It’s not a rhetorical question. I really am wondering, after listening to the live debate earlier this afternoon on Today FM, why anyone should bother voting. I suspect that indeed, the turn-out will be quite low, and the yes vote will probably carry. I also suspect it’s not going to make the slightest bit of difference in the long run. I can’t help feeling that both sides of this debate have missed the point and maybe there is no point. What we’re hearing is just everyone’s favourite talking points, most of which have nothing to do with the actual treaty.
So I want to list some facts, and what I consider to be the most likely outcomes of them:
- There are financial crises in several Eurozone countries. These crises have different causes, but have ultimately brought those countries to the same point – the governments are spending more than they are taking in.
- The EU has stepped in to ensure funding for those countries at lower interest rates than they would get in the financial markets. However, this access to cheap, easy money provides little incentive to channel spending into the right, effective areas. All this bailout money is going towards funding current consumption and paying existing debts, not to grow the economy.
- The treaty is an attempt to put the brakes on government spending, but it does not differentiate between different types of spending. So governments keep pouring cash into what is effectively a bottomless hole; there’s nothing coming back up or out the other side. And the debts keep mounting.
- So governments are spending, but not investing. Individuals are saving and not spending. Small business has no access to credit.
- In an effort to bridge the gap between spending and income, required by the EU, governments raise taxes and cut spending on things such as health, education and infrastructure. But they don’t look to reduce the bloated public sector – money continues to flow into non-productive areas, where it effectively disappears. Unemployment remains high, people emigrate, further reducing the prospects for economic recovery.
- People get tired of bearing the brunt of other people’s bad economic decision making; unrest breaks out in the more volatile EU nations (don’t think that it can’t happen here).
- Germany gets tired of writing out cheques to the rest of the Eurozone, even though there’s nothing else they can really do with their enormous surplus. If they were to store it, the euro would appreciate, rendering their exports too expensive for China, their biggest customer.
- One by one, the fringe Eurozone members default on their debts, not necessarily because they want to, but because they have no choice. Confidence in the Euro drops because no-one knows what it can do any more. Speculators are betting on it failing, and Germany, the only country with the power to ensure it does not fail, is no longer committed to its survival.
- The Eurozone breaks up. Europe retains it’s common market and political union, but abandons the fantasy of a single currency.