What\’s Clarke\’s Law of Politics?

Arthur C once pointed out something along the lines of \”when an elderly and distinguished scientists says something is possible, he\’s usually right, when he says something is impossible he\’s usually wrong\”.

Best my memory can do on the quote.

But how should we reformulate that for politics?

The leaders of Italy and Greece have resigned and the eurozone appears to be on the brink of breaking up, but Lord Heseltine has lost none of his faith in the single currency.

“We made a great mistake in not joining the euro,” the former defence secretary told a gathering of the Conservative China Group at the Palace of Westminster. “It would have been good for Britain.”

To gasps of incredulity, he went on: “All my political life, we have suffered in this country from a vile disease called inflation.

“Every government, regardless of political stripe, takes the soft option and devalues our currency. If we had joined the euro, the Germans would have forced us to be more competitive. I am telling you this country needs to become more like Germany. We should still join the euro.”

No, it isn\’t that in his dotage this politician is barkingly wrong.

He\’s had these views for decades, he\’s been wrong all along.

So, how do we reformulate Clarke\’s Law for politics? No, lines that include \”their lips moving\” aren\’t quite right, we know that one.

13 comments on “What\’s Clarke\’s Law of Politics?

  1. Well he does sort of have a point. We have had too many governments that have opted for inflation rather than taking the tough decisions to properly restructure the economy. It is a product of weakness. And the problem is that a little bit of inflation varies from being like being a little bit pregnant to having a little bit of chocolate. You can rarely have a little but of inflation. The Germans would have forced discipline on us. And we would have been better for it – even if we wouldn’t have liked it.

    But to join the Euro now as it is dying would be insane. Worse than that really. Even in the past the Euro was never the right choice.

  2. But his views are no different from those advocating a return to the Gold Standard to force us to improve fiscal discipline and therefore (hopefully) competititiveness. And there are an increasing number of those voices – not just elderly and bespectacled. The fact that under pressure fixed exchange rate systems have ALWAYS failed seems to be lost on them. And this “defend the currency at all costs” idea flies in the face of economic reality. There are times when devaluation IS the right option. Trying to generate an export-led recovery with a currency pegged at too high a rate against your major export markets is Sisyphean.

  3. “Well he does sort of have a point. We have had too many governments that have opted for inflation rather than taking the tough decisions to properly restructure the economy.”

    Like our current one, for instance.

  4. Frances Coppola – “But his views are no different from those advocating a return to the Gold Standard to force us to improve fiscal discipline and therefore (hopefully) competititiveness.”

    Except the Euro is insane in a way that the Gold Standard is not. The Gold Standard would also allow each country to have its own interest rate, mandate it in fact, which would be nice.

    “The fact that under pressure fixed exchange rate systems have ALWAYS failed seems to be lost on them.”

    I am not sure it fails to be lost on me. Define pressure. France created the Franc as, I think, 4.5 grams of gold in 1803. They kept to that standard until 1914. Then they went off gold in the 1930s. By 1960, when they revalued, the Franc was worth just 2.5% of the 1934(?) Franc. By the time they introduced the Euro, the new Franc created in 1960 was worth about 64 of the newer Francs.

    We know that fiat currencies always fail. It usually does not take that long either. The modern West is doing comparatively well. Perhaps the French did not stick to the Gold Standard, but through Revolution, invasion, the Commune, they stuck to it. A lot of pressure.

    “And this “defend the currency at all costs” idea flies in the face of economic reality. There are times when devaluation IS the right option. Trying to generate an export-led recovery with a currency pegged at too high a rate against your major export markets is Sisyphean.”

    But not impossible. The long term benefits do seem to out weigh the short term costs. Britain did well after re-establishing the pre-War exchange rate after the Napoleonic war. Britain did not do so well in the 50 years after refusing to continue to do so after WW1.

  5. “The Germans would have forced discipline on us.”

    Of course they would have, just as they did on Greece and Italy and Ireland.

  6. The ludicrous thing is that if we wanted to be like Germany we would be. But we don’t, so we aren’t. Just like Greece and Italy don’t want to be like Germany and are suffering from being yoked to them right now. We tried it 20 odd years ago and look what it got us – a common or garden recession made 10 times worse by the govt of the day having to raise interest rates in the depths of the economic dumps to ‘defend’ the pound against the DM.

    If we wanted fiscal rectitude and low inflation we would vote for it. It cannot be imposed on an unwilling population from above without the sort of social disintegration we now see in Greece.

  7. “The fact that under pressure fixed exchange rate systems have ALWAYS failed seems to be lost on them.” Don’t all exchange rate systems fail in the end? Just as all countries do, all empires do, etc. Perishable goods.

  8. SFMS

    I’m personally not very interested in long-term benefits that will be seen after I’m dead if it means that while I’m alive my wages are too low for me to afford to save for my retirement because we are “defending a currency”. And my guess is that a lot of people would feel as I do. Short-termism isn’t limited to politicians.

    And your inflation analogy is dismally wrong. It is perfectly possible to have a “little bit of inflation” without it leading to hyperinflation. But believe me (I speak from experience) it isn’t possible to have a “little bit of pregnancy” without it leading to a baby.

  9. When a politician says something is good for you, he might be right, when he says it is a requirement vote him out.

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