30 years ago to take on the miners. But there is a difference…
The Iron Lady had created a relatively low tax economy for Britain. And we had floating exchange rates which meant that it was possible to be British based and competitive. Some of the Yorkshire miners sat in their pit villages and opted for a life of welfare. That was their call. But they did not have to make that decision. There was work to be had. Those who claimed otherwise were reminded by the great Norman Tebbitt that in the thirties his Dad had got on his bike to look for work. The Yorkshire miners had the same choice.
The British media industry tends to romanticise the plight of Scargill and his comrades who – let us not forget happily brought the country to its knees because they wanted more and more money – during the 1970s. Films like Billy Elliott and Brassed Off ignore the economics of the situation, look at the idea of community through rose tinted glasses and pretend that there was no hope for those facing “dole not coal.” It is all a myth perpetuated by media luvvies. Thatcher got it 100% right and the fact that Britain is bankrupt today is not her fault. It would be in an even worse pickle had she not taken the hard and brave choices she did, the last time we had a real Tory in charge.
So what of Rajoy? Well he has to follow Thatcher’s lead but here is the difference. Spain is locked in a currency which means that it cannot have the breathing space to become competitive again. Each time Rajoy fires a civil servant or a miner or ups tax he makes the depression which is crushing his country worse. That in turn will increasingly undermine the balance sheets of the country’s banks, meaning that Spain needs more and more bailouts.
Sun Tsu argues that faced with a quick death or a slow death, if death is inevitable, you opt for the former. Spain (and Greece) are at the behest of the Evil Empire opting for the latter and that slow death will in turn drag in others (Italy and France) beyond the point of no return. This is sheer madness. I hope that PM Rajoy holds his nerve and carries on firing miners and civil servants but that he also accepts that for Spain no recovery is possible inside the Euro. Spain must default and leave the Euro and start again. In due course it will but not of its own volition. Until then, I sense that as part of the slow death imposed by the EU things are going to get very ugly very quickly in this relatively young democracy.