h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

I awoke this morning to news on my radio of an Italian consumers' strike today. They are protesting about the cost to the consumer of the introduction of the Euro. The Government claim the Euro is responsible for price rises of between one and two per cent. The Consumer Associations claim that the truth is nearer to 10 to 20 per cent. "It would seem Sr. Berlasconi's shopping basket has no relation to goods on sale in his own country".

So I was looking forward to a few people retracting a few of their strongly made assertions in our debate yesterday.

But not a peep !

I also would like to applaud Ouzo for the contribution. It is very helpful to see yourself as others see you. But maybe Ouzo under estimates the general whipped-dog attitude of the British. Far from the jingoism of the past, what I see is a nation of particularly low morale, that would generally agree to being has-beens.

Manufacturing in the UK has all but died, and we now seem to be fulfilling Napoleon's sneer that England is a nation of shopkeepers. This notwithstanding, our recovery as a nation will depend very greatly on our self-confidence as a nation. No-one buys anything (even an inititive) from anyone who seems uncertain, and lacking in self-confidence.

There may well be strong motives from our European cousins for us to join in their (currency) gang and try to whip a bit of US butt. But take a step back. Get real. How likely is Europe to ever do anything in concert, as of one mind? Staying light on your feet seems to me a much less risky proposition for the UK in my view.

But I must revise my prediction that the UK will have the Euro by 2005. It now appears Tony B plans to defer the referendum until the next UK election is safely in the bag (in 2005), so the Euro can go hang until he has re-established his political power base. So much for economics driving the decision!

Simon, did you really say that once we've lost all foreign investment the pound will weaken and home grown goods will become cheaper than imports...?

Doesn't that seem a little like chopping your own leg off just to get an invalidity pension?

Have a look at the British Shipbuilding industry.... It got too expensive, it died, has it been re-born ? No.


In reply to BigEric...

Ok, the Italians are complaining, I don't think they were careful enough when the Euro was introduced.... The French (that wonderful race of 'strike first, think later' people) aren't complaining... it just depends on how well you monitor the introduction of the new currency.... Personally, I would be surprised if businesses didn't try to cover up a price increase within a currency change... that's what businesses do (unfortunately)..

I'm just saying that with our own exchange rate, at least there is more of a chance that if and when our economy turns down, the pound will take some of that strain. Without the pound we lose that buffer.

Do you belive the British shipbuilding industry will return if we join the Euro?
I don't know much about ship building, but imagine that most of them are built in places with cheaper labour and materials these days.

I'm not suggesting we chop our legs off. But if we get gangrene, if we have our own exchange rate, at least there is a good chance our leg will grow back.

I quite like being legless though.

Sorry, probably wasn't making myself too clear there when talking about shipbuilding, what I was trying to get across was the idea that once an industry dies, it generally stays dead. If foreign investment in industry went elsewhere, which it is likely to do if we don't enter the Euro, a lot of skills and expertise are going to be lost along with a lot of jobs... Those skills can be virtually impossible to replace at a later date.

I heard that about the Italians as I was driving along the Autobahn, and I would dearly love to start something like that over here.

I have to stress though, that it is more of a general "feeling" that things are more expensive, although I know that the Schnellimbiss (snack wagon) near my office tried, in January, to simply remove the DM sign and replace it with an €. They relented after 3 days when nobody bought their instantly doubled in price pommes frites.

Some governments did take steps to ensure that there wouldn't be a Euro-inflation boom, but the Germans (and presumably the Italians) didn't, with the consequence that when I shop in Holland, as is my habit, I'm fairly certain that there hasn't been too much of an increase, but over here I'm definitely checking my prices. (and I did this before, so I do have something to compare it with)

It's my firm belief that the perception of the consumer will have the biggest effect on whether or not people vote for or against the Euro. Businesses and politicians may well think it's a good idea, but while the decimalisation fiasco is still within living memory, I'm pretty certain that that (coupled with the usual "Britain is independent of Europe" stance of most British people I speak to in person) will ensure that the first referendum, at least, will result in a resounding "keep the pound"

Is this the same Italians whose economy has been a model of rectitude and stability since the war?
That is a shock then...

Whisky :

Do you accept that a very significant result of changing a national currency is a significant hike in retail prices?

Or is it justa those crazy dagos?

Really. This is like debating in a kindergarten

Hi Sho !

Thanks for your input, which I found interesting and informative.

Surely, the purpose of debate (unless you're a politician or a prat) is to stimulate synergy - to stimulate different ideas and open your mind sufficiently to allow your own opinions to evolve and develop. And your point about the price of chips is noted.

But have you ever heard anybody say "Europe" in answer to a question about where someone is from ? In fact the only time I heard European used was in the early days of trying to trace Ethnicity... and that quickly fell by the wayside (thank goodness).

I just have this gut feeling that there is an optimum size for a marketplace, and that the best stalls in that market would be unlikely to be on its geographic perimiter.

Perhaps Germany should be the heart of Europe, because of its location if nothing else. And Britain could then take its rightful place in the body of Europe... the backside.... (which would make Ireland the boil on our bum it truly is!) ... only joking !!!

My point was that the perceptions of the Italian public, whose economy is in any event a little on the unstable side (one might even say legendarily so), might not be the best indicator when it came to considering the success or otherwise of the Euro. My guess would be that your average Italian shopkeeper, well used to a fluctuating economy (and how best to profit from one), might well have found it advantageous to add a little to their prices when the switch was done.
Sorry, but the Italians have shown no abbility to run an economy in 50 odd years and i don't see why they should now. Which isn't calling them 'crazy dago's' (which, in any event is the wrong racial epiphet to apply to Italians ), it's a fact of life.

Asking Whisky to answer my points is about as helpfu as debating in kindergarten tho', I'll agree on that.

No Eric, I'm realistic enough to accept that unless controlled, some businesses are quite likely to try to use the implementation of a new currency to hide price increases... The important thing is to realise that some businesses are not exactly whiter than white and to legislate accordingly... Something the Italians obviously didn't do...

One point though, the fact that the UK didn't enter the Euro at the same time as most of the rest of Europe can be used to its advantage if and when it does decide to join the club.... The government should be able to look at the mistakes made by other European governments and learn from them.

(Or is that expecting too much of a Labour Government)

Should we join the Euro?

Probably. Personally I can't say that I am bothered an awful lot either way. However there are some issues surrounding the Euro that can't be ignored and must be addressed.

I welcome the idea that a single currency will promote long term economic stability. The impact of the introduction of a single currency in the US and its long term benefit is a prime example (well the only real example). However the US does enjoy a federal government that co-exists alongside individual state government structures. Europe is developing a similar structure through the European Parliament, but needs desperately to address the issues of accountability and transparency, while the governments of the member states also need to at least start to redefine their roles in this developing tiered structure. The electorate of each member state needs to feel that they have an influence over all levels of government (pan-european, state and local).

Alongside this there need to be other changes. The US system works (albeit with faults) because a local governments at community and state level can exercise real power in many areas. Not least law enforcement, education and taxation. As long as their is an effort to over centralise many of these aspects of government, there will be distrust and discontent in many parts of Europe.

The principle bone of contention however, continues to be employment law. The recent announcement of the closure of the Massey Ferguson plant in Coventry is a prime example of the disparity in employment law and its trappings.

The plant is being closed (despite being profitable and with a relatively good order book) because it is cheaper to close this facility and move the profitable product lines to a factory in France, than it is to close the factory in France. Why? Because some of the states in Europe (including Germany and France) enjoy a legislative system that makes it difficult to terminate employment. For example, a German worker who is made redundant must continue to be paid up to 90% of his salary by his employer, until such time as he/she finds another job.

Set against such a back ground, the relatively high exchange rate is small beer in comparison. Why should a manufacturer with facilities across Europe invest in the UK? It is far better to invest in a facility that you can't afford to close than to invest in one that you can close tomorrow.

Recent history is littered with similar examples (another one that springs to mind was Corus - formerly British Steel),

In a similar vein, the provision of state pensions and health care is widespread across Europe, with little or no attempt to encourage private pensions or private health care. These systems are enormously expensive to maintain and continue to be a drain on the resources of Europe and as liabilities will continue to grow. In Britain there are ongoing serious attempts to limit state liabilities in the longer term, through encouraging private pensions and private health care.

This in itself is viewed with mixed feelings in Britain, however I believe that there is a tacit acceptance that the state cannot meet everyone's needs all of the time and that in the longer term we will all benefit.

Still one aspect of increasing unity looms large. The acceptance of a single currency will ultimately lead to the alignment and merging of taxation regimes. With our increasing empahsis on private provisions for pensions and health care, will we also be required to support the evergrowing liabilities of other European states? I personally don't believe that this will happen, yet as a consequence, there is some distrust of European motives in encouraging Britain to join the Euro.

Finally to anyone who thinks that manufacturing is dying in the UK, think again. No one either inside or outside of Europe, other than the British, seem to think that this is so.

We may not enjoy the wealth of the late 19th and early 20th centuries, however it is recognised across the world that the UK has and continues to contribute more to the world economy in terms of innovations and ideas than any other country in the world. A widely publicised Japanese study concluded that approximately 50% of the worlds most commercial innovations of the 20th century originated in Britain.

British manufacturing may be under invested, but is still continues to add value to Britains economy. According to recent DTI figures, manufacturing in Britain adds just over 30% of the value in the UK economy. True, this is low when compared to the European average of 40%, however the businesses included within the DTI survey of the UK, were solely British. US and Japanese businesses (for example Honda at Swindon) were excluded.

Since foreign investment (read Japanese & US investment) is limited in other European countries, I think that this indicates a strong manufacturing basis. Coupled with our ability to innovate this should see us in a leading position.

Unfortunately the UK government had never operated in a fashion that encourages investment in industry and even recently has had much more interest in "Cool Britannia" or maintaining the "old money". And when the government has seen fit to get involved it does so in such an authoritarian way that economics and innovation go out of the window.

Anyway, I must get back to work in my "dying" industry.

On a parting note, I will welcome the Euro if it introduced, without restriction, simply because economic and legislative differences between Britain and Europe will be reduced as a consequence. Britain need not fear the Euro, the rest of Europe needs to look to itself.

But if the Euro is not introduced in Britain then the British Government will have to start doing its job properly and stop bending before the interests of various pressure groups and cronies.

Oh and blues shark....

Oh, hey, hold on.
I wasn't implying you couldn't answer the point, just that I didn't see why you should have to answer a point (about 'crazy dago's) that you didn't make and may not agree with.

May I echo and indeed endorse the submission made by my honourable friend Whisky:

blues shark....

Hi Big Eric!

I'm all up for a debate about the Euro. As I was up for a debate about whether or not to sign the Maastricht treaty (referendum, and therefore public debate didn't happen).

For me, it's a done deed. And I have to say that I support a lot of the goals of the EU. Well, I would, wouldn't I? Benefitting as I do from the ability to live and work in a country other than my native one.

It's a pity that any debate about the Euro, however, soon degenerates into a "Britain will lose it's soverignty" (sp? sorry, too idle to use a dictionary) and "they made us stop selling bendy cucumbers" slanging match.

For some, especially those running businesses that operate Europe wide, the benefits of having a single currency far outweigh other consequences. The man in the street? He's only really bothered with how things affect his day to day life, in general, so the very real fear that prices will rise is a major concern.

Having lived with it for 6 months, it's not as bad as I thought it might be, but we have it easy here, 1 Euro is roughly 2 DMarks, so we don't have to schlepp calculators around. And anyone who was dealing with Euros before the big change was usually doing it on a computer anyway.

The Germans went into a sort of fin du siècle (is that right?) mode starting in about November 2001 and lasting up to 31st December. Then the entire 80 million of them were abducted and replaced by Euro loving pods. Truly, it is incredible to see, moaning about price rises notwithstanding, how they have embraced it. And I'm pretty sure that it's the same in Holland and Belgium.

In short: I really don't know how I would vote, given the chance, but now I have my €, I spend them just as fast as the DM and I would really like a lot more. Please.

Nice to see an H2G2 debate descend to its natural level

I still want the Euro - so there!!

@BigEric

Whoooo.... better step on yer brakes, mate...

Have I ever heard Europe as a place of origin? Yes, YES, *YES*! And I even heard from someone I thought I would never hear anything like that. Yes, it was a british (or better a couple of them) person who told that me that we are all Europeans. (oh, and they were *NOT* drunk )

Origin also lies in the eye of the beholder. When I was speaking with them, we all were in Australia. No one what say that while in Europe, because it is just too general and even sharing the same currency we are still not one country.

And then you switch to the argument, that Britain is going to be Europes backside, because your country is on its perimeter?

That is just the stuff I described earlier. You are not different because you are living on an island, drive on the wrong side of the road, or because your country is a little bit more in the north of the globe.

What is going to happen is, that you are going to be on Europes backside, because you did not join the Euro-Train.

Try seeing it from an interwoven point of view. We are globalized, we are all connected, no one can act absolutely independent (except for the US, they have enough money and guns to silence any opposition so far).

So the next logical step, IMHO, would be to try and work together. Just like unions do. No union acts in union, but they share similar targets and are using similar methods of achieving them. So we are the workers, the US is ripping us off, so let´s go and teach 'em how to strike.

Even if your country does see itself as being a bunch of losers, why are giving proof of that by just winging and complaining without doing anything.

You, as well as us or the rest of the world, have always looked across the great pond for advice, help, money and business opportunities. We don´t want that, you also don´t want that anymore.

We try to change it, you don´t.

Who has the better chance of succeeding?

I don´t want an European state, or an absolutely self-centered and ego-maniac Europe, one of these countries is enough for a small planet, but we need to change something in the economy so that it also focusses a bit more on us again.

Ouzo, formerly know as 194376

P.S. @BigEric: This one wasn´t just for you. I just forgot all the names of the rest of the anti-euro-people and used you as a scape-goat. Sorry...

Actually, I'm in very much the same situation as Sho, I'm living in France and the French, who are usually a highly nationalistic race have embrassed the Euro, if not with open arms, then at least with mildly amused confusion...

Oh, and if anyone is really afraid of a European superstate and the loss of national identity.... Do you really think the French, or the Germans, would want that to happen?

The UK isn't the only country with a long and proud heritage and a wish to remain independant.

@ Big Eric

One thing I forgot:

Status quo: british economy is going bananas

Your solution: stay light footed

Good solution?

Nope, this will not help in any way. You never were light footed, or why do you think your country has not reacted quickly (if at all) to the changes in economy?

Heavy industry is not top of the line business for us rich countries anymore. We are specialising in technology, or trade. The "border-countries" are now in the focus of the manufacturers, because they have what we used to have:

bad laws for the protection of the environment
cheap workers

So, the heavy industries is gone and its never coming back. Euro or not.

Ouzo

Well, you live and learn !

I actually thought that the British Economy was doing really well at the moment - much better than the Eurozone, and that this was the main reason we couldn't easily step back onto the snake (an outdated term for the pilot scheme for the common currency).

I am a great fan of how the Germans have managed their affairs recently particularly their re-unification, which must have been quite massive in its implications.

But I still stand (albeit open to suggestions) as a supporter of the Marx philosophy : I'd not want to join a club that would accept me as a member.

And for the benefit of the slower ones ... I'm quoting Groucho, not his older brother Karl