Last Thursday’s blog post about Daniel Hannan’s view of Iceland has provoked a response. The Conservative MEP has replied in his blog on the Telegraph website (read it here).
Aside from selectively quoting from this blog to distort its argument, he describes Federal Union as having “a whiff of benign 1930s dottiness about its campaign: of handbills and sandals, Esperanto and vegetarianism, decimalisation and naturism.” I think these echoes of the 1930s are worth exploring.
The thrust of Daniel Hannan’s original blog entry was that individual countries should have opted out of the defence of the global financial system and allowed their own parts of it to fail. They themselves would have accrued some benefits and avoided the costs to fall on to others. Iceland, he says, has benefited this way: why could Britain not have done the same?
In the 1930s, there was the same debate. Should countries try to make their way through the economic downturn at the expense of others? Different countries set about devaluing their currencies against each other, with a net result of standing still. Trade barriers were erected against each other’s exports. Some countries repudiated their foreign debts: it was only foreigners who lost out so that did that matter?
This is the economic strategy of the pickpocket. If one person does it, they might make some money. If everybody does it, they merely end up stealing from each other, and nobody is better off.
It would have been, and remains, much better to address common problems together rather than with separate policies that actively undermined each other.
But the breakdown of the economic system also led to the breakdown of the political system. Jeffry Frieden, in his book “Global Capitalism: Its Fall and Rise in the Twentieth Century”, observes that:
“One only needs to know one thing to determine whether a country moved toward autarky and authoritarianism or remained economically open and democratic: whether it was an international debtor.”
Economic freedom and political freedom were inseparably tied up in that decade. A country that put, it thought, its own economic interests first and was prepared to pursue them at the expense of others in fact sacrificed both economic and political freedoms at home. Federal Union was resolutely in favour of free trade and against protectionism, for political reasons as much as for economic ones.
If I may use Daniel Hannan’s reference to footwear, it wasn’t the sandal that was associated with the “my country first” approach, but the jackboot.