A month shy of the 40th anniversary of its first broadcast, I was impressed when my teenage son asked me last week whether I had ever seen the Cheese Shop sketch. He was astounded when I started quoting from it and informed him that Monty Python had defined humour for my generation (sorry Yanks, it was not Benny Hill). For several months my mind has been filled with another of their skits that circumstances will simply not allow to fade away.
When I first saw the Four Yorkshiremen sipping good wine and trying to outdo each other in exaggerated memories of their poverty-stricken childhoods (“I had to get up in the morning at ten o’clock at night half an hour before I went to bed”) I just found it very funny. When I grew up and read Orwell’s “The Road to Wigan Pier” that deals with the abject poverty and misery of the mining families of Yorkshire and Lancashire during the Great Depression, I realised its satirical greatness.
As Europe pulled away from the summer – reading, watching and listening to the media – you could be forgiven for thinking that the Euro Crisis was on its way out. Agreement on banking union, adoption by the ECB of ‘lender of last resort’ status and a green light from the German Constitutional Court for German participation sent government bond yields down in Spain, Italy and Portugal. At the same time Spain, Italy, Portugal and Ireland were congratulated for their austerity packages which only left Greece listing badly and looking like she is likely to sink.
Well, now that we are out on Autumn’s open road, all hell has broken loose as demonstrations and riots erupt across Europe against the austerity packages imposed on the citizens and residents of problem countries. The policymakers in Berlin, Brussels, Madrid, Lisbon and Rome seem to have forgotten one thing in their calculations. The suffering of the people. The Spanish are reduced to reminding us that they discovered the New World, the Italians are reminding us that they used to rule the world, the Portuguese are reminding us that they discovered South America (which explains why, when I travel to Brazil, I cannot understand a single word they say) and the Greeks continue to annoy us by reminding us that they created Western Civilization . Only the Irish, who discovered Guinness that has brought more happiness to men’s faces than all those discoveries put together, are shutting up and suffering in silence.
Of course, what all those nations did in their earlier incarnations is irrelevant in the show-me-the-money modern world. But what should be critical to policy makers is the here-and-now. And the here-and-now is not made up of central bank statistics of inflation targets, quantitive easing and long-term growth. The here-and-now is made up of people who need to live through today and tomorrow before they get to the long-term. The European Union is about people and if its pensioners are being deprived of their only potential source of livelihood and if 50% of youngsters cannot find work then – whatever the ECB statistics say – the European Union is setting itself up for its own fall.
And that is even before we get to the question of whether austerity measures are macroeconomically the way to go (the ongoing battle between the Keynesians – no way – and the followers of Hayek – absolutely).
The extent to which statistics have trounced humanity came home to me last week in, what is almost an aside to the whole shambolic situation. The Portuguese Prime Minister announced that, in an effort to encourage employment, his government was going to cut the Employer’s National Insurance contribution on workers’ salaries by 5.75%. Good economic sense but for one small point. In the same announcement he informed the public that Employee’s National Insurance contributions were going to rise by 7% to pay for the reduction thus slashing take-home pay.
The issue here is not whether costs need to be reduced and taxes raised but, rather, the socially destructive way in which that goal was to be achieved. By telling the man in the street, who understands as much economics as it is to his advantage to understand, that he is being forced to finance the profits of his already overprivileged employer is inviting that man in the street to clamber onto the barricades. Simply idiotic. When I recall that the current president of the European Commission is himself a former holder of the august position of Prime Minister of Portugal my hands start to shake involuntarily. In the meantime the Portuguese Government has backed down on this issue.
And then there is the macroeconomic situation. Most economists today (who happen to be neo-Keynesian) agree that austerity is not the right way forward in the short-term. The view stems from what Keynes called the Paradox of Thrift – that while good housekeeping including saving for a rainy day is an undoubtedly sound policy for individual households, at the collective national level it leads to a fall in GDP and recession. While targets should be set for the long-term, Governments should be allowed to run up bigger deficits in the short-term during a recession to protect their citizens and kick-start the economy.
The irony is that several governments have already been given their marching orders by electorates for fouling things up. On the other hand, the troika charged with sorting things out are the EU Commission (non-democratic), the European Central Bank (non-democratic) and the International Monetary Fund (non-democratic and not averse to a bit of fun in New York hotel rooms). Of course, in the background conducting this Chamber Orchestra is a certain daughter of a Lutheran pastor. Her electorate is likely to boot her out in 2013 if she does not inflict some horrible pain on the recalcitrants. Which means the people can continue to be stretched on the rack, albeit with a little more slack than before due to recent developments at the ECB. The question to be asked is “How many more pensioners will need to commit suicide or how much will violence need to increase among the young unemployed, before those who make the decisions understand that the future of European society is not just about positive financial indicators derived from questionable econometric equations?”
Apropos, the Cheese Shop sketch has proved quite prescient. John Cleese, playing an intellectual prig, enters a boutique cheese shop with a view to assuaging his hunger. Live entertainment is provided by an unlikely duo of bowler hatted gents dancing in the Greek tradition to the accompaniment of a bouzouki. The shop is completely empty of cheese although the shopkeeper, Michael Palin, continues to give Cleese the impression that he has plenty of cheeses. Remind you of a country in Europe (there was a subtle clue in the text)? Anyway, the final part of the scene is where the analogy falls apart. Cleese tells Palin that he is going to ask him straight if he has any cheese and, if he answers “No” he will shoot him. The shopkeeper tells the truth.
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I didn’t press the Like button because the correct word was Love and because I don’t subscribe to Facebook, which seems to be a requirement for effectively communicating luke warm feelings about internet content in one click. Hence this long explanatory reply.