The Eurozone Crisis -- 2008-2018 : Four Lectures: November 2018

The Eurozone Crisis: Notes and an Annotated Bibliography 

Lecture One: November 5--

The Creation of the European Monetary Union 

For a simple background to the creation of the European Monetary Union, see this. The Timeline to the creation is here. For a celebratory documentary on the Euro’s Ten Year Birthday, see this.

The Werner Report 1970 (initially discussed at the Hague 1969) represented the first proposal to set up a Monetary Union between the then 6 member states.  A contemporaneous article notices the federalist implications of the plan:

The Werner Committee's plan for economic and monetary union in the Common Market covers 31 pages. Its fundamental objective is "that the principal economic decisions affecting the EEC will be taken at community level, and that the necessary powers will be transferred to the community [i.e. will be transferred to the supranational level of government]."

The report envisages that by 1980 the Community would formulate budgets, tax policies, and monetary policies; and that there would be a uniform tax system throughout the Community.

It recognises that the transfer of these responsibilities to the Community has "a fundamental political significance and implies the progressive development of political union. The economic and monetary union, therefore, has to be seen as a generator for the development of a political union."

The document says that those must understand its objectives who subscribe to the project, and accept them without equivocation: "Political and monetary unification is an irreversible process and it is essential to go into it with a firm will to achieve it and to accept all its political as well as economic implications."

The Werner Report was shelved, mainly because of a series of global economic crises of the 1970s, including:

--the monetary crisis in 1971 (non-convertibility of the US dollar);

-- the first oil crisis in 1973;

-- the iron and steel crisis in 1974;

 --the economic crisis in 1975;

 --and the second oil crisis in 1979.

1979-1991 European Monetary System (EMS)

"The European Monetary System (EMS) was built on the concept of stable but adjustable exchange rates defined in relation to the newly created European Currency Unit (ECU) – a basket currency based on a weighted average of EMS currencies . Within the EMS, currency fluctuations were controlled through the exchange rate mechanism (ERM) and kept within ±2 .25% of the central rates, with the exception of the lira, which was allowed to fluctuate by ±6% ."

A new plan took shape in 1988 and was published as the Delors Report in 1989.

The idea of a European Monetary Union faced intellectual and political obstacles.

The intellectual obstacles came from economists, who in the 1960s and 1970s had formulated a theory of an Optimum Currency Area (OCA). For a useful summary of this theory, read pages 1-6 of Francesco Paolo Mongelli, “European Economic and Monetary Integration, and the Optimum Currency Area Theory.’’

Crudely stated, OCA—the work of economists like Robert Mundel, Peter Kenen, Ronald Mackinnon and others—sought to identify the conditions necessary for an economic area to share a common currency. Conditions include:

--price and wage flexibility

--mobility of factors of production (capital and labour)

 –product diversification

--openness

--financial integration

--fiscal transfers

--similarity of preferences concerning savings, debt, and life/work balance

--solidarity: are we a community of destiny? do we share your costs?

Why would a group of sovereign states want to set up a monetary union with a common currency?

ADVANTAGES:

1. Eliminate Transaction Costs--check out the currency exchange rates in an airport
2. Eliminate Currency Risk
3. Increases Global/Regional Power--Seniorage
4. Strengthens the Independence of the Central bank
5. Speeds up Economic Integration
6. Speeds up Political Integration (Ever Closer Union)

DISADVANTAGES

1. Countries give up the flexibility of exchange rate depreciation.
2. Absent currency depreciation; countries must rely upon wage deflation.
3. Very difficult to leave a Monetary Union--the Hotel California Problem (see Barry Eichengreen, The Euro: Love It or Leave It; and for a more detailed version, here)

Many economists pointed out in the 1990s that the EU lacked these conditions and a common currency wouldn’t work.

One can go through the 6 conditions of an OCA and argue that some or all are absent.

Source: Baldwin and Wiplosz (2011)

Among the most prescient critics:

Bernard Connolly, The Rotten Heart of Europe (1995)—(this guy was ignored for 15 years, a paraiah in EU circles, until the Greek crisis proved him right)  see interviews and profiles  here and here and here and here

Martin Feldstein, “EMU and International Conflict” (1997)

____  "The Political Economy of the EMU,” Journal of Economic Perspectives, Fall 1997*

These economic objections were dismissed by pro-EU scholars, including this one published—with sad irony—in November 2009 just as the wheels were coming off. (Lars Jonung and Eoin Drea, It can't Happen, It's a Bad Idea, It Won't last: US economists on the Euro 1989-2002)

Watch the celebratory documentary; and then read: Mongelli pages 1-6, Feldstein, the Jonung and Drea, and the Eichengreen articles.

 

Lecture Two--November 7

The Eurozone Crisis: An Annotated Bibliography:

INTRODUCTION:

One of the great puzzles in explaining the Eurozone Crisis (EZC) is to know where to begin. Is it part of the Great or Global Financial Crisis (GFC) (2008) or a separate crisis?

Let’s leave that historical puzzle aside, at least for a moment, and focus instead on an ostensibly easier question:

What is the Eurozone Crisis?

Der Spiegel defines it this way:

“First Greece—then Ireland, Italy, Spain, and Portugal: The European Common Currency has come under pressure from large national debts and the effects of the great financial crisis, ultimately requiring a rescue package close to a trillion euros.”

On this view, the EZC is a sovereign debt crisis.  What is sovereign debt? And why should debt lead to a crisis?  The country with the largest government debt --Japan--is not in crisis; its economy is relatively robust; and its currency remains strong.

[Der Spiegel gives a backwards running commentary –i.e. from most recent newsworthy events to most distant. 

It is well worth scrolling back through these. Start at the beginning.

We are talking about hundreds of stories here.

Interestingly, the first article included in their EZC archive is this—dated December 2009: note the focus is still on the financial crisis of 2008—otherwise known as the Great Financial Crisis (GFC) or Lehman Crisis, but fears are brewing:  

“Practically unnoticed by the public, an issue has returned to the forefront in recent weeks -- one that was a cause for great concern at the height of the financial crisis but then, as optimism about the economy began to grow, was eventually forgotten: the fear of a national bankruptcy in the euro zone. And the question as to whether such a bankruptcy, should it come about, could destroy the common European currency. Greece was always at the very top of the list of countries at risk. But now the danger appears to be more acute than ever.”]

Wikipedia defines it this way:

“The European debt crisis (often also referred to as the Eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of 2009.”

Let’s assume then, at least for the moment, that the EZC is a sovereign debt crisis. 

Immediately, this requires us to say something about debt. What is sovereign debt? And when does it become a crisis?

Sovereign Debt (as defined by the Financial Times)::

This is debt that is issued by a national government. It is theoretically considered to be risk-free, as the government can employ different measures to guarantee repayment, e.g. increase taxes or print money.

In practice, there have been multiple cases in which governments could not serve their debt obligations and had to default. As a consequence, investors ask for different yields across countries. The more a country's repayment ability is in question and the riskier sovereign debt becomes, the higher is its yield

Very simply--the more risky a country is; the more it must pay in interest to borrow money. Risky countries thus have high-yield bonds.

Sovereign debt (also known as public debt, national debt, or the national debt) must be distinguished from private debt--which is the debt run up by individual households (credit card debt, mortgages etc) and private corporations (including banks).

It is important to distinguish between sovereign and private debt, because different countries have different levels of each.

First some figures/Tables (as of 2010 when the EZC became a big problem).

ICELAND AND IRELAND

Perhaps not surprisingly, the first country to blow-up financially was Iceland (not a member of the EU or the Eurozone) in 2008. Its problem was private debt—the debts run up by its banking sector.

Iceland is an important case, because it suggests that the Euro is not the source of all problems in Europe.

Ireland was to run into very similar problems.

For the Iceland story, see this short documentary and these articles: here and here and here and here; and for a comparison of the Iceland and Ireland situations, see here.

For a short documentary introducing the problems of Ireland (from 2011), see here and here

So was the EZC a crisis of public debt (too much government spending) or a crisis of private debt (too much debt –or leverage—from the banking sector)? Clearly, a different story is needed for different countries.

Which Eurozone Countries had what problems?


Greece...Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?....Low Growth?

Italy....Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?........Low Growth?

Ireland....Budget Deficit?...Sovereign Debt?...Private Debt?...BoP Deficit?....Low Growth?

Portugal...Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?....Low Growth?

Spain......Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?....Low Growth?

UK....Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?....Low Growth?

Japan...Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?....Low Growth?.

USA...Budget Deficit?...Sovereign Debt?....Private Debt?...BoP Deficit?....Low Growth?.

When do these debt, deficit and growth problems become "a crisis?"  



The best sources of economic data:

Eurostat

Trading Economics

OECDEU Commission, General Government Data

EXPLANATIONS OF THE EZC

For some scholars, the EZC is neither a public or a private debt problem but a balance of payments crisis.  This is the view of Martin Wolf and Paul Krugman, see here. 

As Krugman puts it:

What we’re basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe. It’s not a perfect fit — Italy managed to have relatively high inflation without large trade deficits. But it’s the main way you should think about where we are.

If Krugman is right, the EZC can be boiled to the problem that Northern European countries (Germany in particular) was much more competitive and exported more than Southern European Countries (Greece in particular but also Portugal, Italy and Spain). The surplus from the Northern European countries was recycled into loans to Southern European Countries, which overloaded the banking system and led to a debt crisis.

In countries with their own currencies, a balance of trade imbalance typically leads to currency adjustments—appreciation in one country; depreciation in the other.  In the Eurozone, currency adjustments are not possible. 

Broadly stated, it is possible to distinguish 7 schools of thought on the causes of the EZC (these explanations are not mutually exclusive):

1.    Those who view the EZC as part of the GFC (or Lehman Crisis). Let's call this the One Long Financial Crisis explanation. This points us to theories of the GFC. (See the Lo article below).

The most impressive work by a scholar along these lines is the work of Adam Tooze, whose book Crashed (2018) is probably the best book both on the GFC and on the EZC. (I say "probably" because one of my friends thinks that Ashoka Mody's book Eurotragedy is better. Ask me after Thanksgiving, when I get a chance to read it.) 

For discussions and reviews of Adam Tooze, 

here (Martin Wolf in the FT)

here (Duncan Weldon in Prospect)

2.  Those who see the EZC and the GFC as a function of the inevitable and incurable faults of capitalism.  (This Marxist explanation informs, for example, the view of John McDonnell, current British Shadow Chancellor: ‘We’ve got to demand systemic change. Look, I’m straight, I’m honest with people: I’m a Marxist....This is a classic crisis of the economy – a classic capitalist crisis. I’ve been waiting for this for a generation!...For Christ’s sake don’t waste it, you know; let’s use this to explain to people this system based on greed and profit does not work.’) Others in this tradition, include Wolfgang Streeck. 

3.  Those who pin the blame primarily on the faults of the Eurozone—the Euro, they argue, was a mad idea from the get go and should never have been invented. (US economists like Martin Feldstein and Joseph Stiglitz and Paul Krugman hold this position.)

4.    Those who pin the blame on the faults of the European Central Bank, (and more generally the so-called Troika (IMF, ECB, and EU), whose austerity-focused policies have turned a minor financial crisis into an existential crisis for the EU (Many European economists hold this view, including Mark Blyth and Barry Eichengreen and Charles Wiplosz and Martin Sandbu.)

5.    Those who pin the blame on the Germans, partly because they support 3. and partly because their economic and trade policies are mercantilist and lead to a beggar-thy-neighbour dynamic (Simon Wren Lewis holds this view; as does Adam Posen)

6.    Those who blame the Greeks (and other Southern European countries) for social, economic, and political practices that led--and continue to lead to--an uncompetitive economy (Stathis Kalyvas, for example, holds this view with respect to Greece; as do many German economists, including the German Finance Minister Schauble; and the Head of the Bundesbank Jens Weidman);

7.    Those who think that the Northern and Southern economies are structurally incompatible. This amounts to a version of position 2. But focuses on internal structural features of the different economies rather than the European Monetary Union itself.  (Peter Hall and the so-called Varieties of Capitalism literature holds this view; this view also informs some of Wolfgang Streeck's writings, including his critique of Sandbu here)

More recently, a number of economists have tried to come up with a multi-causal explanation, which they hope can form the basis of a consensus narrative. See Richard Baldwin et al here.


Clearly there is a lot of material to get through. So what should I read first:

1. Paul Krugman, Can the Euro Be Saved?

2. The Economist, The Origins of the Great Financial Crisis

      3.  Andrew Lo, Reading About the Financial Crisis: A 21 Book Review (Skim)

Lecture Three: November 12

How the Eurozone Crisis played Out in Greece: Causes and Consequences.

GREECE

INTRODUCTION

The Eurozone Crisis began on October 18 2009--more or less 9 years ago exactly. That was the day that the newly elected Greek Prime Minister George Papandreou announced that the previous Conservative Government of Costas Karamanlis had been cooking the books and Greece was much more indebted than anyone realized. EU officials expressed shock and concern

As the FT of Oct 20 2009 reported:

George Papaconstantinou, finance minister in Greece’s new socialist government, disclosed that the nation’s deficit would soar this year to almost 12.5 per cent of gross domestic product, far higher than estimates provided by the former conservative government.

The news, delivered at a meeting of European Union finance ministers, came as an unpleasant but not entirely unexpected surprise to Greece’s 15 eurozone partners. They already suspected that the global financial crisis and recession would have a much more serious impact on Greece’s deficit and public debt than had been admitted in Athens.

Germany and other countries that emphasise fiscal rigour are determined that the eurozone’s stability, watched more closely than ever by markets since the eruption of the crisis, should not be jeopardised by the inability or reluctance of Greece and other less disciplined states to keep their finances in order.

Jean-Claude Juncker, chairman of the so-called Eurogroup of countries, declared: “The game is over. We need serious statistics.”

The extent of Greece’s troubles was underlined on Tuesday by the national central bank, which said Greece’s public debt had soared to 111.5 per cent of GDP in June from 99.2 per cent at the end of last year.

Some private sector economists predict that Greece’s debt will climb to as high as 150 per cent by 2016, a figure unmatched in any European country since the euro’s launch in 1999 and far above the 60 per cent level set for new eurozone entrants.

The uproar over the size of Greece’s deficit recalled an incident at the start of the decade, when Greece under-reported its deficit in order to qualify as the 12th member of the eurozone in 2001.

NB: These figures were to be further revised upwards in coming years. And the worst-case predictions in 2009 were actually quite optimistic--Greek Debt in 2016 reached 320 billion euros or 180% GDP. 

Everyone knew that the Greek economy was not doing well. But no one knew things were this bad. Papandreou had fought and won the election on the promise of boosting public expenditure (As a contemporaneous article observed:

 "The main challenge for PASOK [Papandreou's Socialist party] will be to deliver on its promises of wage increases, infrastructure investments, and sustainable development at a time when the economy is predicted to slide into recession.")

 For some useful background documentaries: see:

Greece and the Euro Crisis(2012)  BBC Documentary on the Greek Crisis (Michael Portillo) 

Greece Debt Crisis and the Future of Europe (I don't know the producer/writer--a socialist of some stripe which balances Portillo's conservative take). 

 https://fieldofvision.org/episode-one-angela-suck-our-balls (a very pro-Syriza documentary by Paul Mason --a good balance to my very anti-Syriza position)

It is difficult to think through wat happened to Greece without engaging with the brilliant provocative work of Varoufaxis--especially his Adults in the Room.

For a good entry, see Tooze's Review.

Greece is important, at least in part because of the way that the perception that the Greeks were mistreated by the Troika fed later Euroscepticism--not least in the UK.

I

The Eurozone Crisis--GREECE--Annnotated Bibliography (PART THREE)

The Eurozone Crisis--GREECE--Annotated Bibliography (PART THREE)

Watch the documentaries mentioned earlier.

Timelines of the Greek Crisis can be found here and here and here.

Background:

The Requirements of the European Monetary Union Growth and Stability Pact:

1. Government deficit  less than 3% of GDP
2. Sovereign debt less than 60% of GDP
3.  If more than 60% it should decline each subsequent year at a satisfactory pace.

Greece's Difficulty in Meeting these Requirements

The Greek story can be summed up by following the story presented in graphs; see here:

The key event, mentioned earlier, was the announcement by the incoming Greek PM Papandreou in October 2009 that Greece's deficits were much higher than earlier announced.

Greece Deficit 1995-2018

Greek Debt:

The German and Greek 10 Year Bonds 1993-2015 (remember Greece entered the EU 1986):

Unit Labour Costs:

Broadly stated, there are five different (non-mutually exclusive) positions on the Greek chapter of the EZ Crisis:

1. The EMU is structurally flawed. (De Grauwe; Krugman)--it prevents countries that experience an asymmetrical shock from devaluing.

2.  The Troika (EU/ECB/IMF) mismanaged the crisis--they chose to bailout Northern European Banks in 2010 rather than let Greece Default. (Sandbu--who thinks that there is nothing structurally wrong with EMU; and Eichengreen, Krugman, and Stiglitz--who thinks that there is).

3.  It's all the fault of the Germans (Simon Wren Lewis and John Weeks and Adam Posen and Peter Bofinger--for a more developed discussion of this topic, see Servaas Storm, "German Wage Moderation and the Eurozone Crisis: A Critical Analysis");

4.  It's substantially the fault of Greek politicians and policy-makers (German economists who hold this view include Jens Weidmann [Head of the Bundesbank], Hans Werner Sinn, and in a more nuanced version, the Greek Political Scientist Stathis Kalyvas);

Storm (a critic) summarizes this view as follows:

 In this narrative, rising unit labor costs are due to fiscal profligacy and “rigid” “over-regulated” labor markets, powerful unions, and strong employment protection. Rising relative unit labor costs supposedly killed Southern Europe’s export growth, raised current account deficits, created unsustainable external debts and reduced fiscal policy space, and hence, when the crisis broke, these countries lacked the resilience to absorb the shock. It follows in this story that the only escape from recession is for the Southern European countries rebuild their cost competitiveness—cutting wage costs (because Eurozone members cannot devalue their currency) by as much as 30% (as proposed by Sinn 2014), which requires in turn that their labor markets be thoroughly deregulated.

5.  It's a consequence of Greece's unfortunate history, but in no way the fault of contemporary Greeks.

6. It's a consequence of globalization and Europeanization--it forced Greece to compete with China and East Europe--they couldn't.

My view, for what it is worth, is some combination of 1. and 4. and 5 and 6.

There is an enormous amount of debate about especially the 2010 Bailout but also the 2012 Bailout.

Many critics of the Troika argue that the Bailout was in effect a Bailout of Northern European (esp French and German banks) at the expense of Greece. Those who hold this view argue that Greece should have been allowed to default in 2010--even at the expense of bankruptcy for all its domestic banks.

The 2010 Greek Bailout

Greece Accepts Bailout Package
From CNN May 2 2010

 Greece has accepted a bailout deal including tough austerity measures, Finance Minister George Papaconstantinou announced Sunday.

The international aid package, negotiated with the European Central Bank, European Commission and the International Monetary Fund, will be worth 110 billion euros (US $146 billion) over three years, Eurogroup President Jean-Claude Juncker said in announcing the agreement Sunday evening from Brussels, Belgium.

Of the overall amount, 80 billion euros will be made available through euro-area members, with up to 30 billion available in the first year, Juncker said.

The first disbursement of bailout money will be made before May 19, Juncker said.

The program will "help restore confidence and safeguard financial stability in the Euro area," Juncker said in praising the deal.

The package includes a promise by Greece to cut its budget deficit to 3 percent of gross domestic product, as required by European Union rules, by 2014, according to Papaconstantinou.

Greece had a choice between "destruction" and saving the country, and "we have chosen of course to save the country," Papaconstantinou said.

Olli Rehn, the commissioner of Eurogroup, said that "the steps being taken, while difficult, are necessary to restore confidence in the Greek economy and to secure a better future for the Greek people."

The head of the European Commission Sunday praised the Greek government for committing to "a difficult but necessary reform process."

The program "constitutes a solid and credible package," Commission President Jose Manuel Barroso said in a statement.

The planned austerity measures are unpopular among Greeks. Protesters clashed with police Saturday during May Day demonstrations, and strikes have been announced for later this week.

Papaconstantinou confirmed Sunday that the government would tighten its belt significantly, despite the protests.

"The expenses of the public sector will go down very considerably," he said.

The program includes cuts in the salaries of public-sector workers, including lawmakers, higher taxes on cigarettes, fuel, gambling and luxuries, an increase in the value-added tax consumers pay on purchases, and an increase in the retirement age for women in the public sector, Papaconstantinou said.

Prime Minister George Papandreou earlier Sunday tried to rally the country behind the government.

"I know that our compatriots are being asked to make big sacrifices, but the alternative way would be disastrous and painful for us," he said in a televised Cabinet meeting.

"It's not a pleasant decision for me, for any of us, but we are here to make the right decisions for our country," he insisted.

He spoke a day after Greek protesters clashed with police who fired tear gas during the annual May Day rally in Athens.

Waving red flags, the crowd at times surged toward the line of police, who wore helmets and carried riot shields. The police pushed them back each time.

Protesters threw objects toward police, and scattered fires were burning on the streets.

Seven police officers were injured, police said. Nine people were arrested -- three for attacks on police and six for theft from stores.

Twenty-seven people were questioned in connection with violence. A van belonging to state broadcaster ERT was set on fire.

About 12,000 people were protesting in Athens, and rallies were also taking place in the northern city of Thessaloniki, a police spokesman said.

Protesters there smashed two ATMs, the glass frontage of a bank, and a car, but no one was arrested or being questioned, the spokesman said.

The Greek government is facing a large deficit and massive debt, ultimately threatening the stability of the euro. The currency is used by 16 countries across Europe, including Greece.

Greece's national debt of 300 billion euros ($394 billion) is bigger than the country's economy, and some estimates predict it will reach 120 percent of gross domestic product in 2010.

Options available to EU in 2010:

1. Bailout Greece and Impose Austerity and require Structural Reform (the policy adopted). [Note much of the money loaned to Greece was used by Greece to pay off its debts to Northern European banks and other Eurozone Countries).

Thus even Karl Otto Pohl, a Conservative German economist, who was one of the initial (albeit reluctant) architects of the Euro had this to say:

Pöhl: It was about protecting German banks, but especially the French banks, from debt write offs. On the day that the rescue package was agreed on, shares of French banks rose by up to 24 percent. Looking at that, you can see what this was really about -- namely, rescuing the banks and the rich Greeks.

SPIEGEL: In the current crisis situation, and with all the turbulence in the markets, has there really been any opportunity to share the costs of the rescue plan with creditors?

Pöhl: I believe so. They could have slashed the debts by one-third. The banks would then have had to write off a third of their securities.

SPIEGEL: There was fear that investors would not have touched Greek government bonds for years, nor would they have touched the bonds of any other southern European countries.

Pöhl: I believe the opposite would have happened. Investors would quickly have seen that Greece could get a handle on its debt problems. And for that reason, trust would quickly have been restored. But that moment has passed. Now we have this mess.

SPIEGEL: How is it possible that the foundation of the euro was abandoned, essentially overnight?

Pöhl: It did indeed happen with the stroke of a pen -- in the German parliament as well. Everyone was busy complaining about speculators and all of a sudden, anything seems possible.

For a skeptical view of this, see Dan Davies "2010 and All That: Relitigating the 2010 Bailout." 

2. Bailout out as above but with much less austerity. (see my essay "Greece and the Limits of European Solidarity")

3.  Let Greece default within the EMU and use the money to bailout Northern European and Greek banks.

4, Encourage or force Greece out of the EMU-- use the money to bailout Northern European and Greek banks.

The bailout of 2010 did not work and further bailouts in 2012 (130 billion euros) and 2015 (86 billion euros) were necessary. It is likely that another bailout will be needed in a few years.

The 2012 Greek Crisis

Key Events:

November 11 Papandreou Resigns

Interim Govt. Nov 11-May 2012 under Loukas Papademou (MIT educated economist)

Feb 2012 Restructuring of Greek Debt (206Bn Sovereign debt)--haircuts to private sector

Feb 2012 Second Greek Bailout (185 Billion Loan package)

May Election --Coalition Govt. New Democracy/PASOK--Syriza wins seats.

Default fears arise in Southern Europe

July 2012--Mario Draghi (Head of ECB) "We will do whatever it takes."

--Mario Draghi introduces Outright Monetary Transaction (OMT) program that agrees to buy sovereign bonds on the secondary market. For assessments, see here and here.

"OMT is the program put in place by the ECB following Mario Draghi’s vow in the summer of 2012 that the ECB was “ready to do whatever it takes to preserve the euro.”  Under this program, the ECB can buy government bonds of a euro area member state in the secondary market, keeping the primary market for these bonds open and driving down the bond yields (Whelan)."

OMT presupposes signing up to European Stability Mechanism (ESM)--i.e. conditionality.

ESM--a bailout set up Sept 2012--all EMU countries to contribute.


GREECE IN COMPARATIVE PERSPECTIVE

Margarita Katsimi and Gylfi Zoega, Greece and Ireland IMF Programmes Compared VOX

Jeremy Corbyn's Brexit Speech

Jeremy Corbyn's Brexit speech makes a lot of political sense, because now Labour can join with Soubry Tories and, if they wish, vote down May's withdrawal bills.

The speech, however, made no sense to anyone who knows anything about the EU. I was surprised to see it was so well-received. Even the usually sensible Martin Sandbu thinks the policy is "smart and realistic." (See the FT's editorial take here and the Guardian's here and Steve Peers here--although the Norths are unsurprisingly hostile--see here and here--as is Artie Shanker in Open Europe.)

Corbyn's new position certainly marks an improvement over earlier even less coherent positions. But that's not saying much, and the new position still has many problems.

Among these problems:--

1a. He seems to think that a Customs Union (which is basically a common external tariff) is sufficient to yield frictionless borders even in the case of "Just-in-Time" car manufacturing (his Mini example). You need to stay in the Single Market and maintain regulatory alignment to get that level of frictionlessness.

1b Ditto for Northern Ireland. A Customs Union would still require a border--especially so given the preponderance of agricultural products moving between NI and RoI.

2. He doesn't directly mention the ECJ--as if it can be wished away--but since he wants to maintain membership of European agencies, then he is accepting the oversight of this Court..

3. He fails to ask--"Why would this new Customs Union be in the EU's interests?  Corbyn seems to think that the EU would allow the UK a say in future trade deals, which presumably would mean either (i) the UK gets a vote of equal weight to every other member state, or (ii) the UK gets a vote of equal weight to the other 27 member states combined.

Rather than have the UK inside the tent buggering-up future trade deals, the EU would surely prefer to keep the UK outside the tent suffering the consequences. If the production of Minis moves to Germany, Slovakia or elsewhere, all the better (see Faisal Islam's article on the car industry).

Indeed, if you parse this bit of Corbyn's speech, the difficulties become all the more apparent--

A.  "The option of a new UK customs union with the EU would need to
ensure the UK has a say in future trade deals." [Legally impossible for the EU to ensure anything without a revision of its Treaties, Politically undesirable--why should the EU give the UK such "a say"?]

B.  "A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest." [why would the EU care about the UK's ability to strike new trade deals in its own national interest? are there any such new trade deals? See the recent intervention of Sir Martin Donnelly]

C.  "Labour would not countenance a deal that left Britain as a passive recipient of rules decided elsewhere by others. That would mean ending up as mere rule takers. [If the UK doesn't want to be passive rule-takers, it should never have exited the EU.]

4. His opt-outs for public procurement etc are not only incompatible with EU rules but incompatible with WTO rules too.

5. You can't leave the EU without leaving Europe--just ask any American who wants to stay in Europe for more than 3 months in a year without a visa.

The more general difficulty with Corbyn's position is, like that of many British politicians and pundits, it fails to answer the question:

What self-interested reason does the EU have to accept your proposal?

In thinking about this question, it is important to remember two facts;

1. The EU is the more powerful party in this negotiation;

2. The EU's principal interests are (i) to maintain the coherence of the Single Market; and (ii) to ensure--whether through regulatory alignment or otherwise-- that a Level PLaying Field obtains between the EU and POst-Brexit UK.

Dominic Cummings and the Case for Leave

Is the EU “a Crap 1950s Idea?”

Dominic Cummings, Disaster-Avoidance, and the Case for Leave

[Draft of an essay for Uta Staiger eds., Brexit and Beyond,  UCL, forthcoming]

The Brexit campaigns of 2016—both Leave and Remain--were fought largely through the medium of simplicities, delusions, and lies.[1] Neither campaign generated much deep political thinking. The Leave campaign floated to victory on a fantastical promise of ending immigration and returning Britain’s EU funds to the NHS. The Remain campaign relied on no less fantastical projections of the ruinous short-term economic costs of Brexit (the so-called “Project Fear”). Dominic Cummings, Leader of the Vote Leave Campaign, did more than anyone to focus the Campaign debate on bogus issues like the NHS and the impending enlargement of the EU to include Turkey. Nonetheless, in a series of writings authored after the referendum, Cummings has produced an argument for Brexit that has drawn considerable attention and praise.  

Cummings’s position is worth considering for two reasons. First, it is useful to know what actual arguments propelled some of the leading figures in the Campaign, especially since they chose not to reveal those arguments at the time.  Second, Cummings insists on moving beyond vague ruminations on whether Brexit will succeed or fail.  He thinks political argument must be based on “precise quantitative predictions about well-formed questions.”[2] (Cummings is a big fan of Philip Tetlock’s work on forecasting [Tetlock and Gardner 2015.)  While Cummings’s own predictions are not, I think, at all plausible; those who advocate Britain’s Re-entry into Europe—which is now in all likelihood a generational project--would do well to follow the form and spirit if not the actual content of his argument.

I

The Science of Disaster-Avoidance

At the most general level, Cummings’ case for Brexit rests on the probabilistic assessment that leaving would improve the chances of “1) Britain contributing positively to the world and 2) minimizing dangers…[including] Britain’s exposure to the problems caused by the EU.” Viewed more specifically, Cummings’ argument proceeds along three tracks.  Track one takes the Eurosceptics’ conventional ride through Brussels--that familiar wasteland, as they see it, of failure, false promise, and dysfunction. The only distinctive feature of this part of Cummings’s journey is the Hayekian-inspired claim that the EU lacks the self-correcting mechanisms of the market and the experimental sciences. For Cummings, the EU—“a crap 1950s idea,” as he calls it—is excessively hierarchical and centralized, and as such lacks even the error-correcting mechanisms of a national parliamentary government (Shipman 2016, 38). Quoting the physicist David Deutsch, Cummings insists that “preserving the institutions of error correction is more important than any policy.”

This part of Cummings’s argument need not detain us. The idea that the EU is slow-moving and lacks rapid error-correcting mechanisms is a plausible criticism to make. Scholars of the EU often make the same point. No fundamental transformation in the EU can take place without a Treaty change, which requires a unanimous decision of all member states. It’s also fair to say that the EU is hierarchical, at least in the sense that its decisions are top-down and taken without much direct democratic input. But it’s ludicrous to attribute this problem to excessive centralization. Indeed, the principal reason why the EU is so slow-moving is due to its highly decentralized and consensual decision-making practices. The EU is such a feeble force in global affairs, partly because it lacks the centralized political system of the other Great Powers. Likewise, the EU has struggled with the Eurozone Crisis, because it lacks the centralized tax and budgetary powers necessary to manage successfully a Monetary Union. More generally, the concept of “error-correction” in politics is more problematic than Cummings seems to recognize. Where there is a clearly agreed aim, it is relatively straightforward to identify an error—this is the case, for example, in computer coding.  But in politics, errors are often only identifiable after the event, and even then, the attribution of “error” remains controversial. Was the Iraq War an error? Was the creation of the EMU an error? Will the UK’s exit from the EU prove to be an error? None of these questions can be answered independently of a justification of our political projects, a justification that will inevitably require an appeal to contestable moral values (Morgan 2005).       

The second track of Cummings’s argument focuses on the idea that “leaving would improve the probability of… making Britain the best place in the world for science and education.” Here it is important to recall that Cummings worked in Whitehall as an advisor to the Minister of Education and is the author of an ambitious project for educational renewal (Cummings 2015). For Cummings, science and education are key evaluative criteria. He predicts that a post-Brexit UK will achieve more, make a greater scientific contribution to the world, once free of the EU’s legal and regulatory regime.

One merit of this argument is that it is sufficiently precise to generate a testable prediction. Post-Brexit Britain will, if this prediction pans out, score higher on objective criteria of scientific success at some specified date in the future (2026?) than the Britain of 2016. Presumably the criteria will include such factors as educational scores on the PISA surveys; citation-weighted research publication rates; scientific prizes; global university rankings; and technological patents.     

The third track of Cummings argument is the most interesting. Brexit, he argues, minimizes dangers, especially the biggest danger of all: the danger that the free movement of labour will spark a populist backlash that will threaten free trade.  As he puts this point:

[A] return to 1930s protectionism would be disastrous, 2) the fastest route to this is continuing with no democratic control over immigration or human rights policies for terrorists and other serious criminals, therefore 3) the best practical policy is to reduce (for a while) unskilled immigration and increase high skills immigration particularly those with very hard skills in maths, physics and computer science, 4) this requires getting out of the EU, 5) hopefully it will prod the rest of Europe to limit immigration and therefore limit the extremist forces that otherwise will try to rip down free trade.

This argument conjectures a chain of events leading from “no [national] democratic control over immigration,” a requirement of the EU’s Single Market, to the rise of extremist forces demanding 1930s style protectionism, which Cummings rightly considers a disaster. He wants to avoid this disaster by way of another conjecture: a chain of events leading from “democratic control of unskilled labour”— high skill labour would be unaffected—to a broader public tolerance of free trade. Ideally, Cummings would like to see post-Brexit UK prompt the formation of “new institutions for international cooperation to minimize the probability of disasters.” He seems to think that post-Brexit UK is in better position to do this than as a member of the EU.

While it is difficult to argue against probabilistic wagers and counterfactual claims, there are significant problems with both the second and third tracks of Cummings’s argument. The claim that post-Brexit UK will be well-placed to experience a scientific renaissance runs into a number of obvious difficulties. First, the UK already does relatively well on national comparative measures of scientific progress (Scientific American, 2012). Second, scholars have never been able to identify with any great confidence the conditions likely to produce scientific progress (Taylor 2016). And third, the UK government will have to ensure that the country remains (and is perceived to remain) an attractive place for foreign STEM workers to come to study, live, and work. It is very difficult to see how Brexit helps here, especially since it diminishes the status of all workers coming from EU countries. Where once these workers had a status grounded in the EU Constitution; now they will be in the UK merely at the pleasure of Her Majesty’s Government (Morgan 2016).

Cummings wager that Brexit would diminish the chances of an extreme form of protectionism emerging in Britain has some initial plausibility. Certainly, UKIP has pretty much collapsed; in the June 2017 election, the voters it had gained in earlier elections largely fled back to the two major parties. But viewed more closely, Cummings argument about Brexit as a means to avoiding protectionism and increasing UK’s share of global trade is deeply problematic. Here we have to weigh a probabilistic claim together with a preventative claim. How likely is it that absent a reduction in unskilled immigration, the UK would face an anti-trade backlash leading to 1930s protectionism? On the face of it, the UK is an unlikely site for protectionism. No current political party—not even UKIP—favours trade protection.  Indeed, a central argument of leading Tory thinkers is that post-Brexit the UK will enter a “‘post geography trading world’ where we are much less restricted in having to find partners who are physically close to us” (Fox 2016). Furthermore, opinion surveys suggest that UK public opinion is among the most pro free-trade in the advanced industrial world (Pew Survey, 2014). In short, 1930s-style protectionism seems like a rather low probability threat. But even if we were to accept that it represents even a low-level threat, there is little reason to think that ending low-skill immigration offers an effective and efficient solution, especially since this type of immigration is so essential in the hospitality, retail, health care, and agricultural sectors of the UK economy (Consterdine, 2017). Cummings’s remedy is not only unduly costly; it promises to be even more injurious than the underlying ailment.

More generally, Cummings’ belief that post-Brexit UK will be more open to foreign trade is as unfounded as his hope that post-Brexit will inspire new forms of international organization. Certainly in the short to medium term, the UK will face huge problems resulting from the impact of quitting the Customs Union on the UK’s supply-chains, most of which involve other EU countries. If the UK were to trade under WTO rules and couldn’t negotiate new frictionless customs arrangements, it is difficult to see how—given the way supply-chains work--the UK could retain its domestic car industry, which is one of the largest sources of UK manufacturing exports. The other big trade problem facing post-Brexit UK is that the UK has very little power to force the EU to offer favorable trading conditions.  If the EU wishes to make life difficult for the UK—say, by demanding close inspections of all UK exports—the EU can and probably will. Partly for these reasons, most macro-economic estimates of the effects of leaving the EU predict that Brexit will have a significant trade-lowering and welfare-diminishing impact on the UK economy. In sum, if the goal is to increase trade, Brexit seems like the wrong way to do it.   

III

What Disasters Should We Worry About?

While there’s not much to be said in favour of the actual content of Cummings’s argument, the general form of his argument is quite sensible. Cummings is right to warn against the vacuity of general claims that Brexit has succeeded or failed.  He is right to recommend that political argument take place in terms of probabilistic wagers and predictions.  Cummings is also right to emphasize the importance of identifying threats and thinking about institutions capable of error correction and disaster-avoidance. Yet even with these admonitions in mind, I think it is possible to reach a very different assessment about the merits of Leaving the EU.

A threat might be conceptualized as a harm multiplied by the probability of its occurrence.  A disaster is a harm with very high costs, whether material costs or value costs.  The notion of value costs is important.  Political communities stand for certain values—whether liberty, democracy, justice, or whatever—and when those core moral values are lost, it might be counted a disaster. Organized political communities guard against threats by way of various preventative mechanisms. These mechanisms must be both effective (i.e. they must work) and efficient (i.e. they must have low ancillary costs).  It is no good putting in place preventative mechanisms that impose higher costs—whether material or moral—than those posed by the underlying threat.  A surveillance society with unlimited police powers might be effective against terrorism but it is inefficient, since it requires a sacrifice of some of our core moral values.

With these distinctions in mind, I want to suggest the following seven threats worth considering in the context of Brexit.

(i)             The exclusion of the UK from the favorable trade, security, and research opportunities enjoyed by other EU member-states; 

(ii)           The Break-Up of the UK as a Political Community and the return of terrorism in Northern Ireland;

(iii)         Russian aggression in Eastern Europe;

(iv)          US isolationism and trade protectionism leading to a collapse of the postwar international order;

(v)           Large-scale migration—tens of millions per year--into Southern Europe;

(vi)          A major banking and debt crisis in Italy;

(vii)        Large scale domestic terrorism as a consequence of the implosion of Middle Eastern and North African states and the failure to integrate existing Islamic minority populations.

In contrast to the threat of immigration-induced protectionism—the threat that led Cummings to embrace Brexit—these threats are all costly and sufficiently probable to require preventative measures.  The first of these threats is the most pressing, because it begs the question how the UK will negotiate a favorable set of ties with the EU member states, once it is no longer an EU member. The principal difficulty here is that the EU is likely to impose additional costs on the UK to make it clear that membership has advantages, and that the UK will find life worse outside rather than in.  Depending on the nature of these costs, the UK could see a sharp downturn in its economy. 

Without defending the claim here, I will merely assert that the EU—either in roughly its current institutional form or in a more politically-integrated federal union—offers better prevention against these threats than does either a post-Brexit UK or a Europe of sovereign nation-states (Morgan 2016). That claim, however, immediately invites the following nationalist rejoinder: You speak of core moral values, but surely one of our most important core moral values is “the nation”-- whether understood as a distinctive historical-cultural identity or as a self-governing people –which is endangered in the EU in its current form and would be obliterated in a more centralized Federal Europe. This nationalist rejoinder draws some of its force from a willingness to concede that Brexit might have significant material costs. Nigel Farage voices a version of this nationalist rejoinder, when he claims that ending low-skill immigration is worth paying an economic cost (Farage 2014). But there are more sensible social democratic and radical democratic versions of this nationalist argument too (Kymlicka 2016; Tuck 2016). These arguments raise then the question: Does it make sense to invoke the seven disasters above, when for the nationalist the greatest disaster of all is the loss or disappearance of the nation? Cummings’ own position on nationalism remains ambiguous.  On the one hand, he seems to think that the most likely “branching history” will yield positive outcomes for both the UK and Europe. But he also recognizes—as we shall see—that Brexit leaves the UK in a worse-off position and the Europe in a better position.  Cummings is certainly no Farage-style xenophobe, nor even much of a nationalist at all.  If greater openness to foreign scientists were to change British national identity, one suspects that Cummings would view this as a positive.

In some ways, any talk of nationhood poses an even greater problem for Remainers/Re-Entryists than it does for Leavers, which is one reason why the Remain campaign didn’t have much to say on the topic. Going forward, Re-Entryists will not be able to maintain this reticence. Broadly stated, there are three possible positions that Remainers/Re-Entryists might take on nationhood:

(i)             British nationalism involves a commitment to Britain as a multi-national composite kingdom, which has historically been open to immigrants from the former Empire and now from the EU. The Remainers/Re-Entryists who favour this conception of nationhood see no contradiction between the UK and the European Union, although they favour an intergovernmental Europe—i.e. a Europe where the nation-states remain firmly in control—rather than a Federal Europe or European Superstate (Bellamy 2017). This preference is grounded, at least in part, on the realization that a more Federal Europe would pose a genuine threat to their conception of British nationhood which typically involves attributing high value to parliamentary sovereignty.  

   

(ii)           Post-nationalism involves a repudiation of the very idea of nationhood.  For the post-nationalist, nationhood has no value.  Only individuals and groups—understood as collections of individuals—have value.  Post-nationalists typically fear that the nation forces unity and uniformity, where neither is necessary for a stable social order.  Individuals can pay taxes, support a welfare state, and even enlist in the army without the need of the emotional appeal of nationalism.  The dream of post-nationalists is a Europe without either nations or nationalism (Morgan 2005, Ch. 5).

(iii)         European nationalism repudiates both the nation-state and post-nationalism. Against the former, European nationalism seeks a unifying myth or way of life that transcends any of Europe’s particular nation-states; against the latter, European nationalism seeks something more than an agglomeration of individuals living in a Zollverein. For Europe to transcend the nationalism of the nation-state, a powerful myth would be necessary. The most plausible option would be for Europe to present itself as the embodiment and defender of the Enlightenment ideals of liberty, truth, and reason. In doing so, Europe would be defining itself in terms of a specific ethical ideal— the equal rights of all individuals to lead a life free of despotism and superstition. Unlike post-nationalism, however, European nationalism would present this agenda as the official way of life of Europe, the basis of its unity (Morgan 2011).

If one accepts that nations and nationalism are in large measure social constructs—albeit social constructs that are powerful forces for both good and evil—then British nationalism, post-nationalism and European nationalism represent options rather than givens. Ideally, the option chosen must be tailored to the tasks that Europeans currently face.  If I’m right both in my account of the seven threats above and in my claim that these threats are best handled by a more politically-integrated Europe, then Europe needs to embrace either a form of post-nationalism or European nationalism.  There is little to be gained, I think, in hiding the implications of the need for more integration on the nation and nationalism.  If you value a closed ethnocultural conception of nationhood, fear foreigners as a pollutant of the national spirit, and are willing to endure each and everyone of the seven disasters outlined above, then you would be right to think that the EU is “a crap 1950s idea.” I suspect, however, that most people will be able and willing to rationally assess the costs of these disasters and modify their value commitments—including commitments to an outmoded conception of nationhood.  To those people, the EU will be seen as an excellent idea.
In his latest thoughts of the topic, Cummings himself acknowledges that “in some possible branches of the future, Leaving will be an error” (Green 2017).  A number of newspapers misinterpreted these remarks as an admission by Cummings that he had been wrong to support "Vote Leave."  It would be more accurate to recognize that “branching histories” are part and parcel of Cummings’ probabilistic approach to major policy decisions (Armstrong 2017).  There are always multiple possible branches that history can take. It has always been his probabilistic wager that Brexit would initiate a branch of history that would yield positive outcomes for both the UK and Europe. He still thinks that on the balance of probabilities, the most likely branching history is one with positive rather than negative outcomes. In reaching this conclusion, Cummings seems to place a lot of weight on the claim that the UK political-administrative state is dysfunctional: neither the politicians nor the bureaucrats are fit for purpose. Brexit is an external shock that provides an opportunity to shift the UK on to a path which yields gains to science, education, productivity, and international cooperation. It is not clear here, however, why Cummings thinks that this opportunity is any more likely to yield a successful rather than a disastrous outcome.  Indeed, if his bleak assessments of the UK political-administrative state are accurate, it seems more probable that the state will bungle Brexit and—cut free from the constraints of EU laws and practices, not to mention the benefits of the Single Market and the Customs Union—ruin the national economy.  British nationalists will certainly find cold comfort in Cummings’ tweet that “leaving increases EUR's overall ability to adapt more effectively to an uncertain world & increases probability of good branches happening (Green 2017).” One paradoxical feature of these latest remarks is that they point to a possible branch of the future where the UK comes out of Brexit very much worse off, while the EU comes out—partly because of Brexit—more adaptable, more unified, and altogether better off.  This opens up a rather alarming prospect (at least for British nationalists) where the UK is mired in domestic wrangles over how best to manage its future outside of the EU, while the EU, now freed of the dead weight of the UK, becomes a dynamic and successful global power. Perhaps it is no great surprise that Cummings didn’t say much about this particular “branching history” while running “Vote Leave.”

NOTES

Armstrong, Kenneth A. (2017), “Branching Histories and the Error of Brexit,” https://brexittime.com/2017/07/04/branching-histories-and-the-error-of-brexit/

Armstrong, Kenneth A. (2017), Brexit Time Cambridge: Cambridge University Press.

Bellamy, Richard (2017), “A European Republic of Sovereign States: Sovereignty, republicanism and the European Union,” European Journal of Political Theory, 16 (2): 188-209

Consterdine, Erica (2017), “What Britain’s Post-Brexit Immigration Policy Could Look Like,”

http://theconversation.com/what-britains-post-brexit-immigration-policy-could-look-like-74488  

 

Cummings, Dominic (2016), “On the referendum #21: branching histories of the 2016 Referendum and the frogs before the storm,”

https://dominiccummings.com/2017/01/09/on-the-referendum-21-branching-histories-of-the-2016-referendum-and-the-frogs-before-the-storm-2/

 

Cummings, Dominic (2017), “On the referendum #23, a year after victory,”

 https://dominiccummings.com/2017/06/23/on-the-referendum-23-a-year-after-victory-a-change-of-perspective-is-worth-80-iq-points-how-to-capture-the-heavens/

 

Farage, Nigel (2014)  “I’d rather be poorer with fewer migrants,” Daily Telegraph, January 7, http://www.telegraph.co.uk/news/uknews/immigration/10555158/Id-rather-be-poorer-with-fewer-migrants-Farage-says.html

Fox, Liam (2016), “Free Trade Speech,” September 29
https://www.gov.uk/government/speeches/liam-foxs-free-trade-speech

Green, David Allen (2017) Jack of Kent Blog: http://jackofkent.com/2017/07/in-some-possible-branches-of-the-future-leaving-will-be-an-error-an-exchange-about-brexit-with-dominic-cummings/

Kymlicka Will (2015), “Solidarity in Diverse Societies: beyond neoliberal multiculturalism and welfare chauvinism,” Comparative Migration Studies 3:17, https://comparativemigrationstudies.springeropen.com/track/pdf/10.1186/s40878-015-0017-4?site=comparativemigrationstudies.springeropen.com

Morgan, Glyn (2005), The Idea of a European Superstate, Princeton: Princeton University Press.

Morgan, Glyn (2011), “Europe, Europeanism, and European Nationalism,” European Political Science 10: 4, pp. 501-507

Morgan, Glyn (2016), Liberals, Socialists, and Brexit: The Challenge for British Labour,” ABC Religion and Ethics, June 22, http://www.abc.net.au/religion/articles/2016/06/22/4486618.htm

Pew Survey (2014), “Faith and Skepticism about Trade,” http://www.pewglobal.org/2014/09/16/faith-and-skepticism-about-trade-foreign-investment/trade-08/

 Scientific America (2012), “Best Countries in Science,” https://www.scientificamerican.com/article/global-science-best-countries-science-scorecard/

Shipman, Tim (2016) All Out War: The Full Story of How Brexit Sank Britain’s Political Class, London: William Collins.

Taylor, Zachary (2016), The Politics of Innovation: Why some Countries are better than others at Science and Technology, Oxford: Oxford University Press

Tetlock, Philip and Dan Gardner (2015), Superforecasting: The Art and Science of Prediction, New York: Crown.

Tuck, Richard (2016), “The Left Case for Brexit,” Dissent Magazine, June 6, https://www.dissentmagazine.org/online_articles/left-case-brexit

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[1].  For the best account of the internal operations of the campaigns, see Shipman (2016). 

[2].  All quotes in the text are to Cummings (2016).