Out of the Euro: How Smart are the British?

      Unfortunately, not nearly as much as you might at first glance credit them. To be sure by not being on the Euro they have avoided Krugman's Rubicon Effect-the effect of lacking your own currency and printing press.

      Still, Britain under David Cameron has subjected itself to Euro style austerity while not having a Euro style debt crisis. In reality despite what the austerity hawks tell us what determines whether or not you have a debt crisis is not whether you are "thrifty" or "spendthrift" but rather whether you have your own printing press.

      Nevertheless perhaps Britain deserves credit for having dodged a bullet and not being part of the Euro in the first place.

      This seems plausible. However, after reading a bit of the historical record in Correlli Barnett's "The Lost Victory: British Dreams, British Realities 1945-50" Britain's abstention from the EU gets some historical context and doesn't look very impressive. Certainly Britain's historical isolation from the EU was not due to superior, piercing insight but to the contrary out of being out maneuvered and overall having the wrong priorities.

      As Barnett shows, British dreams at the end of WWII were largely a prisoner of the past glory of the British empire and also the illusion of being on the side of the "winners" in WWII. In reality of course, as Barnett says, Britain had to be bailed out and carried home by the U.S.

      The trouble was this. The British still wanted and thought they were a "big power" but in reality had long since become a second rate power. This development was already clear at the start of the early 20th century but it was undeniable after the end of WWI.

        While Churchill is remembered-rightly overall-for being the hero of Britain-certainly he was the right man at the right time following the disastrous appeasement policy of Neville Chamberlain-in reality Churchill's strategy during WWII retarded progress and needlessly prolonged the war. The reason for this was largely two fold-he had the British anxiety to avoid the 700,000 causalities they had suffered in WWI, and because they wanted to protect the British empire-India, Egypt, it's other colonies and commonwealths.

        After WWII with British pretensions at their zenith-after all they were on the side of winners, they were a "great power"-this was never a concern during the era when the British truly were the world leader in the 19th century, but now that they were a second rate power they now were concerned with prestige-they were more concerned with maintaining the British commonwealth of nations and their "special relationship" with the US-this special relationship was and has since been a lot more special for the British than the US of course-and they weren't sure about the European Project thinking it might take away from these priorities.

        Recently of course Cameron was left out in the cold after attempting to impose a list of demands before the EU went forward with some moves towards further integration.

         http://diaryofarepublicanhater.blogspot.com/2011/12/david-cameron-biggest-loser.html

        Cameron was ignored and Sarkozy basically told him he could mind his own business. It was worried after this that Britain had suffered a bad political loss by this thumbing of the nose at Cameron.

         Yet this has been the relationship of Britain with the EU since the earliest days of the European Project. As Barnett shows us, in 1950 when the Europeans put forward their Schuman Plan, the British tried to come up with their own diluted  plan,

         "The French, however, had preempted such British attempts at sabotage with the speed and ruthlessness of a Gallic driver overtaking and cutting up a car-load of British tourists trundling obstructively in the middle of the road. Before Schuman even first informed the British Government of his plan on 10 May 1950 he had secretly obtained American and German support for it. Dean Acheson, the US Secretary of State, being strongly in favor of European integration and also bored and irritated by British pretensions to share-as between two world powers-a 'special relationship' with the United States, enthusiastically backed the Schuman plan."

          The Germans of course also jumped in to jump in to be co-founders with the French of a new authority. Britain just as they were recently with Cameron were left outside. Britain would be on the outside looking in with the construction of the new postwar Europe.

         It's easy to lose perspective about the EU. This idea was formed with the objective in mind of making sure there was never another European world war again. The current problems are about the monetary structure of the Euro system started in 1998. This needs a lot of work. Clearly the EU needs either less or more union.