Tuesday, July 05, 2005

Tackling the euro popularity deficit

Another one to get the sceptics all upset - a call for a propaganda campaign to convince people that the euro is great and stuff. From the report (.doc download) it looks like some of our more economically-minded anti-EU brethren could have some fun with this:

"the benefits of a single currency and its accompanying instruments - a single monetary policy and enhanced co-ordination of economic policies - cannot be seriously questioned at this stage"
I mean, I'll freely admit to having little knowledge of economics and even I know that's a silly claim to make.

There's also the assertion that "polls in new Member States also reflect some scepticism to the adoption of the euro caused primarily by a lack of relevant information" (my emphasis).

Lack of information is not the issue - it's lack of a detailed knowledge, understanding and ability to interpret the relationship between macroeconomics and individual prosperity.

I'd say that the dodgy situations of Italy and Germany, both Eurozone members, is probably in itself reason enough to be a tad sceptical about the benefits. And it's entirely reasonable for the average punter to look at the apparent short-term impact of the new currency on those states which have adopted it, even if the hopeful assertion is that, long-term, it will be beneficial to all - and even if the short-term impact may only be a perceived one.

What else, after all, can they base their judgement on? They certainly aren't going to trust "information campaigns" funded by an organisation with a vested interest to see the thing work. Bias in economic analysis is among the worst sort, for economics is basically a science. You wouldn't trust the findings of a creationist study of evolution which concluded that evolution is a load of bollocks, so why would you trust an EU-funded study which concluded that the euro is great?

In any case, a propaganda campaign is not the way forwards, as it assumes a popular hostility which flies in the face of the facts. I seriously reckon that, when you get down to it, the issue of euro resistance is not one of nationalism. Naturally there is a strong traditionalist attachment to national currencies - especially one as strong and successful as the pound. But what the majority of people want is not so much the coins they're used to jangling in their pockets, but simply a comfortable standard of living.

The issue of the Queen's head on our currency has long since been sidestepped by - erm - each member of the Eurozone being able to have national symbols on their money. And the experience of switching from L.s.d. in the seventies shows that everyone can cope with a far more complex currency changeover than a simple shift from one metric system to another would be. (The issue of metric weighting is somewhat different, what with money being an arbitrary construct dependant on many variables and weight actually relating to something tangible and constant and all, but that doesn't really bear on this issue, thankfully.)

I've said it before and I'll say it again, the largely abstract notions of national identity are not as strong or as binding as the desire to get food on the table as cheaply as possible. If the euro could be demonstrated to cut our bills and make life in general cheaper, we would - bar a few "patriotic" extremists - be up for it.

This is why, of Gordon Brown's famous (yet never sufficiently remembered) five economic tests, the only one that really matters to the average man on the street is the last - "Would joining the euro promote higher growth, stability and a lasting increase in jobs?" That test cannot be passed with a propaganda campaign - and until it is any propaganda campaign will fail.

The real question, of course, is whether the euro can ever achieve all that has been claimed for it. As of yet, there is little in the way of overwhelming evidence to support claims that the euro - and, importantly, the euro alone - has been responsible for "price stability, low mortgage rates, easier travel, protection against exchange rate fluctuations and external shocks" as that report asserts. There is also little overwhelming evidence of the opposite. But when it comes to this sort of thing, better the devil you know is a fair enough line to take until the evidence becomes overwhelming. The evidence isn't yet overwhelming - hence Gordon still saying his tests aren't passed - so no one but the most fervently ideological is going to be convinced. That simple.

4 Comments:

Anonymous Neil said...

I've never left a comment on a blog before, so apologies in advance if I mess anything up.

I'm definitely a layman when it comes to economics, and I feel I'm about to bare my own ignorance to all, but surely the adoption (or otherwise) of the euro in this country will ultimately be a political, not an economic, decision?

Even if in the near future the Euroland begins to tear away with 10% annual growth in GDP, which I'm supposing no-one with any sanity is suggesting will happen, there will be plenty of people, not least economists, who will say that the adoption of the Euro was not necessary for this hypothetical success - and may even argue that the Euro only served as a drag. You'd only be trying to compare the state of the economies with the euro to those same economies without, which you can never do. Therefore you'd never PROVE the efficacy of the euro as such. The "success" or otherwise of the euro - as far as economic growth is concerned - would only ever be a matter of perception.

So it seems, if the above makes sense, some kind of propaganda campaign would always be necessary before the British public could be persuaded to adopt the euro. I had always assumed that Gordon Brown's "tests" (not worth remembering, if you ask me) were just a precursor to this campaign.

Except of course, something needs to be done with the constitution first, and adoption of the euro here looks as far, far away as ever.

7/06/2005 01:35:00 am  
Anonymous Anonymous said...

The thing is, the Euro _has_ been a success.

For example, in Italy, the huge deficit could only be financed because of the strength of the Euro, which did not come crashing down despite Berlusconi mismanaging his country into a depression.

Same thing for France.

This is in fact a testimony to the incredible resilience of the Euro.

The problem is that the countries of the Eurozone happen to be in a bunch of economic quagmires all different and all of their making.

Changing your currency just when the world suddenly decided to move faster is good only if you know where you are going...

7/06/2005 06:48:00 am  
Blogger Nosemonkey said...

You're both, from what I can tell of what is a somewhat insanely complex situation, spot on.

Neil - the euro will need to be "sold" in Britain to overcome lingering resistance, no doubt about it - and yep, it will be a political decision (one strong currency is, after all, about as good as any other..). But a concerted propaganda campaign won't, I reckon, do it.

It's got to be a slow process, and the real clincher won't be government pamphlets going on about the benefits of not losing cash via exchange rates when heading to the Costa del Sol or lots of photos of happy Europeans with their odd coins, but the ability to point at standardising prices across the continent (particularly handy if that happens considering how much of a rip-off Britain is for so many things) and healthy economies throughout the Eurozone.

They will need several years' worth of pretty much flawless data to back up any propaganda. At the moment they don't have it - hence no referendum on joining the thing in this parliament.

I reckon we'll probably also increasingly see shops throughout the country (at the moment it's primarily the big ones in London) accepting euros alongside the pound - it makes good business sense, after all - and so everyone will start getting used to the idea of the things despite themselves. It'll be little different to Scotland, where the various Scottish bank notes run alongside the standard English ones, and no one gets overly confused. (Scotland, with its different legal system and funny money is always a handy example to use when arguing the EU case...)

Anonymous - so, perhaps if dear Gordon's prudence turns out to be prattishness the euro may start holding more appeal?

Economics, eh? Bloody complicated - this is why I tend to try and avoid it. To understand the euro you really need to have detailed knowledge of the economies of all the Eurozone members - both before and after adoption - and a workable way of doing comparisons. Whether or not such a thing exists, I have no idea. What I do know is that if it does it'll be impossible to boil down into simple enough language to work as part of a propaganda campaign - but that such comparisons are the only thing that will convince.

7/06/2005 10:15:00 am  
Blogger The Pedant-General in Ordinary said...

Nosemonkey,

It'll be little different to Scotland, where the various Scottish bank notes run alongside the standard English ones, and no one gets overly confused. (Scotland, with its different legal system and funny money is always a handy example to use when arguing the EU case...)

No-one gets overly confused because a Scottish banknote IS STERLING. It just happens to have been issued by a different bank. It is measured in pounds. The exchange is exactly 1; it does not vary and there is no commission on exchange.

This is one thing that makes us Scots very cross indeed. To use it as in favour of the Euro is, well, disingenuous to say the very least.

As for the rest of this argument, well, I think I will agree with you - it is all jolly tricky.

7/06/2005 03:41:00 pm  

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