Henchman's medicine

Henchman’s medicine

According to a recent article on derStandard.at, the European Union is considering a “Marshall Plan” to boost its nations’ struggling economies. The measure would raise up to 200 billion euros to be invested in infrastructure, renewable energy and “key technologies”.

This doesn’t sound bad. After years of frugality-talk and fiscal hawkishness, the possibility that governments might actually take some money and invest it in the real economy instead of flushing it down the financial market's drain feels like a fresh breeze of sanity in a crisis that has so far been dominated by political cowardice and perplexity.

If the article had ended right there, one might have been able to indulge in a small amount of optimism that seems so hard to come by these days. Unfortunately, the article goes on to describe where the money needed for this would come from. The proposal suggests that 12 billion euros be taken from the European Financial Stabilisation Mechanism in order to raise private capital on behalf of the European Investment Bank using "complicated financial instruments". If this was a farce, it couldn't have been better put.

 "Complicated financial instruments", now where have we heard this phrase before? Oh, right, wasn't it complicated financial instruments that got us into this mess in the first place? Wasn’t all this ruckus caused by rocket scientists employed by big financial institutes coming up with formulas and, let’s call them what they are, “bets” that almost no other mortal being could possibly understand? Does that not matter?

Maybe the EU’s politicians assume it’s different if these "instruments" are used by the light side of the force. Maybe fire can sometimes be fought with fire. Maybe. Anything is possible. But is that a mantra you want to base political decisions on? Irony is a dangerous concept. Sometimes it is not understood, sometimes only too well, and often people simply don't like it. Especially if their money's at stake.

Of course, it’s a little unfair, if not simplistic, to express such criticism. Complicated financial mechanisms essentially helped our grandparents to a decent pension and are still helping us get decent insurance at halfway affordable rates and I’m sure are achieving some other positive things on a macroeconomic scale. Many people in the developed world can live a decent life because responsible people do responsible math. However, complexity always shifts power to those who understand it. And isn't democracy based on people understanding and judging what's being done in their name? Knowledge is power, but if you flip the proverb, so is ignorance. Any measures that deepen it should be observed critically.