We have been learning a lot over the last few weeks - or at least I hope we have.
Above all we have learnt once again the power of nature relative to mankind. A tiny virus can cause misery and significantly damage the world economy.
We should have learnt smaller things too, that it is better to be part of a significantly sized economy which has genuine political and economic cohesion rather than be on our own or part of a loose alliance. We are also in the process of learning that no Government can protect us from all ills.
We are in a more dangerous economic situation than in 2008. Then the problem was in the credit markets and Governments, whose balance sheets were in reasonable shape after many years of strong growth were able to take the strain.
The position now is quite different. We have a sudden and significant reduction in demand at a time when, after more than a decade of anaemic growth in the West, Governments are financially weaker and their citizens restless.
People compare the current situation to wartime. The effects on our ordinary lives and liberties do have echoes of that but the economic situation is not the same. In wartime Governments run up large debts and spend money on wasteful things but employment tends to be high and inflation is the norm. Now the more immediate dangers are deflation and a surge in unemployment but unfortunately we will get levels of debt relative to the size of our economies which have not been seen since the 1940’s. There is really no choice - only Governments of nations with a Central Bank have shoulders broad enough and the ability to print money which gives them the power to do what needs to be done - but if we look past the next few months there will be unpleasant consequences beyond the ones we currently focus on.
For the UK the level of debt we must take on to mitigate the collapse in demand will weigh on growth and our ability to fund public services at the time when an ageing population will increasingly require more help. We are going to have to brace ourselves for higher taxes and downward pressure on real earnings for probably a considerable period. The painful burden of debt which this crisis will cause can be worked off over many years or slyly shifted onto the shoulders of savers and future generations. Once Governments taste the miraculous power of being able to print money it is a habit which is hard to shake off - inflation is the result. At the moment the chasm in demand points the other way but significant inflation is a real risk round the corner.
The second thing the current crisis will cruelly expose is the existence of European states which are not really economically viable - they might limp along within the EU but they will increasingly obviously no longer cut it in terms of being dynamic societies and economies with effective and affordable public services. A decade ago the EU managed with considerable strain to pull Greece back from the brink. That won’t be possible this time. Greece will be joined by Italy and possibly others.
The moment of truth which the EU has avoided ever since it set up the Euro will have to be faced. Currencies cannot succeed in the long run without deep social, economic and political union. Both the weaker and stronger members of the EU will have decisions to make, the former whether to give up sovereignty or fail their citizens and the latter whether to pick up the bills or say goodbye to the Euro.
Whatever the decisions they make Scotland is better staying out of it.
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