The victor vs the guilty and the scared : UK in the EU

David Cameron has laid it plain - if elected as a majority government in 2015, the Conservatives will offer a referendum on membership of the EU in 2017.

The intention as described in his speech today, is to renegotiate the UK's membership in the EU, with more openness, more flexibility and a relationship with more direct accountability, so that a referendum would mean that a "yes" vote was for a new EU relationship.  "No" of course, would mean departing the EU.  What isn't clear is what would happen if there was not to be a new EU relationship that made a substantive difference to the status quo.

David Cameron is obviously driven by politics.  He wants to sideswipe UKIP, so that its primary policy is, essentially, his.  Why vote UKIP (and risk putting Labour in) when you can vote Conservative and have your say on EU Membership?  Labour leader Ed Miliband has made it clear he doesn't support a referendum because of "the uncertainty" it creates, and the beleaguered Liberal Democrats have long had a love affair with the European project.

However, there is more to it than that, he wants to send a clear message to other EU Member States that  they better negotiate a good enough deal for the UK that he can sell it to UK voters, or those voters will say "no".

You see voters wont be choosing between the status quo and a new relationship that has yet to be negotiated, they would be choosing between a new relationship and leaving the EU.   So something will have to be negotiated.   That puts pressure on those Member States keen on the UK remaining to compromise significantly, for the consequences of failure would be considerable.

It's telling though that the consequences of a "no" vote remain vague.  For most campaigners for a UK exit from the EU, in UKIP, don't want to abandon the single market, they just want to abandon the customs union, EU law and the financial transfers to support EU programmes.  They want to keep open borders for trade and investment.  However, to say "no" to membership of the EU doesn't actually say that.  It is throwing it all away and starting from scratch.  That's a strawman that suits supporters of the EU, but isn't what UKIP wants and isn't what almost all opponents of EU membership argue.

However, what is this all about more fundamentally?  Why is there such antipathy towards the EU in the UK?  Why is there such a different attitude on continental Europe?

It all goes back to history and how it is taught at school to children in Britain and on the continent.  

The British view of history before the EU is fairly simple.  The UK fought and won World War 2 (yes with American help), as such it contributed to being a bulwark against Nazism and subsequently against the threat of Soviet invasion from behind the iron curtain.  Deep in the British national psyche is this belief in the justice of this win, that Britain protected Europe from freedom.   Britain doesn't and didn't see the European project as doing that for Britain, but as being a way of opening up markets and allowing trade and travel.  Britain didn't see it as a way of sharing its welfare state with those from far poorer countries.  

The countries on the continent think quite differently.  The citizens of the countries that believe they were victims of World War 2, i.e. France, Belgium, the Netherlands, believe that the European project is about peace, and is about defusing centuries of nationalist tensions and rivalries.   It is seen as protecting their freedoms, bear in mind these countries all endured years of Nazi occupation and fighting in the streets and fields of their countries.  Britain had the Blitz, but it was never occupied.   The strong belief that the EU is the foundation of keeping the peace in Europe endures because there are generations still alive who can tell tales of horror and poverty of how it was before.   That tale isn't told in the UK which won, rather than was occupied.

The citizens of the countries that fell on the wrong side of the iron curtain think differently again.  For them,  the war was followed by over 40 years of tyranny and totalitarianism.   For them, joining the EU (and NATO) is about turning away from Moscow and turning towards the West.  Notwithstanding the money that comes from EU cohesion funds for being the poorest countries in the EU, the likes of Poland, Romania and Latvia see the EU as part of their process of civilising government, of tackling corruption and promoting core principles such as the separation of powers.   Their view of the EU is understandably different given the darkness from whence they recently emerged.

Finally there is the guilty. Germany (and it wouldn't admit it, Austria).  Germans have hammered into them war guilt, Holocaust guilt, combined with part of the country also carrying relief of having emerged from the same totalitarianism as its eastern neighbours.  For Germany the EU is a way of doing good, of fueling prosperity, human rights and values of freedom, secularism, tolerance, productivity and accountability.  Germany embraces it as salving its conscience over what happened in the war, and what happened in the countries that were occupied.   

So Britain comes from it differently, and has done so fairly consistently.  Britain has long been critical of the Common Agricultural Policy, and gained a partial rebate of its contribution as a result.  Britain has long pushed for reforms for greater transparency and accountability for EU budgets for controls on major projects and scepticism over the growth in EU regulation and spending.

However, it is now coming to a crunch.  There is a profound widespread opposition among many in the UK to EU Membership, not because of free trade, not because of free movement to travel, but because of opposition to petty regulations, opposition to EU spending not only on a profligate polity and bureaucracy, but to well-heeled industrial farmers in France, to spendthrift Greek infrastructure projects.   There is opposition to people from poorer EU Member States claiming welfare benefits, free health care and education, having paid no tax in the UK.  There is opposition to mass uncontrolled migration from those countries.  

Some of the fears are genuine, some of them are beat ups, and there is a lot of bluster about how much the EU costs the UK budget, lots of nonsense that the European Convention on Human Rights came with EU Membership (it comes with being a member of the Council of Europe) and that all the EU brings is regulation (when it also brings prohibitions against governments subsidising businesses that compete with those from other EU Member States).

However, EU Memberships is a constitutional matter.  EU law is supreme in the UK, the UK government is bound to implement most EU law (it needs to negotiate a specific opt out or conditions otherwise, which it also needs agreement on).   The EU takes a small portion of national VAT revenue to spend on the Commission, and the European Parliament is not sovereign, the European Council is.  So imagine a supranational government where the elected representatives of the citizens are not in charge.

It is right for the UK to renegotiate its membership of the European Union, and I will write about why later.   What is wrong with the EU is plenty, what is good about the EU is few, but significant.   I believe it would be great if the UK could renegotiate EU Membership and indeed the European Union on grounds that would be outward looking, liberal, and working towards less laws, except those to bind the economic and social freedoms that Europe should be famous for.

However, I don't believe that this can happen, I don't believe any UK government can remotely negotiate EU Membership that can deliver more freedom and less government (because they don't believe in it at all), and I don't believe the EU is compatible with that.

Davos - when will someone talk about the elephant in the venue?

Regular readers of my blog know my views of the annual World Economic Forum at Davos.

In 2009 I wrote:

There is not inconsiderable hype in the business world and among some in governments about the annual exercise in mutual onanism called the Davos Economic Forum in Switzerland. Like many conferences of high profile people, one of the key objectives is to get people to agree and put out nice sounding statements that will offend no one and look like some enormous intellectual capital has been applied to the economic issues of the world.

Liam Halligan at the Daily Telegraph calls for this year's WEF to actually do something useful, like dealing with the elephants in the economic room that never get discussed, because to do so would embarrass the inept, timid and unprincipled politicians that scurry about the venue at Davos, seeking to appear important and competent.   He focuses on the US fiscal cliff and the unsustainability of the "Western model" of growing state dependency, deficit spending and public debt.

However, Davos wont do that.   It didn't identify the financial crisis, it didn't debate solutions, it hasn't really done much at all over the years.   It does involve a lot of networking and back slapping.  Andrew Ross Sorkin in the New York Times has written about how many of the prophesies at Davos prove to be far from true, like Bill Gates predicting Google didn't really have a business, how Ken Lay CEO of Enron was a keynote speaker in 2001 (yes the one convicted of conspiracy and fraud)  and how C. Fred Bergsten, senior fellow and director emeritus of the Peter G. Peterson Institute for International Economics in Washington, said at Davos 2008 that it was inconceivable that there could be a world recession.

It's hilarious, for an event where the cost to send a delegate is a registration fee of US$20,000 a head, plus accommodation, airfares and other expenses of course, add a zero or two if you actually want to speak.

No doubt the business people attending see value in networking and discussing opportunities, but it is the fact it provides a forum to ignore some serious home truths about public policy in governments, whilst politicians are there talking about everything, but the hard issues, that makes the Forum more hype than substance.

No serious scholar of economics or finance would look at the Davos World Economic Forum as a locale of intense debate and discussion about any need for serious systematic change to domestic or foreign policy in any countries.

So what SHOULD be talked about?

How about this:

- The budget deficit and public debt of the United States, exacerbated by the unsustainability of social security and Medicare, and how it requires the US to choose between serious cuts in the role of the Federal Government, or serious increases in taxes, and what both options mean for economic growth and the long term future of the United States as the world's leading economy;

- The future of the European Union, particularly the nationalisation of southern European public debt by northern European economies, and how unsustainable the widespread European model of ever growing public spending and regulation of the private sector has proven to be in sustaining growth, employment and confidence.  In other words, how will Europe grow when so much of its economy and society is dependent on internal transfers;

- The risks and disappointment that quantitative easing/money printing/debasement and devaluation of currencies has proven to be in re-invigorating those economies that have engaged in it, and the emergence of new asset price inflation bubbles fueled by the fiat money manufacturing process.  In other words, real debate about the use of monetary policy to create money and the chimera of the short term "success" it creates.  Is there starting to be a shift back towards commodity money as a source of store of value?;

- The opportunities trade liberalisation in good and services can have in promoting economic growth, reducing poverty, increasing employment and improving the environment, if only the US, EU, Japan, China, India and Brazil could get their act together and launch a new WTO trade round, and how the creeping protectionism globally threatens to cause much harm.  How could world leaders catalyse a new open trade round for the 21st century?;

- The corrosion of economies and societies by corruption, through the effective confiscation of wealth by corrupt politicians and business owners using state regulation, protectionism, subsidies, exemptions from legal enforcement of contract, tort, criminal and property laws.  How critical it is for developing countries to seriously tackle corruption, with open independent courts, open free media and political systems that allow voters to remove those in power readily, and to protect the rights of all citizens from infringement by government, by gangsters and other thugs.  What does failing to do this encourage in terms of net emigration, the lack of interest from foreign investors beyond extractive businesses?

- The qualitative difference between governments cutting spending on consumption, and increasing taxes on wealth and income creation, and how one helps to create economic growth, whereas the other stymies it.

It wont happen.  Economic vandals like Gordon Brown will be speaking, a man who was one of the world's worst dealers in precious metals, but also an egregious creator of rampant state dependency and an unsustainable economy fueled by an endless addiction to promoting private and public sector credit.  His personal behaviour was notable for paranoia and an egotistical over-estimation of his own intellect and perspicacity, he shouldn't be speaking in polite company.

It includes Eurocrats, who demand austerity from Member States but more money for their own, unaudited, intergovernmental organisation.  The leader of a company that facilitated a country lying about its public spending and then seeking to profit from it.  A communist and finally a serial bigamist who jokes about rape.  Pardon me if I am not impressed by a group that invites individuals with such questionable intellectual and moral credentials.

Of course the World Economic Forum includes meetings in secret, but who really will take on the corruption,  the wilful deception by politicians of the monetary and fiscal positions of their countries, including those who promised unearned money, goods and services at the price of bankrupting future generations?

It wont be happening in Davos.

Yep, it's not worthy of the esteemed individuals who actually do attend.

Move along, there isn't a lot to see here.

UPDATE:  Helen Clark is at Davos.  Who is surprised? 5 star hotels, schmoozing and pontificating, whilst escaping the excoriating criticism of the substandard subsidiary of the UN she leads.   She is keen on how austerity is impacting on development, code for "how dare developed countries cut spending on aid funnelled through intergovernmental organisations because they have the temerity to try to balance their budgets by means others than taxes".  Rich, of course, for an international civil servant who pays no tax.

Politicians are to blame for Heathrow being unable to cope with snow

The news the last few days in the UK has been focused on the reaction of much of the country to what is really a fairly average dump of snow, albeit the first proper snow this winter.  Yes, some roads have been slow, yes some railways have been a bit slow too, and there have been some delays at airports across the country.  Most people accept this to be normal, which is true.  There needs to be more care in such conditions, and it is how people in colder climates manage this time of year.

However, the outrage has been focused on the one piece of transport infrastructure that the media has portrayed as being unable to cope, but which is actually coping the best it possibly could under the circumstances - Heathrow Airport.

Heathrow's owners, BAA (soon to drop that name), invested £50 million in equipment to clear snow from runways, taxiways and stands, and the airport has been accomplishing this successfully.  It is just as well equipped as airports in continental Europe, its problem is capacity.

No other airport in Europe runs at 98-99% capacity.  With low clouds, falling snow (which was the case yesterday) and low visibility, the key need is for planes to have a far greater following distance for takeoffs and landings, to build in a greater safety factor.  The problem for Heathrow is that its landing and takeoff slots are at tiny intervals of around 1-3 minutes (depending on aircraft type).  Simply increasing these by another minute cuts a lot of slots out, so suddenly Heathrow faces knocking 10-20% of flights out just so the remainder can operate safely.

You can do this at Stansted, where the airport is only running at less than 60% capacity (a few delays at some busy times, but that's it).  At Gatwick, which is operating at around 90% capacity, it can just manage.  Of course Schiphol, Charles de Gaulle and Frankfurt all have spare capacity as well, but Heathrow doesn't have it.

The reason is politics.

Heathrow's owners have long wanted to build a third runway, but politicians stuck their noses into it because of the concern of more flights over properties of people who live under flightpaths.  The land for the runway has mostly been owned by BAA for some time and at no point has BAA wanted a penny of taxpayers' money to pay for it - it is commercially viable in its own right (A point largely ignored by the media, which treats infrastructure spending by the private and public sector as if it has the same impact, whereas only the latter is paid for by everyone).  However, the last government had inquiries and investigations into it for so long that approval was only given a year before the election.

The Conservative Party, supposedly a party of business, saw a chance to look Green, as part of David Cameron's efforts to "modernise" the party - code for embracing everything that looked new and trendy and "nice" to attract more voters, but actually included embracing the avowedly anti-growth agenda of the environmental movement.  So he promised no third runway at Heathrow Airport.  He's in coalition with the Liberal Democrats, a party that warmly embraced that philosophy years ago.  Labour has since seen a chance to win seats in west London, so has jumped on the anti-runway bandwagon.

So that it be.  Whilst there is talk about airport capacity, and all sorts of lunatic ideas from a huge taxpayer funded airport at the Thames Estuary (talk of it being commercially funded is laughable), to using other airports with ample capacity that airlines aren't so keen on, there is a new inquiry looking at options, conveniently timed to report back after the next election, in two and a half years' time.

Heathrow Airport sits and gets jammed up with cancelled flights and upset people, few of whom will point the finger at politicians for their plight, but they should.  They should be blaming Nick Clegg, Zac Goldsmith, David Cameron, Ed Miliband, Ken Livingstone, Boris Johnson and others who have hopped on this bandwagon.  You see they just wanted the votes of people who chose to live under the flightpath of Europe's busiest airport.

If Heathrow had a third runway, there would be more flights, no doubt, but the airport would probably be working at more like 75%-80% capacity, so would be unlikely to need to cancel flights in the conditions seen lately, of course in particularly heavy snow conditions it would close, like any airport must do.

So if you're stuck because of cancelled flights at Heathrow, recognise that BAA is not to blame, British Airways and the other airlines are not to blame, it's the politicians who consistently get in the way of a profitable privately owned business from expanding its asset to meet the demands of its customers.   

UK Treasury isn't on top of its own website

let alone the economy.

One may jest that it is hardly surprising that one after another there are UK businesses folding due to competition from the internet (Jessops, HMV, Blockbuster, Comet), when those advising the Government aren't even able to keep on top of their own website.

Do a search on the Treasury website for Treasury structure.  I did that moments ago because I actually wanted to find someone in the organisation.

You'll get not one, but two PDF files listed as follows:

Treasury Structure and

Treasury Structure

both very similar, both with the Chancellor of the Exchequer being one Rt Hon Gordon Brown. 

Now I wouldn't suggest that this means anything significant, other than the Treasury has failed to keep its website up to date or to maintain it properly.  

This sort of nonsense shouldn't happen, but then the incentives around Treasury getting things right (and the penalties for getting things wrong) are not quite as direct as they are for businesses.

Environmentalist reveals anti-science attitudes at heart of the movement

Whether you call it GE or GM, the debate about genetic engineering has been overwhelmed by vehement opposition from the environmental movement from day one.   Former NZ Green MP Jeanette Fitzsimons said in 1998 that that Christmas was the last one when you could "trust a potato" and since then the rhetoric around GMOs has been simple:

- Genetic engineering shouldn't be allowed outside laboratories because once released into the environment anything can happen (visions of plants and animals overrunning the landscape);

- GM food is "Frankenfood"(visions of it coming from monsters, as if it involves something half fish/half pineapple) and so everyone has the right to know if there is any trace of GMO in it, so they know they are "safe";

- Organic food is safe and healthy and wonderful, and is not only the best for one's health, but is great for the economy.

Mark Lynas is an environmentalist, his credentials are here.  He was an activist against GMOs, and he has come out to admit he was wrong.  He gave a lecture on 3 January 2013 to the Oxford Farming Conference where he said so.   It tears at the heart of the rhetoric of the Green movement on genetic engineering and as a result gives good reason to question any time any of them try to quote science.

Here was a big American corporation with a nasty track record, putting something new and experimental into our food without telling us. Mixing genes between species seemed to be about as unnatural as you can get – here was humankind acquiring too much technological power; something was bound to go horribly wrong. These genes would spread like some kind of living pollution. It was the stuff of nightmares.

These fears spread like wildfire, and within a few years GM was essentially banned in Europe, and our worries were exported by NGOs like Greenpeace and Friends of the Earth to Africa, India and the rest of Asia, where GM is still banned today. This was the most successful campaign I have ever been involved with.

This was also explicitly an anti-science movement. We employed a lot of imagery about scientists in their labs cackling demonically as they tinkered with the very building blocks of life. Hence the Frankenstein food tag – this absolutely was about deep-seated fears of scientific powers being used secretly for unnatural ends. What we didn’t realise at the time was that the real Frankenstein’s monster was not GM technology, but our reaction against it.

It is damning about the environmental movement, about Greenpeace and Friends of the Earth.  Some of the choice quotes are: