There is nothing more human than folly and the best example at the moment is the drama unfolding in Europe, says John Gray.
Greece's minister of finance has declared that his government will make "a superhuman effort" to fulfil the conditions of the recent bailout.
The declaration has a slightly ominous ring, and I can't help thinking back to one of the most ancient Greek legends.
There are several versions of the myth of the Trojan Horse, but the heart of the story is clear enough - the folly of the leaders of Troy in allowing an enormous wooden horse into the city, when everything pointed to the fact it was a stratagem devised by their enemies.
Seemingly a trophy signifying the end of the war in which Troy had been besieged for 10 years, the horse was left outside the city by the Greeks. Troy's leaders had heard and rejected many warnings against bringing the horse within their walls.
More than anything else, they wanted to believe the 10-year siege of the city was over. So they disregarded the warnings and brought the horse within the walls. The soldiers hidden inside stole out at night and opened the city gates to the Greek forces. As we all know, Troy was reduced to ruins.
In her book The March of Folly, US historian Barbara Tuchman cited the Trojan Horse story as showing that humankind in the shape of the citizens of Troy "is addicted to pursuing policy contrary to self-interest". For Tuchman, the fall of Troy was only the first of many great acts of folly in history.
Describing folly as "a perverse persistence in a policy that is demonstrably unworkable or counter-productive", she says a policy can be identified as folly if it meets three tests.
It must have been perceived as counter-productive at the time and not just by hindsight; a feasible alternative must have been available; and the policy must be that of a group and persist over a span of time, not the act of an individual ruler.
America's war in Vietnam, she argues, fits this definition of folly perfectly. The story of the Trojan Horse is an exception to the third of these rules, but it illuminates the essential element of wilful blindness to the self-destructive consequences of one's actions.
Folly is not error, not even error of an extreme kind. Error suggests the possibility of learning from mistakes, whereas folly is the pursuit of policies that are known to be harmful to those who pursue them.
No doubt many examples can be found, but there is probably nothing at present that exemplifies folly as clearly as the drama unfolding in Europe.
A single European currency of the kind that exists at present was never going to be workable. When it was first mooted economists pointed out that a "one size fits all" monetary policy would be counter-productive. Setting a single interest rate for countries with quite different economies would leave some over-stimulated and others mired in stagnation.
Monetary union could work if it was combined with a fiscal union, a mechanism for reallocating tax and spending that would harmonise the different economies. European bureaucrats agree with the economists - ever deeper union is the only solution to the euro's problems.
But this solution is based on a failure to understand the nature of the problem the eurozone faces, which is not economic but to do with political legitimacy. Eurozone economies can interact productively through trade and commerce, as they did before the euro was invented.
But they can't be harmonised to the point where they're a single economy. What enthusiasts for the European project want is a European government, something like a United States of Europe. But that's never been more than a fantasy.
Not only do the states that already exist in Europe have different histories, cultures and political systems. They also have different levels of economic development, and if a fiscal union were ever set up it would have to be permanent. But that assumes a kind of solidarity across the eurozone that can't be created by fiat from Brussels.
There has been fiscal union in America at least since the time of Roosevelt but it works because the US is a modern nation-state, which it became only after a devastating civil war. There is no way that national leaders can cede power to a transnational bureaucracy to do something similar across Europe.
If they try to do so they soon become illegitimate themselves. This is what would surely happen in Germany if Chancellor Angela Merkel were to accept a system of permanent economic transfers to the countries of the southern periphery, and something of the kind is already happening in Greece which is on the receiving end of the transfer.
Patients turned away because they can't pay from hospitals that used to treat without charge, graduates with no prospects of any kind of employment and small business owners forced into sleeping rough when their businesses fail aren't going to accept an indefinite period of poverty and despair.No people living in anything resembling a democracy will endure collapsing living standards for the sake of hypothetical benefits sometime in a remote future.
As the economy continues to shrink, the political consensus on austerity will break down. Sooner or later leaders will emerge who accept that Greece will have to leave the euro, even though the process is bound to be extremely traumatic.
And I am sure that once Greece breaks out of the trap, other countries will follow. Better a finite period of agonising readjustment under conditions of self-government than unending lack of hope under a government controlled by a distant European bureaucracy.
Moving to a European government isn't just difficult, as advocates of the project will agree. It's impossible. The project is demonstrably self-defeating. Pressing on with it can only inflame nationalism, both in the countries that are bailed out at the cost of humiliating austerity and in those that are saddled with paying for the bailout.
But this doesn't mean enthusiasts for the project will abandon it. Quite the contrary. All it shows, they insist, is that we have to redouble our efforts. It's hard to think of a better example of folly.
That's what European leaders are saying today. Rather than looking for constructive ways of enabling some countries to exit from the single currency, they are committed to preserving it in the form in which it exists now. The result can only be a process of disintegration in which the eurozone as we know it passes into history.When a scientific experiment fails, we know we have to come up with a different theory. We don't say: "We must try harder. If we make a superhuman effort, the experiment will succeed next time."
This is where Tuchman comes in. Self-defeating policies of the kind she discusses aren't exceptional in human affairs. In politics folly is normal. What she doesn't fully explain is why this is so.
Some of the reasons are obvious. Politicians become identified with their policies, and it's hard for them to admit mistakes. Jobs and careers are on the line, and it may be more advantageous to press on with a project that is guaranteed to fail than struggle to come up with something new. But these prosaic calculations aren't the whole story. There's something deeper going on that affects us all.
Let's go back to the wooden horse. The Trojans wanted to believe the siege of their city was over. Having held out for so long, they could not bear the thought that their decade-long struggle had been for nothing.
Today we are no different. We humans will do anything to secure a meaning in our lives. We hold on to the projects that have given our lives shape, even at the cost of losing all we care for.
Confronted with intractable difficulties, the most sensible thing to do may be to toss the past aside and improvise. But this involves casting off our beliefs, and we would rather be ruined than face facts. That is the perverse persistence we call folly, and nothing is more human.
Outspoken eurosceptic Godrey Bloom, UK Independence Party MEP for Yorkshire and North Lincolnshire, has claimed in an interview with FTAdviser that the European Union is "fundamentally hostile" to IFAs as he warns that there is "no political interest" in helping advisers.Mr Bloom, member of the European Parliament's Economic and Monetary Affairs Committee, added that the EU ultimately had an end game of getting rid of IFAs.He said: "The EU has been a great supporter of the bureaucratic and political banking class; it is fundamentally hostile to small businesses, including IFAs."The whole system of centralised stateism, which is the EU, does not like small business, just like our Treasury does not like small business and financial advisers."IFAs control something like 50 per cent of the UK's electoral savings and politicians hate the idea of not being able to get at that and control it. It is much easier to control it via nationalised banks."Mr Bloom warned further layers or regulation imposed by the European Union were already impacting the UK's financial services industry.He said: "There is no question, it is already happening. It is manifesting itself at the moment at the committee and first reading stage."It will start with things like derivatives and capital guarantees. You will see with one sweep of the pen they can get rid of the IFAs - which is the end game - through meaningless capital guarantees."In every walk of regulation that we have, they will set out the template of regulation and that will be the bottom line. On top of that we will get this system of gold plating regulation that the United Kingdom always carries out."Let's say the EU gives us a base line of 100 regulations, then whoever replaces the Financial Services Authority will say, 'right, we want 150', and they will add 50. They will add cost and they will add complication."Mr Bloom said further regulation by the EU was unlikely to be favourable towards IFAs.He said: "Nobody has any interest in helping the IFA, there is no political interest in doing so. They are regarded in the same way as Stalin regarded peasant farmers."To read the full interview, click here
