Monday, November 28, 2016

Behold our Western democracies

            Alarm bells are ringing in, the Western world. An intruder armed with malice is on his way to the White House. Each of his moves draws a torrent of ill-favoured comment; every cabinet appointment offers further proof of malign intent. Tub-thumping increases in volume as the usurper’s enthronement draws near with media stars, academics, journalists, many of them blessed with the gift of eloquence, belabouring us daily with the idea that populism has triumphed over common sense and the common good. Too many Americans have been hoodwinked by lies and demagoguery; and for that matter too many Brits - those who voted for Brexit - have been duped by extravagant promises and chauvinistic appeals to self-interest. An overwhelming question forms on every dissenting lip: what must be done to stop all this. So runs much of the background noise.
            What lies behind the shock results of these two plebiscites? Why do firebrands like Nigel Farage, Steve Bannon, Trump himself - or ridiculous figures like Alexander “Boris” Johnson, Daniel Hannan and Jacob Rees-Mogg  - appear to have gained traction among people they like to call “ordinary”?
            Perhaps we should remind ourselves that demagogues find no nourishment where there is contentment, nor where, even in the face of difficulty, the majority feel understood and respected by their representatives. They thrive in fields left fallow and neglected by government, where the privileged few wallow in superfluous wealth while the many must live where hope is in short supply, and insecurity and privation have become the wages of democracy.
            People who voted for Trump and Brexit are not simple-minded malcontents prey to any rabble-rouser with a microphone. They have simply reacted to economic injustice, lack of adequate status, a sense of injury and indignation that those in whom they have entrusted their welfare and that of their children have ignored and betrayed them.  Perpetrators of that betrayal have been successive governments operating in cahoots with the captains of finance and industry. These are the true inmates of Hillary Clinton’s basket of deplorables,  of which she, too, is a member.
            Deepening inequality is perhaps the clearest evidence of the social divisions that have produced Trump and Brexit  in their respective domains. In his final state of the union address, President Obama lamented the rise of inequality and the desirability of an  “…economy that works for everyone.” - words that Theresa May echoed from the steps of No.10 in her inaugural remarks to the nation as UK Prime Minister. Obama recently told a Greek audience that inequality is the greatest threat to democracy, a Damascene revelation that he took two full presidential terms to articulate and then only in the wake of Donald Trumps electoral victory. Laudable sentiments from both leaders no doubt, but they beg the question of why, during Obama’s eight years in the White House and May’s six years in Cameron’s cabinet, they presided over an increase in what they now pretend to deplore.
            Nobel prize-winner Joseph Stiglitz noted in a recent report that governments are perfectly capable of counteracting the growth of inequality - and its handmaiden poverty - if they will; but their policies have actively promoted the opposite - a conclusion supported by Professor John Weeks’ recent piece in Open Democracy. Whether by neglect, design or sheer incompetence they have fostered unfairness, deprivation, and misery - and where the old dispensation survives, as in the UK, they plan to continue doing so.  Trump suggested during his campaign that the US electoral system was rigged; but what has truly been rigged is an economic system geared to rewarding the already wealthy and making the poor pay for downturns.
                        Inequality and marginalisation are not the only beefs against the political class. On both sides of the Atlantic, voters are repelled by State activities that are not just unpopular but repeatedly show up decision-making incompetence and a lack of moral judgment. Here are some:
-        A  determination to commercialise public life and to submit social welfare to the vagaries of competition;
-        Genuflection to big business and finance - with political office functioning as a route to personal enrichment;
-        Military interventionism - led by the US but with the UK as lieutenant - in which modern weaponry is deployed against stricken countries, and innocent victims are anodised as “collateral damage”.
-        Foreign policies towards countries such as Afghanistan, Syria, Libya and Ukraine that are marked by ignorance, dithering and bewilderment;
-        In the UK, a government and opposition embarrassingly lost in a fog of confusion on Brexit; in the US, a similar confusion about international trade deals that effectively leaves big business and labour at loggerheads;
-        A potentially dangerous cold war with Russia, and possibly with China in the South China Sea;
-        Refusal to face up to the challenge of climate change and protectionism towards industries that damage the environment;
-        Wavering incoherence towards the growing problem of human migration;
-        Persistent, bare-faced lying to the electorate - nowhere more evident than in the Brexit referendum and the 2016 US election campaigns.

            Plenty of flak is being hurled in Trump’s direction - but so far, at least, his sins are largely of word rather than deed. Those of the political class, by contrast, are part of our lived experience and they have been demonstrably unpleasant, disabling, divisive, careless of the welfare of citizens in their own and in other countries, and in some cases outright dangerous.
            Born into an impoverished working-class family,  I am a life-long left-winger. My education I owe entirely to the UK welfare state. I am reasonably well-read in the literature of the left and have more than dipped into that of the right. I am an unabashed admirer of the brilliant figures who spearheaded US independence from Great Britain and who wrote the US constitution. My political heroes include Simón Bolívar, Thomas Jefferson, John Adams, Alexander Hamilton,  Clement Attlee and, of course, Fidel.
            During the US election, I asked myself how I would vote if I were a citizen of that country. I thought of Trump’s insulting outbursts against Mexicans, against Muslims and against women, his vile mimicry of a disabled person, his airy dismissal of climate change, his egomania and brittleness. The foulness of his campaign, however,  could not erase in my mind the callous and venal record of the Obama years. Nor as a lifelong student of Latin America, could I overlook the outgoing administration’s incessant interference in that region, not least Hillary Clinton’s support for the 2009 coup in Honduras that ousted President Zelaya, and the absurd designation of Venezuela as an “extraordinary threat to the national security and foreign policy of the United States.”  My answer, disagreeable to my own conscience, is that I would probably abstain, but that if I had decided to vote, it might well have been for Trump if only because he, at least, had not yet betrayed the people and thus offered at least a smidgin of hope that he might modify his extreme opinions under the constraints of office. Clinton, on the other hand, offered only more of the same and thus no hope at all. Repentance would assuredly have followed, no matter which of the three alternatives I chose. If I had put my cross against Trump’s name, my subsequent sense of shame would probably have discouraged me from admitting it - even more so after his ignorant and menacing response to the death of Fidel Castro. There were no good options. France’s forthcoming presidential election may present French citizens, those on the left at any rate, with a similar dilemma next year. Meanwhile, the UK is governed by a Prime Minister the people haven’t elected, running a government programme for which no one voted, and who prefers the royal prerogative to parliamentary democracy.
 Behold the state of Western democracy.

Monday, November 14, 2016

Trumping from Right to Left

-->            From time to time throughout history, prophecies of doom have warned us of the approaching apocalypse. Most religions have an end-of days component in which the world as we know it will be swept away either to be reborn with suitable moral improvements or, as in the Theravada branch of Buddhism, to be finally destroyed in a conflagration. Some bold prophets have even ventured to predict the date of our extinction. Pope Sylvester II assured the faithful that they and everyone else would expire on January 1st of the  year 1000; while one of his successors, the aptly-named Innocent III settled on 1284. Martin Luther, Christopher Columbus, Nostradamus (Michel de Nostredame), and Isaac Newton, are among the better-known apocalyptic sooth-sayers, Jim Jones and Charles Manson among the most sinister, while New England Puritan minister Cotton Mather and Herbert Armstrong (founder of the Worldwide Church of God) figure among the most indefatigable - happy to revise their predictions when their chosen extinction date passes without incident and they find  themselves still alive on the following morning. A modern variation on the theme was the widely-believed prognosis of computer meltdown on January 1st 2000; and we have been assured by a newspaper as respectable as The Guardian that interstellar detritus will soon put paid to us, although the most recent extinction attributable to outer space is that of an Egyptian dog in 1912.
            Latest in the long human saga of dire forebodings is the electoral victory of Donald Trump on November 8th 2016 - an event that has unleashed a torrent of alarmist rhetoric from prominent members of the commentariat. Historian and media star Simon Schama, an inveterate anti-Trump tweeter, angrily told a BBC Newsnight audience that Trump’s election was akin to Adolf Hitler’s rise to power in the 1930s. On the BBC’s Question Time on November 11, Professor Sarah Churchwell, a US citizen, was barely able to contain her fury at the prospect of Trump becoming president and confessed that she no longer understood her own country.  Senator Joe Manchin is currently squabbling with fellow Democrat Senator Harry Reid over the propriety of hurling expletives at the president elect. The New York Times, having spent uncountable column inches demonising the Republican candidate, is suddenly fearful of losing its subscribers and issues an apology through gritted teeth for having persistently denigrated the new leader prior to the election. Protests erupt in cities all over the United States at the news of Trump’s victory. Students at Cornell University stage a “cry-in”, though they are consoled in their grief by supplies of freshly-brewed coffee courtesy of a sympathetic barista. More energetically, but with an equal display of cerebral distinction, Columbia students march around the campus screaming “Fuck Donald Trump”.
            Not to be outdone, newspaper columnists in the UK are fulsome in their expressions of outrage that a “racist misogynist” has won the White House.  “Don’t for one moment let the horror of the Trump election become normal”, urges Polly Toynbee of The Guardian, while fellow journalist Owen Jones tweets that “55% of white women voting for Trump is one of the most horrifying statistics I’ve ever seen”.  The Mirror goes even further with a headline predicting the end of civilisation.  Canada’s immigration web site crashes on US election night, overloaded with inquiries from Americans wanting to escape Trump’s America and presumably believing that terminal implosion will occur only south of the 49th parallel.
            Adopting a slightly different but no less partisan approach, a furious Glen Greenwald turns his ire not on the electorates that voted for Trump and also for Brexit, but on the political class that has failed to concern itself with the welfare of citizens while watching complacently as “…elite circles gorged themselves on globalism, free trade, Wall Street casino gambling, and endless wars”. As an exercise in angry polemic, Greenwald’s piece is as good as it gets.
            What is meant  by the political class?  Essentially, the phrase refers to an inner circle of elected representatives and their advisers who belong to political parties that have a proven ability to achieve power. In the United States there have only ever been two such parties; and despite recent fragmentation, the UK currently still has two - although some might contend that the number should now more realistically be one and a half.
            Serious attempts at the US presidency have required adherence either to the Democrats or the Republicans. From time to time, independents like Ross Perot and Ralph Nader have thrown their hat into the ring, as did minor-party candidates Gary Johnson and Jill Stein this year; but to no avail. If a fresh face is to appear, it must do so from within the main party stockades. For the Democrats, Obama managed it in 2008 and Bernie Sanders, a self-proclaimed socialist, nearly did so in 2016.  In their different ways, however, both have ended up toeing the party line.
            From the outset of his presidency, Obama has arguably remained on the conservative wing of the Democratic Party. He selected his first cabinet from the political-class rule-book: several Clinton stalwarts - including Hillary as Secretary of State, a sprinkling of Republicans including Robert Gates as Secretary of Defense, and bank executive Timothy Geithner as Treasury Secretary when the choice might have fallen on more progressive figures such as Nobel prize-winners Paul Krugman and Joseph Steiglitz either of whom would have brought added distinction to the cabinet table.
            In the end, despite his high intelligence and winning personality, Obama has had little or nothing to offer the blue-collar Americans who voted him in. Rust belt states have remained rusty, wealth and income inequality have continued to increase. Foreign policy, meanwhile, has continued in an expensive and vainglorious mixture of confusion and belligerence: the failed “surge” in Afghanistan, aggressive incoherence in the Middle East, bewilderment on Russia and Ukraine, frustration in trade negotiations with the EU. Obama’s conservatism is nowhere more evident than in his administration’s coolness towards left-wing governments in Latin America where policy has ranged from meddling in Venezuela, sanctioning a coup in Honduras, quietly applauding the impeachment on false charges of Paraguay’s left-wing President Lugo, and showing approval for Argentina’s new right-wing government with a presidential visit.
            Even a cursory glance at Obama’s record demonstrates why, in the world of politics, appearances often prove deceptive, hopes turn out to be illusory, and progressive rhetoric ends up sounding like vacuous sloganeering. All parties claim to be for the people - the right a little less so, the left a little more so. But in recent years, they have all occupied the same policy landscape, the one laid out by Reagan and Thatcher. They are neoliberals to a man and woman.
            Party nonconformists, meanwhile, are usually either squeezed out like Bernie Sanders, or struggle to achieve credibility like Jeremy Corbyn. Neither of these has succeeded thus far in engaging the people they claim to be addressing. During the primaries, Sanders had virtually no traction among African Americans and very little among Hispanics; Corbyn has scant following in the deprived areas of the north of England and the Midlands, and none at all in Scotland. Sanders in the end compromised his principles by supporting Hillary for the sake of the party. Corbyn and his colleagues fall back on the vocabulary and thinking of the 1970s when unions were strong, manufacturing still a major component of the UK economy, and the financial sector didn’t rule the roost. The Democratic Party reined in Sanders, and though the electoral result may unleash him again, time is not on his side. Corbyn’s vocabulary remains firm, but thus far he enjoys limited credibility among those he most needs to convince. Sanders’ followers are largely young, idealistic students and middle-class intellectuals, and so too are Corbyn’s. Both are fluent in the requisite progressive vocabulary and they doubtless use it honestly; but they mainly reach those who think they know the answers to the problems of the poor, the unemployed, and the disadvantaged, among whom they themselves were never numbered.
            Enter Trump and Farage from the outfield - the true disrupters of convention. Both have picked up on widespread public disaffection and moulded their language to suit - Trump, one suspects by instinct and Farage by calculation, though the result is the same.  It is Trump, of course, who matters; and what is interesting and instructive about some of his prescriptions for addressing blue-collar anger in particular is that they are fundamentally left-of-centre. Whatever one may think of his xenophobic outbursts, his crude sexual boasting, his transparent vulgarity, these may fade into insignificance beside his stated desire to revamp America’s economic profile and the role of the state - ambitions, incidentally, that could put him at loggerheads with a Republican congress. Three policies, in particular, might prove ground-breaking.
            First, the hostility to free trade deals - including the NAFTA (North American Free Trade Agreement). Trump has understood than free trade is never free. As soon as the ink has dried on the parchment, the signatories to trade deals find themselves obliged to open their borders to each other’s exports regardless of the interests of employees, communities, and even whole regions and sectors of activity. Tariffs reduce or disappear, but competition does not. Companies free to operate within a free trade area can move to where costs are lower - not only labour costs but also those related to energy prices, taxes, exchange rates, environmental standards and so on. Rust, decay and unemployment in regions thereby deprived of economic activity are among the less happy consequences, accompanied all too often by neglect from officialdom.
            Where formal trade deals do not exist, companies may also shift production to lower-cost countries, but governments at least remain free to implement countervailing policies without being dragged before a tribunal. Free trade deals, by contrast, bypass democratic accountability as the Canadian government learned when it tried to ban the importation of a toxic fuel additive from the United States.They are set in stone. They oblige the signatory countries to submit to their wording regardless of changing economic conditions. They can and sometimes do prevent governments from acting in the national interest. By minimising production costs - but not necessarily prices and certainly not profits - they also help to concentrate wealth in the hands of capitalists and senior executives, and thereby to increase inequality. Trump’s hostility to trade deals may or may not prove advantageous, but it is far from indefensible.
            Second, Trump’s team is beginning to outline a tax plan that is again more coherent than may first appear; and though it may look thoroughly right-wing, the corporate tax element has more to do with common sense than ideology. At present the US has the OECD’s highest corporate tax rate, One consequence is that instead of repatriating their overseas profits, US companies operate abroad from low-tax jurisdictions like Ireland (tax rate 12.5%) and stash much of the rest in tax havens like Bermuda and Cayman Islands. Lowering the US corporate tax rate could be a means of inducing US corporations “back home” - bringing jobs and  investment with them as well as revenue to the government.
            Third, Trump is proposing major investment in infrastructure. Unlike many politicians, he understands the difference between capital  and operating expenditure; and he knows that investment by the state in, for example, highways, airports, educational facilities etc. not only increases employment, it also has the long-term effect of reducing operating costs. Compare the UK’s so-called PFI initiative by which clever Labour and Tory chancellors sought to save public money by getting the private sector to finance capital projects. PFI’s signal achievement has not been to save public money, but to put hospitals into the red and excessive profits into the hands of corporations, while adding to the deficit.
            In summary,  some of Trump’s most significant economic policy proposals are ones that would not or should not seem outlandish if they were to come from Sanders or Corbyn. Much left-wing commentary would have us believe that Trump’s elevation signals the end of days. But the poor, the unemployed, and those many who feel marginalised by the relentless march of neoliberalism may beg to differ. Even if voters find some of Trump’s opinions distasteful, when it comes to putting bread on the table, they will choose to feed the kids. While the media are fretting about the Mexican wall and the deportation of illegal immigrants - policies already softening and destined in time to become footnotes - they are forgetting Bill Clinton’s celebrated aphorism: “It’s the economy, stupid!”.

Tuesday, June 14, 2016

Saturday, April 23, 2016

Brexit Bollocks


            A common complaint about the referendum debate from so-called “ordinary voters” is that while soothsayers and their opinions are many, facts are depressingly thin on the ground. In default of facts, the public is bombarded with unverifiable assertions whose reliability tends to be in inverse proportion to the confidence with which they are expressed. Some of the most forceful of these are manifestly untrue and routinely take the form of histrionic tantrums and insults - humorous and otherwise - directed at opponents. Bombast and fury, notably from advocates of the ‘Leave’ campaign, occupy the sound waves and headlines, elbowing out rational argument and well-researched analysis.  Boris Johnson’s scatological quip about the government’s referendum leaflet, for example, tells us less about the quality of the document than about the puerile humour of a man who, by some accounts, is using ‘Vote Leave’ as part of a plan to replace the current occupant of Number 10. If he succeeds, he will be the first overt buffoon ever to lead the country. Ambition, cold calculation of personal or corporate advantage seem more present among the ‘Outers’ than concern for the country’s future.
            By contrast, the ‘Remain’ campaign seems oddly low-key - probably because it is difficult, perhaps impossible, to be passionately angry about advocating “no change”. Yeats’ unforgettable lines come to mind:
“the best lack all conviction, while the worst
Are full of passionate intensity.”
            Not that we should in any sense admit the current UK prime minister into the ranks of “the best”. He is, as Anthony Barnett describes in his excellent piece, an inveterate dissembler, a callow purveyor of untruths. But with respect to the referendum, the arguments for ‘Remain’ put forward by Cameron’s team - and by Corbyn’s for that matter - give the impression at least of appealing to our intellect rather than to crude emotion.
            What is lacking so far in the ‘Remain’ camp is any sign that the manifest absurdities of  prominent ‘Out’ campaigners like Johnson are being subjected to scrutiny. So here is a taste of what such scrutiny might reveal.
            Among Johnson’s recent pronouncements is a claim that President Obama is a hypocrite for recommending that the UK remain in the EU (with a concomitant loss of sovereignty) when the US wouldn’t dream of sharing its own sovereignty with any other nation. That Johnson feels free to voice such an offensive insult suggests that he will say anything to advance his case regardless of whether it is fair, true, or an appropriate way of referring to a foreign head of state prior to a visit to this country.  This is embarrassing enough; but even worse is that his remark is patently untrue.  When, in 1994, the US government entered into the North American Free Trade Agreement (NAFTA), it surrendered a substantial degree of autonomy, as did the co-signatories Canada and Mexico. A complex and substantial range of NAFTA rules and regulations governs trade and investment between the three countries, a fact that has given rise to unease in some quarters at the loss of sovereignty supposedly involved.
            The idea that trading arrangements in the modern world are free of political consequences is, to borrow one of Johnson’s favoured epithets, piffle. All such agreements involve releasing control over some aspects of national economic life in return for expected advantages. Whether these involve a fundamental loss of sovereignty, rather than a reversible one, is another matter. ‘Leave’ campaigners are fond of pointing out with declamatory relish the percentage of UK laws now made in Brussels (a Farage speciality), and that various desirable initiatives of the UK government are stymied by EU regulation. What they overlook is that the UK parliament remains sovereign in law and that while, on joining the European Community (as it then was) in 1972, it agreed to acknowledge the supremacy of European law, it could not and cannot bind its successors. Like other EU members, the UK can repudiate existing EU legislation or refuse to sign up to new legislation with which it disagrees. As I have signalled in a previous piece, other EU members have a decidedly pick-and-choose attitude towards EU legislation; and the idea that the UK lacks this element of discretion is, to borrow once more from Johnson, bunkum.
            One of the ‘Leave’ campaign’s most outspoken storm-troopers is Daniel Hannan who, despite his distaste for the EU, is an elected MEP with a right therefore to enjoy the associated perquisites. A curious reversal of Groucho Marx’s refusal to join a club willing to accept him is Hannan’s adherence to a club that he evidently feels should have no members at all - not UK ones at any rate.
            As readers wearing armour plate can verify for themselves, Hannan has assembled  what he doubtless considers to be an imposing armoury of munitions against ‘Remainers’ and everything they stand for; and he expresses himself with the frightening self-confidence of someone for whom doubt is an alien concept, and facts are discardable or subject to revision if they fail to correspond with his vision. 
            An anti-EU article by Hannan in The Spectator  offers a summary of his views. He begins by telling readers that: “… the migration and euro crises are deepening, and Britain is being dragged into them.”  As an exercise in misrepresentation this could hardly be bettered. Given that the UK has not adopted the common currency, the euro troubles to which Hannan refers can only affect the UK indirectly through commerce; and since no one is advocating a cessation of trade with the EU, the issue is irrelevant to the case for or against Brexit. More sinister is Hannan’s reference to migration because it directs our attention, as he doubtless intends, to the refugees flooding into southern Europe from various conflicts in the Middle East, North Africa and elsewhere. Their numbers certainly qualify the phenomenon as a crisis, but it is not one created by the EU. If responsibility lies anywhere beyond the conflicting parties themselves, it is with foreign powers that have interpreted their role on the world’s stage as a right to meddle, to bomb, to invade, and to sell arms to those regions, with scant regard for the consequences.
            Hannan’s migration comment slides neatly over the UK’s own role in fomenting the migration crisis: the wreckage of Iraq that gave rise to ISIS, a dithering intervention in Syria, military adventurism in Afghanistan, Cameron’s pathetic failure to keep his promises on Libya, and so on. The inference is that we can and should close our eyes  and borders to the refugee problems facing Greece and Italy, and instead pursue a policy like those of Hungary, Macedonia and now Austria aimed at keeping out unwelcome hordes.  If Europe is descending into what may be the kind nationalism that we saw prior to WWII, then the EU project may come to an end anyway - not for the reasons cited by Johnson and Hannan, but because of a dispiriting failure to exercise the common solidarity that, in a globalised and increasingly volatile world, is critical to our well-being.
            What of the accusation that Brussels obliges the UK (and presumably all the other members) to accept unwelcome regulation? Here is Hannan comparing Swiss “liberty” with EU regulatory oppression:
“Zurich doesn’t need to worry about the expensive and sometimes downright malicious EU regulations that menace London: the Alternative Investment Fund Managers Directive, the short-selling ban, the bonus cap, the Financial Transactions Tax.”
Describing the EU as “malicious”, and its activities as a “menace” to London anthropomorphises it as a villainous creature intent on doing us down. Since Hannan offers a list of malign EU initiatives, let’s take a look at them. The Alternative Investment Fund Managers Directive (AIFMD) represents an attempt to limit systemic risk in the “alternatives investment” market, such as hedge funds and derivatives, that are widely considered to have contributed to the global downturn of 2008. Despite coming into force in 2011, only a handful of EU members have bothered to ratify it - the UK being one of them. No one forced the hand of government to sign up, and given the havoc wreaked on the world economy by out-of-control financial speculation, the menace would seem  to be not in Brussels but in the minds of those who wish to allow fund managers to carry on as before. One can only wonder at the reason why Hannan thinks the AIFMD threatens our well-being.
            The short-selling ban is a piece of legislation designed - like the AIFMD -  to foster financial stability in the light of lessons learned in the aftermath of the 2008 crisis, and it contains exemptions available to all member states; while the cap on (bankers’) bonuses - at an almost grotesque maximum of 200% of pay - seems so absurdly innocuous that to cite it as an example of EU maliciousness is either perverse or simply weird. Finally the Financial Transactions Tax is an initiative of the European Commission in which fully half of the EU members - including the UK - have opted not to participate.
            In summary, Hannan’s terrifying examples of EU malevolence turn out to be neither terrifying, foolish, oppressive, malevolent, or even obligatory.
            Turning to the cost of EU membership, Hannan refers to an obscure paper by “Professor  Herman Matthijs of the Free University of Brussels” in which figures are given for national contributions to the EU budget. Hannan’s complaint is that Iceland, Norway and Switzerland, which are non-EU members, only contribute €50, €107 and €68 respectively per capita, while the UK has to pay €229. What he fails to point out, either because the message is inconvenient or because of his own ignorance (he incorrectly describes Professor Matthijs as the only available source) is that the UK’s net per capita contribution after rebate and financial support deductions is not €229 but €118, equivalent to 2.5 pence per day.  By contrast, France pays €176 per capita, Germany €270, Belgium €302, and Netherlands a whopping €504 [1]. Of the twelve EU countries that make positive net contributions to the EU, only Ireland, Spain and Luxembourg pay less per capita than the UK.
              The UK’s position as a net contributor to the EU budget roughly corresponds to the country’s relative wealth per capita. This may come as a shock to those who have become accustomed to hearing - notably from ‘Leave’ campaigners - that the UK economy is the fifth largest in the world. Absolute size is far from being a reflection of economic success, and in Europe, the UK lies in tenth position in terms of GDP per capita behind Austria, Belgium, Denmark, Finland, Germany, Ireland, Luxembourg, Netherlands, and Sweden. Where the country stands proud is not in relative wealth but in achieving the rank of Europe’s most unequal country.
            Hannan’s peroration in his Spectator article borders on the delusional. In scratching around for evidence of how we could happily go it alone, he quotes the following from disgraced Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson:
 “Iceland is much better off outside the EU. Unemployment is minimal, purchasing power has never been higher, and we have control over our own legal framework, currency and natural resources.” 
            Some might consider this comment to be a damned cheek as well as misleading. Iceland is the country that had to be bailed out by EU countries (plus Norway) when it went bust; and it adheres to virtually the entire EU framework - including the “Schengen” open-border arrangement from which the UK is exempt.
            On the BBC’s Today Programme, MP John Redwood, another ‘Leave” proponent, saw fit to trash the recent  Treasury analysis of the consequences of Brexit, before confidently affirming that “we will be better off out”.  He then excused the ‘Leave’ campaign’s lack of supporting data for this view with a stunning  piece of rhetorical self-contradiction: “Who knows what’s going to happen?”;  a question to which presumably the only possible reply is that of Voltaire’s potty anti-hero Dr Pangloss: “All is for the best…”
            Rhetoric rather than information is the ‘Leave’ campaign’s main weapon; and its case rests largely on arousing sentiments of nationalism, on appeals to emotion and to certitudes whose validity on inspection seeps away like sand through a sieve.
            Writing in 1934, Stefan Zweig presciently identified the difficulty as well as the fundamental  nobility of the European ideal:
            “The European idea is is not a primary emotion like patriotism or ethnicity;….it is not the product of spontaneous fervour, but the slow-ripened fruit of a more elevated way of thinking….the egoism of nationalism will always cut more keenly through to the average man than the altruism of the European ideal because it is always easier to be aware…..of one’s own kind than of one’s neighbour….If we cannot arouse enthusiasm for our idea (of European unity) in the heart and blood of our peoples, our effort will be in vain, for never in the history of change has the intellectual sphere and that of patient reflection ever triumphed.” [2]
            His warning went unheeded, with all the ensuing consequences. Former Greek finance minister, Yanis Varoufakis, speaks in similar terms in a recent interview with Owen Jones of The Guardian.  His message: we need to bond across borders if we are to avoid a descent into xenophobia, racism and ultra-nationalism.
            Perhaps, in the end, we just need to glance back at the last century, and learn.


[1] Net figures for 2014. Source: Laissez Faire
[2] Stefan  Zweig, The Unification of Europe in “Messages from a Lost World”, Pushkin Press, London.

Note: This piece first appeared in  opendemocracy.net

A Gulf in Understanding


            Great Britain and Ireland are the only members of the European Union with a legal system based on common law. Civil law prevails in all the other member states. These two traditions are the basis of quite different ways of approaching EU regulation; and they lie at the heart of some of the most critical misunderstandings between - in particular - the UK and the EU. They also  go some way to explaining why the UK seems constantly to struggle with EU bureaucratic rigidity and with what eurosceptics perceive as undemocratic regulatory incontinence.
            Custom and equity are the two guiding principles of common law: precedent tempered by a sense of what is “just”, so that while past judgements make up the scripture, they don’t necessarily override fairness.
            Civil law, on the other hand, owes its origin first to ancient Roman law - developed under the emperor Justinian - but also somewhat to the canon law of the Catholic Church. These were the twin influences that fed, under Napoleon,  into what became known as the Napoleonic Code which was subsequently adopted in most of Europe, with variations, updates and rewrites appropriate to each nation. For our purposes, what is important in the Napoleonic tradition is that the law is codified in the form of statutes. Under civil law, a judge is supposed to be able to reach a decision by applying logical deduction to the written code. If this proves impossible, it is theoretically either the fault of the judge for not understanding the law properly, or of the legislature for failing to keep the  code up to date.
            In common law countries, courts interpret the law, while in civil law countries judges follow and apply it. Common law plays out as a gladiatorial contest between opponents; while civil law works more as an inquisition in which the judge’s role is to expose the truth. What this means in practice is that the British tend to take the law literally, probably because its cultural basis is consent - a consent epitomised with respect to new legislation through acts of parliament but where judicial interpretation and precedent still hold sway. By contrast, those who live under forms of civil law work under what distinguished lawyers and  codifiers have written down. The Napoleonic Code (1804) was drawn up by a commission of four eminent jurists. Hence why Europeans tend to be more comfortable than the British with laws “made in Brussels”. Brits are simply not used to legislation being drafted by unelected bureaucrats or specialists; and some therefore conclude with sniffy condescension that while wein the UK are wedded to democracy those Europeans must necessarily be less so.  Eurosceptics are doubtless not alone in looking askance at the proliferation and seeming intractability of EU “rules”. and in wondering why the whole of Europe has not risen in arms against the Brussels bureaucrats.
            One answer lies in the fact  that the primacy of “the book” in the European legal tradition has given rise to a long-established custom of working through the interstices of the legislative framework whenever it seems possible and convenient to do so;  and where civil legislation is concerned, legitimate reasons may sometimes be found for simply ignoring the letter of the law in favour of a higher purpose.
            A few words of biblical context may help us understand the thinking. When, in the Old Testament, the Israelites demanded “like other nations” to have an earthly king as well as a heavenly one”, the prophet Samuel acceded to the request on the Lord’s advice, but only after warning the people that a king would use his power to bend them to his will. (Samuel Bk1, ch. 8).Thus began a dichotomy between human and divine authority that led along one path to claims that monarchs and spiritual leaders were divinely anointed, and along another to what became known as scholasticism, and subsequently under Jesuit influence as casuistry. The latter are forms of argumentation and abstract reasoning aimed at achieving a desired conclusion without trespassing on received dogma. Even today, Roman Catholics are used to discussing how and under what circumstances it is permissible to disobey the law. We are in the realm here of a cultural inheritance whose roots lie deep in the past.
            Different attitudes towards the law are fundamental to understanding why Europeans states seem able to handle EU  legislation even when it appears not to be in the national interest, while the UK - government as well as eurosceptics - claims to be powerless against its strictures.  While Brits tend to think that EU legislation is set in stone - however “undemocratic” it may seem - Europeans are used to working out ways to circumvent it or, at any rate, to avoid some of its unwelcome consequences.  A Spanish phrase summarises the approach: “La ley se acata pero no se cumple.” - the law is respected but not (necessarily) obeyed. This particular formulation arises from the Spanish colonial period when edicts from Madrid were dutifully acknowledged in the distant colonies of Latin America and thereafter ignored as “impractical”; but it is an inbuilt cultural characteristic of countries that have inherited the Catholic-Napoleonic tradition.
            How are these differences between the UK and the EU manifested? Let us start with the issue of nationalised industries. Maintenance of a level playing field between member states in matters of commerce is a prime responsibility of the European Commission  (EC) which is supposed to have wide powers of regulation. According to the EC, long-term state holdings in corporations are a form of state aid and therefore constitute unfair competition. Tories famously eschew nationalisation on ideological grounds, but both UKIP  and strong  Labour voices concur that the EU won’t allow it anyway. An illustration of the earnestness with which EU state aid regulations are treated as gospel is the government’s own manual on the subject published for the enlightenment of officials (downloadable, and excellent nourishment for masochists). For readers with less tolerant digestive tracts, an EC powerpoint focused on the steel industry provides the essentials of what we are supposed to believe. Clearly stated in the legislation is a prohibition on state aid for companies in trouble or for disadvantaged regions.  That would seem to put paid to Redcar, Port Talbot and the entire British steel industry. Too bad that Chinese steel, under the protection and sustenance of the Chinese state, is being dumped on the European market at knock-down prices! Too bad for the UK that is because, as has not escaped everyone’s attention, so many exceptions to the state-aid prohibition exist that there’s room enough for tanks to trundle through the legislative gate without touching the sides, Belgian, French, German and Italian tanks among them.
            Germany’s way with the rules is notably instructive. A  study conducted by the TUC in 2012 and which formed part of a submission to a government committee states that “….over the period 2010-2012, German industries, including energy intensive industries, benefitted from a range of reliefs from duties, levies and taxes worth EUR 26 billion, or some EUR 8billion a year. These reliefs are set to continue for the longer term”. Moreover, “…they cover a wide range of measures (including) grids, power plants, energy efficiency, renewables, energy research and compensatory arrangements for businesses competing at the international level "(my italics).  Nor is energy the sole framework for direct state aid to industry. Buried a little shyly in a long piece in The Economist on German manufacturing is an admission that the state doles out cash in support of industries that it thinks are important areas of growth, and offers “extensive” research facilities to small and medium-sized firms when they need help.
            All that seems to be required for these subsidies to pass ‘go’ is a careful reading of the regulations allied to a determination to ensure that these don’t interfere with German economic interests. Even when Germany is caught in a flagrante breach of the rules, as seems to have occurred with the subsidisation of Deutsche Post,  it somehow manages to avoid embarrassment or even bothering to respond.  Thanks to the Centre for Policy Studies,  we now know about Germany’s recent gas pipeline deal with Russia - a development  entirely contrary to EU energy policy but which the EC will doubtless be unable to prevent. Germany is, after all, the EU’s biggest beast and, like the ghost in Hamlet, “is as the air invulnerable and the EC’s vain blows malicious mockery.”
            Perhaps the most egregious German subsidy of all concerns exports to the rest of the EU - and, in particular, to the countries of southern Europe. Here Germany takes sublime advantage of the European Central Bank’s inter-bank payments settlement system known as TARGET2. Every time money flows from the banks of one euro member country to the banks of another, it does so through the TARGET2 system which works as follows. Let’s say a Greek dealer orders a consignment of luxury cars from Germany. The German exporter duly dispatches the vehicles while the Greek importer instructs her local bank to arrange for payment. This is effected via the Greek Central Bank, which then registers a TARGET2 credit in its accounts in favour of the German Bundesbank (central bank), after which the latter in turn credits the amount to the bank of the German exporter.  Because the deal is in euros no foreign exchange is applicable, and no money needs to change hands because these apparent financial transactions are just computerised entries. 
          If, for example,  the funds are lacking in Greece to pay the debt (which has been the case), then the Bundesbank simply registers a claim against the Greek Central Bank. 
At the end of February 2016, the Bundesbank’s TARGET2 claims amounted to EUR 605 billion. Prior to the onset of the financial crisis in 2008, the balance was EUR 71 billion, while at year end 2006 it was only EUR 5 billion. In other words, as Greece and other southern European countries descended into critical levels of debt, the Bundesbank’s TARGET2 balances swelled in parallel. TARGET2 credits have enabled the Bundesbank to finance and therefore subsidise German exports to cash-strapped Eurozone countries - albeit at some risk to the German taxpayer because if any of these countries had been “allowed” to default, German citizens would have had to foot the bill. Hence the German pressure on Greece to knuckle down to austerity and to flog off state assets.
            Admirers of German efficiency and apparent economic success tend to confuse the country’s reputation for meticulousness with straightforward dealing. Meticulous the Germans certainly are, and fine engineers too; but as the recent Volkswagen scandal has amply demonstrated, straightforwardness is not a characteristic to which they can fairly lay claim. An objective observer might be tempted to conclude that the German government favours the national interest above the interests of her European partners; but then it is to the German electorate not the EU that Mrs Merkel must answer.
            France differs somewhat from Germany in her approach to dealing with EU regulations,  though the objectives are similar. French nationalism is more overt, and direct state participation in industry more significant. The country maintains a large state sector, and readily finds
reasons for blocking foreign ownership of French businesses, not simply those one might expect such as defence or “foundation” industries, but any firm considered to be a quintessential representative of the nation. When yoghurt-maker Danone became a takeover target, the government took up arms to defend what the French Prime Minister referred to at the time as “one of our industrial treasures”; a striking contrast  with the UK government’s response to the takeover of Cadbury. But then France offers scant respect for “prohibitions” that are deemed not to be in the national interest, the attitude being that if an initiative is not allowed, then it will be redefined as “strategic” and therefore allowable after all, or simply met with a ministerial shrug of the shoulders and a sotto voce “on s’en fout” (we don’t give a damn). Here we see casuistry at work - if necessary with a defiant twist - in modern Europe. France has adopted a fiercely nationalistic policy of industrial development and seems unlikely to change course any time soon.
            Whether protectionism is good or bad is not the subject of this essay. What may be of concern, however, are the possible long-term consequences of industrial laissez-faire - or an over-zealous adherence to EU state-aid rules. One consequence is suggested by the annual Thompson-Reuters report on the top 100 global innovators, the 2015 edition of which has Japanese and US companies leading the way with 40 and 35 respectively, while France has ten and Germany four.  Among the newcomers are Korea with three and Taiwan with one.  And the UK? None.  In the short-term we may not notice much effect on our standard-of-living of what appears to be a lacklustre level of innovation, although the UK’s stubbornly low productivity may well be one; but who knows if in the medium-term we will not end up as hewers of wood and drawers of water in an economic universe controlled elsewhere? The UK’s finance sector currently feeds the government with tax revenues, and the low-paid service sector feeds the employment statistics; but they do little to foster the development of a vibrant, creative nation.
            Ideology, of course, plays a role in the UK’s policy - notable since Thatcher - of delivering the country’s industrial welfare to the vagaries of the market.  Ironically, the United States, considered by some to be the model of free-market thinking, is far less hesitant than the UK about protecting strategic industries. But regardless of the ideology at play, successive UK governments - and the current one not least  - have a history of bowing to EU regulations more punctiliously than any other major country.
            Nothing perhaps more clearly demonstrates the weirdness of the British attitude to EU regulation than the Hinkley Point C nuclear power saga.  In 2014, the EC graciously gave the UK permission to proceed with Hinckley Point despite serious misgivings about pricing and loan guarantees that bear a striking resemblance to state subsidies. Moreover, the proposed lead builder and operator of Hinckley Point is to be none other than EDF - a French state-owned utility company. Both the Austrians and the Germans have objected to what looks like a stitch-up, and in July 2015 they filed a lawsuit against the EC for its decision to override EU competition law against state aid. In March this year, the plot thickened when it came to public knowledge that the Information Commissioner has been refusing to reveal details of the full extent of subsidies planned for Hinkley Point. Unsurprisingly, the EC’s green light for Hinkley seems not to have been based on the regulations but on politics. France has taken the UK by the hand and shown that if you have the clout, the guile and the effrontery (in varying degrees) then rules become largely a matter of “consumer” choice and of keeping up appearances in case the hoi polloi (the smaller or more gullible countries) get ideas above their station.  If Hinkley Point goes ahead it will not be because the Austro-German lawsuit has failed, nor because the EC benignly looks away, nor even because the UK government wants it to happen. French self-interest will be the deciding factor - a conclusion as revealing about the EU as it is humiliating for the United Kingdom.
             A  word more  about democracy. France, and Germany among other EU countries have shown themselves willing to prioritise national interests over formal EU strictures when the two are in conflict. Their electorates would doubtless interpret this willingness as an example of democracy in action.  In the UK, by contrast, which makes a noisy virtue of sticking to the rules whether made in Europe or inherited as part of a sclerotic and unrepresentative political system, democracy seems to be little more than a smug soundbite, a totem of self-congratulation. The UK is not more democratic than our European neighbours. It is considerably less so; and the lazy failure of our political class to understand Europe, to grasp what it offers with both hands, to prioritise the national interest within a framework that is far more accommodating than we are led to believe, should induce us to question not whether we ought to be in Europe but why any of our politicians deserve our vote.

This piece was first publish in opendemocracy.net.