Let us hope that the euro and the EU do collapse
Now yes, agreed, I am known for my euroscepticism, both of the very EU system and of the currency, thinking them both thoroughly bad ideas from start to finish. But I'd like to point out that there are those not as entirely crankish as I am on the subject who think that the toppling of one or both wouldn't be so bad: could even be desirable.
The claim that the downfall of the euro and the EU would produce chaos and war may be interpreted to be just a strategy necessary to get support for helping the highly indebted nations such as Greece, Portugal, Spain, or Italy with ever more financial support. However, conversations I have had with persons from various European countries suggest that many people really believe that Europe will disintegrate and that wars are looming if the EU dissolves. I hold this view to be seriously mistaken.
Good, just to get that out of the way.
The individual countries in Europe will quickly form new treaties among themselves. Collaboration will be maintained in all those areas where it has worked well. Some countries will remain in a newly formed and smaller Eurozone, for which the appropriate treaties will be designed. A similar reconstitution will take place with respect to Schengen, which will then encompass different members. Only those countries that find it advantageous will join a new convention on the free movement of persons. In contrast, those nations that do not find such new treaties attractive, or that are not admitted to them by the other members, will not join.
The result will be a net of overlapping contracts between countries, which the various nations will join at will. These contracts will not be based on a vague notion of what ‘’Europe’ may mean, but rather on functional efficiency. Crucially, the individual treaties will be stable because they will be in the interest of each member.
What is being suggested is a multi-speed Europe, a contractual one or, if you prefer, a liberal conception of inter-state cooperation rather than the building of new over arching state. And it's a vision that I find very attractive indeed. I see no need or, no reason for, a new State of Europe while I can see the obvious benefits of cooperation across the continent.
But let's have that cooperation freely given, freely negotated and split out into its component parts. As Bruno Frey (for it is he) points out:
The essence of ‘Europe’ is variety and diversity rather than étatisme and bureaucracy.
So why in hell is anyone at all trying to constrain such variety and diversity under one set of rules and one set of rulers?
There, that's better!
Well, we’ve stripped those Royal Bank of Scotland rascals of their titles and bonuses and the surge of optimism pulsing through the economy is palpable. The stock market is soaring, businesses have launched ambitious investment schemes and dole queues are disappearing.
If only.
We’re somewhat ambivalent about this whole executive bashing brouhaha that is substituting for serious thought on stimulating economic growth. Before moving on, though, here’s one small point. Britain is a big player in the premier league of top executive talent. Earlier this week, the world’s most successful company Apple appointed Dixons CEO John Browett as head of Apple’s retail store operation. Born in Rutland and a graduate of Cambridge University and Wharton Business School, Mr Browett worked at Boston Consulting and Tesco before moving to Dixons. In short, he’s a serious player on the global stage.
Let’s remember that before we penalise top talent for the sins of RBS. The UK’s biggest industry by far consists of professional services like lawyers, accounts and architects and business services like IT, security, training and catering. Together, they’re 17% of the economy compared with 11% for manufacturing and 10% for financial services. We need a cultural climate that allows the likes of Mr Browett to come and to go, to teach and to learn.
Then there’s the collective waste of energy and hot air expended on the matter of executive compensation – the dispiriting politics of envy that won’t launch a single new business or entice existing ones to expand. How much better to spend that scarce time and political capital on liberating the economy.
For example, Europe continues embroiled in its financial crisis – floundering with grand plans for debt relief and squeezing taxpayers for every last penny. The surest way forward is to complete the Single Market project, especially since that which remains to be done applies to those very professional and business services that the UK is so good at. Now that we’ve got our RBS scalps, let’s put the same effort into finishing the Single Market.
Here’s one quickie – a single pan-European patent regime has been stalled by a squabble over where to locate the main patent court: London, Paris or Munich. For goodness sake, just give it to Germany, the biggest issuer of patents, and let’s get on with it. European patent protection and any consequent litigation now costs five times as much as in the US because of the filings required for each country.
This is a costless measure that will spur far more growth than any hocked knighthood or confiscated bonus. We need growth more than we need spiteful envy.
Quango merry-go-round
Quangos were invented in the 1960s but not much used until the Thatcher administration saw them as a means of downsizing government and reducing ministerial meddling. They have blossomed since causing the Coalition to make big claims that they would cull their number and their costs.
As we now know, what the Coalition says and what it does may not always match. The claim was to push autonomy down to locals and reduce the coverage of central government. In fact the reverse is happening.
Last week’s National Audit Office report on the quango reduction is most illuminating. 200 or so quangos will be culled but much nif not most of their staff will be absorbed into Whitehall departments. Ministers will again be able to meddle directly. These new costs have not been set against the savings and thus the net position is far from clear. What is clear from the NAO report is that the claimed savings are overstated. And once the quangos are safely back in their departments, which is more likely – renewed growth or shrinkage?
One example is the “Local Better Regulation Office” which was invented only recently by the last administration and a prime candidate for the bonfire. Instead it is being incorporated in Vince Cable’s BIS department as the “Better Regulation Delivery Office”. Note that local is becoming national and central government is being expanded.
Meanwhile regulations continue to pour out, ignored by our MPs.
The Coalition will doubtless ignore the NAO report as they have so far. Wouldn’t it be better if they got together and produced a full list of quangos as at May 2010 showing which continue roughly as now, which are being absorbed into their departments and which are being culled without replacement? We are entitled to know this broad picture, the numbers employed and the costs. Maybe an MP will ask these questions?
Good government?
Earlier today, Tim asked how we could determine whether one government was better or worse than another, concluding that it is almost impossible make a verdict on any objective basis. Like Whig in the comments below Tim's piece, I'd quote the following: "That government is best which governs least". That's been attributed to Thomas Jefferson and Thomas Paine, but according to Wikipedia it was Henry David Thoreau who said it first. Either way, I agree with the sentiment. I also like this verse from the Tao Te Ching: "Governing a large country is like frying small fish. Too much poking spoils the meat."
Measuring government performance
What is “good government”? How would we know, for example, that this government is better, or worse, than the last or than UK government in previous centuries. This should be of interest to scholars and other citizens but the last thing any government would wish is an objective measurement of its own performance.
John Stuart Mill famously proposed that the role of government was twofold; the protection and development of the benefits of its citizens. He assumed democracy was best but did not justify any of those things. And he omitted justice, freedom, [government] transparency, the interests of minorities and minimalising corruption (the use of power for personal gain).
He did, of course, write about justice which can be seen as existing outside government, that is to say, government is subject to justice, not vice versa. But then government does pass laws and limit rights. And Mill wrote about liberty as limiting governmental powers: “the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.” On that basis, government should not prevent us doing anything which may harm ourselves, but not others.
One could argue that a government should be assessed on the extent to which it does what it said it would do in its pre-election manifesto but that too has a number of problems. The present coalition had no pre-election manifesto. The less demanding the manifesto, the more easily it is delivered but that does not prove the government to be better than one that one just misses a far more challenging manifesto.
This government is setting up its UK happiness index but there will be no comparative figures and Downing Street will be quick to distance itself from any poor results.
This blog may simply be exposing my own ignorance but my question is whether UK government in the 21st century is better or worse than in the time of Adam Smith. How would we know? Should we ask the National Audit Office?
Unwinding the Iron Lady
Recent weeks have seen a flurry of articles about the upcoming release of The Iron Lady, featuring Meryl Streep as Margaret Thatcher. A lot of these have been drearily predictable – superb performance of a dynamic personality but, heaven forbid, the writers could never vote for Thatcher and lament her destruction of a golden Britain that never was. One Guardianista admitted to being only six when Thatcher was ousted but still claimed to be opposed to everything she stood for.
Expect more of this when the film actually opens in early January but prepare to demand from such critics what, precisely, of Thatcher’s legacy needs undoing. Two decades and four prime ministers later, very little has actually been undone so here’s a shortlist of the possibilities:
- Re-open the coal mines and send the noble working classes back underground to face an early death from accident or disease. The mines will need a subsidy, of course, but we could switch these from green energy schemes and support instead increased output of carbon dioxide.
- Simply hand the Falklands over to Argentina, apologise and offer up a couple of aircraft carriers as compensation. We’re building some now for which we have no plans.
- Speaking of war, Thatcher never invaded a foreign country so perhaps we should pick up on some of her successors' examples in Bosnia, Afghanistan and Iraq. Of course, our reduced military capabilities limit suitable candidates but there must be some minor evil we can correct - mineral exploration in Greenland, say, or money laundering in Belize.
- Re-nationalise privatised companies from airlines to gas to telephones to electricity to you name it. Increased waiting times for delivery and service would do much to calm our frenetic pace of life. The recent success of Northern Rock, Royal Bank of Scotland and Lloyd’s point the way.
- Discourage competition and innovation. Do we really need our horizons broadened by cheap flights to every corner of the world? What was wrong with the stodgy fare in the supermarkets before Tesco, Sainsbury’s, Asda and Morrison’s got down and dirty?
- Eliminate quality in our manufactures and banish those foreign devils from Toyota, Honda, Nissan, BMW and Tata. Bring back British Leyland so we get to know our local garage mechanic better.
- Make the pips squeak again. There’s too many smart and creative types flouncing around London so let’s get those marginal tax rates back up to 70%. Just think of the parking spaces this will free up.
- Re-purchase former council housing but only pay the original selling price. That’ll teach those contented families to aspire beyond their station.
Praising democracy in Africa
Or praising democracy anywhere in fact. An interesting but not surprising finding from Africa:
Africa is poor and its urban population and industrial centers are small, while its rural population and agrarian sectors are large. In the absence of party competition… we should therefore expect economic interests to seek to influence public policies through lobbying by interest groups. Insofar as this is the case, we expect economic policies to be “urban biased.” But when there is a change to party competition… electoral majorities acquire political weight and those seeking office will therefore begin to advocate measures designed to attract rural voters. They should therefore begin to support policies that favor agriculture.
Any ruler must favour the interests of those that keep him in power. A military dictator has to take good care of the Army and everyone, even Roman Emperors, is afraid of the urban mob. And what we saw in Africa after independence was that the urban masses, although only a small fraction of the country, were those who had the political power. Ghana's insanely over valued currency for example, which killed off the cocoa plantations in favour of cheap manufactured imports for the urbanites. And as that first flirtation with democracy faded then things only got worse.
But when the majority of the population is rural, engaged in farming, it's only right that economic policy should be determined by the needs and desires of that majority. Which, with the return of democracy, is what we're seeing happen.
And there's a lesson for us oh so moderns here too. Allowing power, decision making, to float off into the technocracy (at any level, UN, EU or just Whitehall) is going to cause exactly the same problems. As the power base, the support, will come from technocrats to technocrats policy will be decided with the aims and desires of technocrats in mind, not with our.
Which is really why we don't want political power to accumulate in the centre but to keep it close, by us. Doesn't matter which centre, if it gets there it will be deployed to benefit the centre whereas if we have it then we get to exercise it for ourselves.