Saturday 21 March 2015

The economic conseqences of - the Greeks.

I'm reading with great enjoyment historian Richard  Davenport-Hines's recently published book  "Universal Man: the Seven Lives of John Maynard Keynes."  Davenport-Hines's  comments on the aftermath of the Versailles Treaty should, I believe, be noted by Mrs Merkel et al as they negotiate with Greece over the next few days.

. . .less than half of the £6.6 billion demanded by the Allies  under the Versailles Treaty was reckoned by (Foreign Office) experts to be  recoverable.  Consequently , throughout the 1920s the Foreign Office's tactics. . . sought to pacify Europeans tensions  by allowing reparations  and then war debts  to be winnowed, during thirteen years of wrangling, to about £1 billion.  'From the earliest years following the war,' explained a Foreign Office memorandum, 'it was our policy to eliminate  those parts of the Peace Settlement which, as practical people, we knew to be untenable and indefensible.' . . . . . It was not Keynes's polemic* that taught German voters  that the Allies were yielding diplomatists . .  . These reductions were not necessitated by Keynesian sophistry , but by the unenforceable provisions of which he had warned.

Here in Britain Osborne and the rest of the political establishment have refused to learn the lessons of the 1920s and 1930s  and so imposed unnecessary misery on some 20% or so of our population..  There is scope for the for the leaders of the Eurozone to be more enlightened and avoid even more severe misery for most of the Greeks.

*The Economic Consequences of the Peace

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