The debate surrounding Europe's economic crisis has reminded me of Lewis Carroll's Humpty Dumpty. In Through the Looking Glass he scornfully tells Alice: "When I use a word, it means just what I choose it to mean – neither more nor less."
And so it is in the Eurozone debate, especially over the two words on everyone's lips – "austerity" and "growth". It seems to me that every speaker means something different by each word, while each listener understands something else. For some, austerity means economically-dominant northern Europe – forcing southern Eurozone partners into political submission under the weight of monetary and fiscal union.
For some of us, however, it seems an unfortunate and misplaced word to use altogether, precisely because it is capable of so many different meanings. Never forget, the Greeks didn't get where they are by accident, nor because of any agenda in Germany, ECB or EU to do them down. They got there through years of poor decisions and bad governance. Most notably, they thought that once they were in the Eurozone, Greek labour costs could have parity with the Germans. Without German productivity, they priced themselves out of the market and the government effectively handed control of monetary policy to the trade unions.
The Left like to use the word "austerity" to imply needless hardship. In truth it is merely a recognition of economic reality. For those who would rather live now and let our children pay later, "austerity" has become a handy word to deflect blame elsewhere. Austerity is not a punishment by the ECB or EU. It simply means getting back to spending what you earn. Greeks have spent several years living beyond their means, but making up the difference with money their government borrowed. Labour did something very similar in the UK and if the voters had not eventually seen through them the consequences could have been still more disastrous.
Then there is the other word, "growth". All Europe's leaders want growth and several have begun to demand it – as if it can be created by sheer force of will. It is as though they would scatter seedcorn on a block of concrete and say – "Go on, then – grow!" Just wanting growth is not enough. We must provide the right soil, light and nurture for something to grow and flourish. The Commission and Council cannot just order growth and then sit back and watch it happen. Growth will be a product of their getting everything else right. They don't seem to understand that growth needs a low tax, deregulated, business friendly environment, access to capital, a lower burden of regulation and consumers who have confidence to spend. An imperative to do just that.
For some, growth is just a code-word for more public spending, higher taxes, more borrowing, more money for cohesion funding. All that will do is create false jobs in questionable social projects: the very actions that created our troubles in the first place. Nothing do with wealth-creation and everything to do with wealth-redistribution – from North to South in Europe.
Growth may be the goal, but competitiveness is the way to achieve it. So, the EU must concentrate all its efforts on measures to create jobs through competitiveness. To do that it must stop prioritising pet spending projects such as cohesion funding and social policy. A prime driver in all of this is not the Euro, ECB or EU: it is the global economy, which is forging ahead with, or without, us. Europeans have the choice: keep up or fall behind.
When competitiveness is the real issue here, the focus must be on the areas where the EU really can create added value with the money it spends – the fields of research and development, science and real investment in technology and digital infrastructure. We need vigorous pursuit of free trade and the completion of the single market to embrace digital enterprise. The Commission must be told that when it comes to fixing the economy, the single best tool in the box is the single market.
Yet against a backdrop of a stagnant economy and 23 million unemployed, it is clear the single market is not delivering what it should. Attempts to reform and reinvigorate it are running far too slowly. We need war on red tape to run in parallel. It is the SMEs which will do the heavy lifting in getting this economy on the move again – but instead of looking to set such enterprises free to grow and prosper, Mr Barroso and his commissioners press ahead with burdensome social legislation such as the Working Time Directive which merely ties them down.
This is the way to stimulate recovery. These are the areas where judicious investment can genuinely drive competitiveness and help the continent turn the corner away from its current perilous economic state. There lies the path to growth. Unfortunately, too many in the EU's leadership struggle to see this truth. Sadly, it shows in their language. When the Commission published its latest economic data last week, it had the unpalatable task of announcing zero growth across the EU. In doing so, it reached for an excruciating euphemism. A press release heralded the apparently good news of "stable GDP" in Europe.
Of course stagnation would have been the proper word. Lewis Carroll would be impressed.