Liberty, Politics and Economics

Brexit – The Movie. A critique.

or stream the video here:  Brexit – the movie

Critique:

This movie revealed an EU that is relatively undemocratic, frustratingly opaque, often unaccountable and hopelessly bureaucratic. The EU’s accounts have not been transparent enough to be signed off by an independent auditor for years, which means it could also be corrupt. I was appalled to discover that democratically elected MEPs cannot suggest or initiate legislation (that can only be done by unelected, unaccountable bureaucrats) and neither can they repeal legislation once it is on the statute books.

On the business side it covered the enemies of a successful economy: lack of competition, restriction of free trade, excessive regulation and (again) bureaucracy. All areas in which the EU excels.  The EU has restrictions on trade with countries outside the EU and this stifles competition.   It is also damaging the economic growth of poor African countries by preventing access to the EU markets for their farming produce.  The examples of it gave of free trade and lack of Government control and regulation unleashing an economic miracle in post-war Germany, whilst the UK economy drowned in Government regulation and bureaucracy (i.e. socialism) was compelling.  As was the example of the huge economic success of Switzerland, which is outside the EU and free of its regulation, bureaucracy and general centrally controlled interference and incompetence.  Switzerland also has some of the lowest levels of social inequality in Europe.

The film also made the excellent point that we don’t need trade agreements with other countries to trade with them. In fact the UK  trades with many countries without a trade agreement. In the same way my company doesn’t need a contract to sell products to our customers. They just buy according to our standard terms and conditions.

However, I thought their emphasis on Tate and Lyle and the decline of the British fishing industry was weak, as these are relatively old and small industries.  Examples of biotechnology and technology industries would have been more compelling.  The huge success of the Swiss pharmaceutical industry, despite being outside the EU, was briefly mentioned and should have got more prominence.  There should also have been some debate on the effect of EU membership on quality and quantity of scientific research in Europe.  And everything said by the editor of The Sun newspaper lowered the tone of the debate.

Mervyn King, the former Governor of the Bank of England thinks the economic impact of Brexit or remaining in the EU will be broadly similar:

All in all, I’m not convinced there will be an economic disaster if the UK left the EU. The CBI, IMF and other so-called economic experts have all been wrong before.  Very recently the IMF and EU said George Osborne’s economic plan for Britain would cause a major recession and mass unemployment. They were wrong.  UK has the strongest growth in the developed world and low unemployment.  The EU economy is a disaster, particularly in Greece, Spain, Portugal and Italy.  Unemployment levels are high and their youth unemployment levels are scandalous.  High European unemployment is predominantly caused by restrictive labour laws i.e. bureaucratic, Government intervention in the employment market.  Perhaps the UK’s economy is doing reasonably well despite, and not because of, EU membership.  Maybe we would do even better without the EU.

In any case there is also the future possibility of rejoining the EU, perhaps even negotiating better terms.

Even if it is proven that the EU gives specific economic benefit it would have to be huge to compensate us for not having a democratic and accountable Government making our laws.

If the Brexit debate is just about the economy why don’t we just sell our freedom and sovereignty to the highest bidder?  China may be prepared to pay us a lot more than the EU for the rights to make British laws.

The one opinion I really value is The Economist newspaper, which I have read religiously for over 25 years. I generally find their views agree with my own.  They are very much in favour of staying in the EU, which is why I am still wavering.

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Politics and Economics

The Labour Party has missed the real trend acting against them – the colossal rise of Individualism

Labour has missed the real trend which is acting against them.  It is not the anti-austerity yearning of Scotland, or the anti-immigrant sentiments of the working classes in the North of England.  It is not even the rising aspiration in the Midlands and South of England.  What Labour has failed to see through their statist, collectivist eyes is the colossal rise of individualism.

Society has moved on from Henry Ford’s “you can have any colour you like so long as it’s black” philosophy   We are the internet generation and do not need to identify with mass movements in order to express ourselves.  We can define ourselves very precisely on social media and advertise and revel in our many similarities and differences with people across the globe.  We believe that what we buy is a reflection of who we are and there is a mesmerising diversity on the market.  Just look at the car market.  Choose your colours, body styles, interior designs, mood lighting, car audio, Sat Navs, engine size and type, gear box…define it on the web and the manufacturer will make it – just for you.  No need to buy an LP record anymore, create your own playlist on iTunes from a whole world of music.  No need to buy your clothes from the store on the high street but go online and find exactly what you think projects precisely who you are and how you feel.  We are less likely than our elders to consider ourselves part of any particular religion and less likely to join a political party or a trade union.  We can tailor our world to exactly fit who and what we believe we are.  A highly individual, tailored personality.

Part of this tailored identity resides in where we are from.  There is now more identity with local geography i.e. North and South, Yorkshire, Welsh, Cornish, English and Scottish, rather than British. The rise of nationalism in Scotland should not be a surprise.  Many Scots don’t identify with the English and Labour’s campaigning with The Tories (“The English Party”) against Scottish Independence lost many voters.  After all, 45% of Scots wanted independence.   The English, London based, Middle Class personalities running the Labour Party alienated even more Scots. This was not an argument about austerity and extent of left-leaning political positioning. It was an argument about the desire for a tailored personal identity expressed as a localised, geographical belonging.  The UK’s disaffection with the EU is following a similar trend.

Work has also become less collectivist.  The mass employment coal, steel and car industries are long dead.  Automation has taken manufacturing jobs.  We are more likely to start our own business than our forbears.  Starting a business online is easier than ever before.  We make our living designing web sites, apps and computer games.  Online we sell our marketing skills, our ability to write, entertain and solve problems.  We can advertise our spare room for B&B and our car as a part time taxi.  Our local bespoke businesses can now reach a global audience, be it in IT, local food and beverage or art and craft.  We make a living from millions of small industries.  We now get our employment protection through employment law and the EU, not from our politicians and trade unions.  Politicians are only important in creating an environment where these businesses can flourish.  They cannot control business as they did in the 20th Century. They cannot control the internet, let alone nationalise it.

So we are not collectivist.  There is no more tribal belonging.  Our individualism can be expressed in so many ways through commerce, in social social media and fashion.  We believe we have a right to express ourselves by what we consume and how we choose to live.

Organised Labour and Trade Unions don’t connect with this new reality.  The Labour Party are arguing there is no point offering “Tory Light” politics and that they should go back to their core vote and historic beliefs.  i.e. the traditional left position by offering classic statist, collectivist, trade union supported, high tax, high spend, nanny-knows-best politics.  The Tories, however inadvertently, stand for individualism and personal freedom.  They believe individuals should have the economic freedom to spend more of their own money themselves and they are increasingly advocating more social freedom with the passing of laws around gay marriage for example.  They believe in a small state that doesn’t interfere with our personal lives and doesn’t tell us how to think, what to buy and how to live.  They are the party of free enterprise, individualism and free expression.

In the modern, highly individualistic, personality tailored world who do you think will win?

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Politics and Economics

Despite the scale of Labour’s electoral defeat its supporters are still in denial.

Labour’s denial of why they lost the 2015 General Election is symptomatic of a chronic mental condition called “idiopathic socialist ideology”. It seems that its sufferers have such an overwhelming delusion that their beliefs, logic and thought processes are right (and that everybody else is wrong) that they fail to detect, interpret and internalise opposing points of view.

Involuntary motor-neurone symptoms include inappropriately enthusiastic clapping on Question Time every time a left wing politician so much as farts and knee jerk reactions to perceived social and economic inequality. In extreme cases small groups of those afflicted can be seen shuffling along public streets holding placards and robotically shouting inane slogans.  Sufferers can also have paranoid delusions that the media is deliberately disseminating toxic opposing views and that non-sufferers are particularly stupid for believing them. Their delusions are further manifested by a ludicrous belief that they are the only ones immune to the media’s propaganda because they are intellectually and morally superior.

This condition further exhibits itself with impaired social interaction whereby its sufferers speak very loudly to people expressing contrary opinion (often even shouting) and hurling Tourette-like ad hominem insults in debates, on social media and in the press. Sometimes they are even deliberately offensive to people who don’t share their delusions.  This aggressive and anti-social behaviour is very cathartic for the sufferers but unfortunately it creates a downward spiral in their symptoms, as they are subsequently further angered when they inevitably fail to change the opinions of the people around them.  Sufferers are further deluded by thinking that this behaviour enhances their self-image as a virtuous individual.

Currently there is no cure for this serious mental condition. Fortunately, however, it is self-limiting.  The recommended treatment is a repeat subscription to The Guardian and to quarantine the sufferers into the Labour Party, where they will not interact with society at large.  Consequently their symptoms can be contained by only interacting with a shrinking number of sufferers with similar delusions.

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Liberty, Politics and Economics

Women’s rights and gay rights are the result of a free society, not the cause if it.

A “free society” is one where the creative talent, energy and ambition of the people is free to fuel enterprise, innovation and achievement.  A society where self-expression, individualism and self-determination is not stymied by the tyranny of the masses, bossy politicians and nannying State interference into our personal lives – both social and economic. Or as John Stuart Mill would have it – the individual should be free to do as (s)he wishes unless (s)he harms others.

Such a society would have gay people publicly living their lives with complete freedom to express themselves in ways that feel natural to them.  Especially as this behaviour is not hurting others.  Women would be free to follow their dreams whether it is family, professional or both.  But this gay and female friendliness is an outcome and not a cause of a free society.

So in achieving this type of freedom we must be careful not to put cause and effect the wrong way round.  This type of freedom is won by creating a society where tolerance and equality are valued in their own right – not because they have been legislated for.

Any legislation is a restriction of freedom and it should be used sparingly to prevent people doing harm to others.

Many people pre-suppose that legislation drives the changes in society that we want.  i.e. politicians drive change.

It is similar to the view that marketing and advertising changes people’s buying behaviour.

In both cases the marketeers and the politicians are merely reflecting what society already wants.  Politicians win votes by advocating policies in which society already believes.  Marketeers are more successful when they create and promote products that their target market already desires.

So successful politicians merely grub for votes – reflecting back to the electorate what they already know they want.  This is why they spend so much money on focus groups and opinion polls.

In a democratic society it is not easy to get legislation enacted and kept on the statute books if it is expressly against the wishes of the people.  Think of the UK poll tax.  And sometimes in opinion polls people express views that are not particularly strong. So successful legislation can appear to be against public opinion but only if the public has no strong views on the subject.

A free society allows freedom of speech and campaigns to educate, inform, debate and influence society regarding social change. These are far more effective in changing social attitudes than legislation that forces behaviour without necessarily changing opinions.

So it is not the legislation that drives change, it is the change that drives legislation.  We could do without much of the legislation (which inhibits freedom and often has other unexpected and detrimental consequences) because society is already changing.

Fewer politicians, less state power and less legislation will only have the effect of creating a freer, less bureaucratic and therefore less expensive society.  Social change will continue its own course regardless.

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Politics and Economics

How Independent Would an Independent Scotland be?

The Scottish Nationalist Party (SNP) dream of an independent Socialist Republic of Scotland where they believe they can better create a more equal, fairer society.   A sort of socially-just Xanadu where the wealth of the nation is more equally spread.  A society with generous housing and pension benefits, free childcare, free prescriptions, free health service, free tuition…..free everything.

This has to be paid for and Scottish North Sea oil reserves would be asked to cover much of the costs.  But can it?  Ignoring North Sea oil and gas, Scottish tax revenues per head are almost the same as the UK average but public spending per head is about £1,200 a year higher in Scotland than in the UK as a whole.  Oil revenue would have to cover the existing higher level of public spending as well as the SNP’s planned increases.

North Sea Oil_graphic_767622a

Scotland’s oil reserves are running out at a time when large shale oil reserves have been found in England.  Additionally the international norms for determining territorial waters would also mean Scotland will get a smaller share of North Sea oil than the SNP are claiming.  Some of these reserves will actually belong to England.  Also, most of Scotland’s oil belongs to the Orkney and Shetland Islands, who have clearly stated their reluctance to be subservient to Edinburgh and would prefer an allegiance to London.  They don’t feel particularly Scottish and their history proves it.  If you ask a Shetlander “who are you?” They will say “Shetlander”, not “Scottish”.  In the event of a Yes vote for independence expect Shetland to ask for their own referendum or at least more autonomy over “their” oil.  Scotland will need Shetland more than Shetland will need Scotland so their negotiating position will be strong.

In any case oil revenue is highly volatile.  North Sea oil and gas revenues would have accounted for over 15% of Scottish revenues in 2010-11 compared with 1.6% for the UK as a whole. They were more than 20% of Scottish revenue in 2008-09 but just 12% in 2009-10. Looking back further they accounted for nearly half of all revenue in the mid 1980s, falling to just 3% in 1991-92.

But the cost of running a socialist state is not volatile.  It is high, constant and addictive. The ups and downs of Scottish oil revenue would need supplementing with borrowing in order to pay the social bill every year.

Borrowing costs are likely to rise in an independent Scotland as the financial markets would worry about Scotland paying back the debt without the reassurance of the Bank of England as bank of last resort. Rating agencies have already indicated that Scotland would have a lower credit rating than the UK, requiring a higher yield and therefore higher interest rates. The assets of Scottish banks are an alarming 12 times the country’s GDP adding markedly to the perceived risk of Scottish debt.  This is much higher than the multiple in Iceland before their economic crash.  The equivalent multiple for the rest of Britain is below five and for Ireland on the eve of the financial crisis it was about seven. In another economic meltdown Scotland would struggle to rescue its banks.

Scotland would also have to take its fair share of UK debt after independence, which would amount to perhaps £100 billion ($161 billion)— a lot for a small country to issue at once.  Scotland’s likely high debt, fiscal deficit, weak economic growth, lack of institutional frameworks and low foreign exchange reserves suggest it would pay a higher interest rate than the British government.  Brokers estimate an extra 1-1.5 percentage points a year.

In any case this still leaves somewhere between 80% and 97% of Scottish Government income coming from sources other than North Sea oil. How easily can the SNP and Scottish Labour party raise taxes and benefit spending in an independent Scotland with an economy on their doorstep that is 10 times larger?

The rest of the UK (rUK) stripped of Scotland would be more likely to produce Conservative governments. The chance of an old Labour socialist style Government would be much diminished.  Labour has had the majority of seats in Scotland in all but two General Elections: 1951 and 1955.  The Conservative share of seats has been 2% or less since 1997.  Also the Scottish Labour MPs tend to be more socialist Old Labour style politicians than we find in England.  Tony Blair’s New Labour would still have achieved overall majorities in the elections of 1997, 2001 and 2005 even if all Scottish votes had been declared invalid, but his politics were hardly the Socialist Nirvana dreamed of by the SNP.  Tony Blair’s top rate of income tax was lower than that of the current Tory led coalition.

Without Labour’s 41 Scottish seats the Tories would have had an absolute majority in the current Westminster parliament rather than having to share power with the Liberal Democrats. This would suggest a long series of Conservative or Centrist rUK governments committed to lower public spending, no increases in the higher rates of income tax and downward pressure on business rates. Where would that leave the Scottish Government?

If Scottish taxes rise to pay for more benefits how will the SNP stop high earning, affluent Scots and Scottish businesses moving across the border to seek a more favourable tax regime?  How will the SNP stop English benefit seekers moving north to maximize their income from the State?  There are few geographical, language and cultural barriers to quell a massive movement of people and capital.  With such a large economy on their doorstep the Scots’ ability to manage their own tax and spend would be much diminished unless they were prepared to put up a Berlin style wall to stop the affluent leaving and the poor arriving. It would reproduce the mass emigration we saw from the Republic of Ireland, a flight that did not abate until the Irish abandoned the worst of their country’s ultra-nationalist business cronyism and implemented some of the most attractive low tax packages in the western world.

Currently SNP and Scottish Labour MPs are able to influence the economic policy of the UK, which they would not be able to do if they were independent. Despite the Tories being wiped out in Scotland in terms of Westminster Government seats their style of politics is not as unpopular there as many pre-suppose.  They still accumulated 413,000 votes in the 2010 general election — hardly a different order-of-magniude from the 491,000 votes won by the SNP.  An independent Scotland voting for its Government using proportional representation would have to take these political views into account.

So a vote for independence would most likely result in a series of more right wing, low tax, low spend governments in England, which would then severely limit an independent Scotland’s ability to mange its own tax and spend as it would wish.  They would have to fall in line to manage their government finances and maintain their competitiveness.

This mirage of independence would also be further diminished if they entered a currency union with the rUK. Counter-intuitively Scotland will have more independence as part of the UK than they would as an independent nation. England is likely to do well despite a breakaway from Scotland. It would be free to have a more friendly tax policy to attract businesses and talented, motivated individuals.  As North Sea oil dwindles the English taxpayer will not have to fund the higher public spending and faster aging population of Scotland.

The main Scottish banks and pension funds are likely to relocate much of their assets and many of their jobs to England, boosting English GDP and creating more high value employment.

English depositors will be unhappy to hold their money in a foreign bank (the Icelandic banking meltdown is a sobering example).  They will worry about the future of their pension and life-assurance policies held with the likes of Standard Life, Scottish Widows (owned by Lloyds) and Aegon (formerly Scottish Equitable). All are Edinburgh-based and among the largest pension funds in Britain. English investors will want to know whether they would still be paid in pounds and will also worry that they would no longer have any influence through the ballot box over the tax regime governing their pensions.

If Scotland votes to leave the UK the flow of pension money into the Scottish-based insurance companies from outside Scotland may well dry up and there would be transfers out, to English-based companies.  The main Scottish financial institutions have already announced they will move much of their business to England in the event of independence to reassure their depositors and prevent this from happening.  Edinburgh’s financial sector will be weaker and London’s stronger after a split. This is significant because finance is a highly lucrative business and already pays 12% of all UK taxes.

Quebec_investment_graphic_767622a

In fact, business investment and employment in general will probably increase in England at the expense of Scotland. Look at what happened in Quebec after it tried to break away from Canada in 1995. Investment as a share of GDP before the referendum roughly matched the rest of Canada. Afterwards, even though Quebec voted against independence, a big gap opened up as investors decided the political risk was too great. They took their money elsewhere in Canada.

Many companies serving Scottish markets may be tempted to base themselves in Newcastle or York, boosting jobs and investment in the North of England. This will be in addition to the expected migration of talent from north of the border to seek better opportunities and lower taxes in England.

The loss of British influence in the United Nations, NATO, G7, Security Council and European Union will be a major blow to both Scotland and the rUK, but England will suffer less.  It will cope well without Scotland and may well flourish at Scotland’s expense.

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Politics and Economics

A Democratic Monarchy is the Least Bad Way of Running a Country

A Democratic Monarchy is the worst possible way of running a country, apart from all the alternatives that have been tried.

Presidents are “elected”.  To do this requires political backing, financial muscle and (in many cases) military support.  This opens them up to corruption and political influence.  Even the democratic one’s are not supported by all those that voted for the other candidates, making them partisan and difficult for the whole country to unite behind.

The list of the most free and open countries in the world is full of Democratic Monarchies (Australia, New Zealand, Canada, Sweden, Norway,  Denmark, The Netherlands……. ).   The list of unfree and closed countries includes many Republics (Iran, Syria and North Korea).

The best thing we can say about a democratic monarchy is that the head of state is not a politician.  And because they are born into wealth and privilege, they are incorruptible.  Unlike our politicians.

To have a head off state, with no executive power, which is impossible to corrupt, around whom the whole country can unite and towards whom our politicians must show humility and deference is genius.  

After all,  quis custodiet ipsos custodes? 

Those who seek power are the last people we want to have absolute power.  Somebody must keep these arrogant, self-opinioned windbags in check.

A Democratic Monarchy is a ludicrous way to run a country.  If anybody comes up with a better alternative, please let me know.

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Liberty, Politics and Economics

Real Democracy Lies in Purchasing Power not Committee Meetings.

In Ed Miliband’s Hugo Young Lecture this week he outlined his solution to unresponsive and unaccountable state services.  He proposes to give more power to the people. He wants to provide the public with more information.  He wants local people to be consulted about local decisions and he wants local government to take back more power from the centre.  Laudable aims, but how will this be implemented?

Labour will give power to the people so long as their decisions are constrained within their preconceived framework of socialist thinking. So the services would still be state run and monopolistic but the public would be allowed to influence the flavour or hue.  This is not power or freedom. It’s being imprisoned in a series of endless bureaucratic meetings, which will be dominated by a few activists who have the time and energy to expend on a narrow cause. This will inevitably include the type of full time agitators, anarchists and protestors we see objecting to fracking and busily occupying London.

Oscar Wilde’s remark that Socialism would never work because there aren’t enough evenings in the week seems to be accurate. Mr Miliband’s pledge that local people will be consulted on decisions is typical of Labour’s illusion that ordinary people are desperately clamoring to give up their free evenings to sit on the local committee for refuse collection or to influence the local clinical commissioning panel. The voice of the silent majority will remain just that because they have better ways to spend their time than arguing with a few highly motivated extremists. So it would not be very democratic either.

Real power lies with whoever holds the purse strings.    So instead we should introduce a voucher system, which we can all use to procure the type of local services we want.  For example, we would have the power to use our Medical Voucher to choose our own doctor, our Education Voucher to choose our child’s school and our Refuse Collection Voucher  to choose who empties our rubbish bin.   We would all get an equal opportunity to influence these services and providers will be kept on their toes because revenue would flow to those providing the best service.

However the public sector Unions and left-leaning politicians would become impotent under such a scenario. They only have power if we have no choice but to use their monopolistic services.   For this reason neither would allow it.  In reality they will constrain the decision making to the Henry Ford solution. You can have any colour you like so long as it’s black – or in this case, red.

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