Could the rise of Golden Dawn save the Eurozone?

In Germany's nightmares, inflation leads to Nazis. But now that there are Nazis anyway, perhaps we'l

More growth would obviously do a lot to help the Eurozone. For Spain and Italy, a healthy level of growth alone might be enough to pull them out of crisis mode. For Greece, more would have to be done, but it would be a strong start.

Unfortunately, that growth is being at least partially quashed by the outspoken desire of Germany (and thus the European Central Bank) to keep inflation low. High inflation in Germany would overcome the problem that the Eurozone currently has where wages in Spain, Greece and Portugal need to fall relative to those in the core, but are showing no signs of doing so.

Why is Germany so against inflation?

Well, the fact that high inflation would negatively impact the German economy is obviously a large part of it. But equally important is the experience of the German people in the 1930s. Put bluntly, there is a fear in Germany that high inflation leads to fascism.

Which is why the rise of Greek neo-nazis Golden Dawn (whose flag looks like an alternate-universe version of the swastika) could be a blessing in disguise. Albeit a really, really good disguise. Because the one thing Germany hates more than inflation is Nazis.

Greece has price of a little under 2 per cent. There are a lot of things causing the rise of their homegrown Nazis, but hyperinflation is not one of them. So right now Germans are seeing their worst nightmare happen even though they managed to keep inflation low across the Eurozone.

Could this mean that they'll back off slightly over their overbearing desire to keep inflation low?

Well, so far there isn't a huge amount of encouraging news. On Wednesday, the FT did report that:

A future German inflation rate above the eurozone average could be part of a natural adjustment process as crisis-hit countries pulled themselves out of recession, the Bundesbank argued in evidence to German parliamentarians.

Except that that was only a couple of days after the Bundesbank president wrote in the same paper that:

To prevent the recovery stalling, demands have been directed at the Eurosystem to deliver yet lower interest rates (or at least to forego raising them), yet more liquidity and even larger purchases of assets.

However, the assumption underlying such well-intentioned advice does not hold up to closer scrutiny.

So they don't appear to have been spooked into monetary expansion anytime soon. Perhaps Golden Dawn aren't really a blessing in disguise after all; sometimes, to misquote Freud, a Nazi is just a Nazi.

The leader of the fascist Golden Dawn party. Photograph: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Getty
Show Hide image

Richmond is a wake-up call for Labour's Brexit strategy

No one made Labour stand in Richmond Park. 

Oh, Labour Party. There was a way through.

No one made you stand in Richmond Park. You could have "struck a blow against the government", you could have shared the Lib Dem success. Instead, you lost both your dignity and your deposit. And to cap it all (Christian Wolmar, take a bow) you self-nominated for a Nobel Prize for Mansplaining.

It’s like the party strategist is locked in the bowels of HQ, endlessly looping in reverse Olivia Newton John’s "Making a Good Thing Better".

And no one can think that today marks the end of the party’s problems on Brexit.

But the thing is: there’s no need to Labour on. You can fix it.

Set the government some tests. Table some amendments: “The government shall negotiate having regard to…”

  • What would be good for our economy (boost investment, trade and jobs).
  • What would enhance fairness (help individuals and communities who have missed out over the last decades).
  • What would deliver sovereignty (magnify our democratic control over our destiny).
  • What would improve finances (what Brexit makes us better off, individually and collectively). 

And say that, if the government does not meet those tests, the Labour party will not support the Article 50 deal. You’ll take some pain today – but no matter, the general election is not for years. And if the tests are well crafted they will be easy to defend.

Then wait for the negotiations to conclude. If in 2019, Boris Johnson returns bearing cake for all, if the tests are achieved, Labour will, and rightly, support the government’s Brexit deal. There will be no second referendum. And MPs in Leave voting constituencies will bear no Brexit penalty at the polls.

But if he returns with thin gruel? If the economy has tanked, if inflation is rising and living standards have slumped, and the deficit has ballooned – what then? The only winners will be door manufacturers. Across the country they will be hard at work replacing those kicked down at constituency offices by voters demanding a fix. Labour will be joined in rejecting the deal from all across the floor: Labour will have shown the way.

Because the party reads the electorate today as wanting Brexit, it concludes it must deliver it. But, even for those who think a politician’s job is to channel the electorate, this thinking discloses an error in logic. The task is not to read the political dynamic of today. It is to position itself for the dynamic when it matters - at the next general election

And by setting some economic tests for a good Brexit, Labour can buy an option on that for free.

An earlier version of this argument appeared on Jolyon Maugham's blog Waiting For Tax.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues.