Monday, 23 May 2016

On the EU Army Nonsense.

The UK military has operated independently twice in the past 400 years with a 1-1 scoreline. The treasonous war of American so-called "independence", and the Falklands conflict. Otherwise we always operate in an alphabet soup of foreign alliances.

The EU Military staff doesn't directly command troops, who usually (but not always) operate under the auspices of NATO.  Most military co-operation in Europe is bi-lateral such as Anglo-French missions to Mali, or multi-lateral and Ad Hoc, like EuroFor. Eurofor, which has deployed several times, isn't an EU army but multi-lateral co-operation between Italy, France, Portugal and Spain, and has mainly operated in the francophone Africa.

The EU battlegroup training on salisbury plain recently isn't a nascent EU army, just one of the alphabet soup of foreign co-operative organisations of which the UK military is part, one which hasn't deployed anywhere, and is a bit like the Allied Rapid Reaction Corps of which the UK has long been the core.

The French, long suspicious of NATO and who want to make the EU a counterweight to EU power, have accepted that while the UK is a member of the EU, an EU army isn't going to happen and rejoined NATO's command in 2009. They pulled out in 1966 arguing (no, seriously...) that NATO (get this, right...) undermined their sovereignty. (Lol).

The EU army isn't going to happen, because the UK has consistently vetoed the formation of an independent EU military command.

Of course were we to leave the EU, then the French would be free to get their way, leaving NATO's command again and possibly taking the Germans with them in time. We must remain to prevent the French using the EU to undermine NATO.

Friday, 13 May 2016

On the "Brexit and War" Question: Not as Silly as it Sounds

Russia conducted an exercise of 80,000 troops in 2014 simulating an invasion of the Baltic States of Latvia, Lithuania and Estonia. It isn't unreasonable that our Article IV NATO allies and EU partners feel a mite worried about the bellicose behaviour of their nuclear-armed Neighbour, who has 800,000 men under arms. Russia could bring forces to bear, invade, and mop up all resistance in the Baltic states within a week. The only thing stopping him taking back what Putin has described as "not real countries", is the security guarantee they enjoy from NATO, and especially the USA.

Far from being "provocative", the Western alliance has bent over backwards to accommodate Russia's paranoia. No troops have been permanently stationed in the Baltic until recently. There is constant communication (from NATO) in order to prevent misunderstandings. (Much less is forthcoming from Russia). NATO exercises in the region have been no more than a few hundred troops. There is certainly no massing of forces that could possibly threaten Russian territory, and the west has no interest in provoking Russia. The idea that the Association Agreement the EU was to sign with Ukraine was in any way "provocative" to Russia should be met with a snort of contempt and derision, let alone the idea the Euromaidan protests were "anti-russian" or orchestrated by "fascists". (So please don't say so in the comments, I'll simply delete such Putin-toadying).

But the Russian state's default position is Paranoia. In the Siloviki, you have, in effect, a state captured by its spooks. They are in thrall to Alexandr Dugin's doctine of Eurasianism, and feel encircled by enemies, chief amongst which in the Kremlin's demonology are NATO and the European Union. NATO is the shield, but the EU is the means by which we will defeat Putin's eurasianism. By bringing countries like the Baltic states and Ukraine into the European system, we demonstrate the profound failure of Russia as an alternative. Ultimately the Russian people would be better off embracing western values, and without Putin's toxic and paranoid statecraft.

While the world watches Syria, Russia is busy pouring poison into western discourse with the explicit aim of breaking the world order in place since the fall of the Soviet Union in the 1990s. So Putin supports “anti-systemic” parties of left and right. He bankrolls the French Front National and Hungarian Jobbik. Alec Salmond and Nigel Farage were regulars, and well paid, on Russia Today, Putin's toxic little propaganda swamp. Aaron Banks, UKIP and Leave.EU's biggest donor is married to a Russian, and has form for repeating Putinist lies. Jeremy Corbyn regularly used to spout Russian Propaganda, before he was forced by circumstance to converse with grown-ups for a change. Green parties have money siphoned to them (anti-fracking, to support Russian energy interests). Putin is absolutely delighted at the Rise of Donald Trump. It has been alleged Russian Bombing of Aleppo and elsewhere in Syria was undertaken deliberately to create refugees, to further destabilize and undermine the European Union. I suspect, though this was not more than a secondary benefit, to the ultimate goal of making Mr. Putin look good on Russian state TV.

We’ve never had an enemy like this before. Russia is a spy agency, which has captured a Nuclear-armed state, but it's not clear Putin is in complete control. The entire apparatus of the state is about creating an alternate reality, in which fact and fiction merge. Maskirovka, raised to a governing philosophy. but with no real end-game in sight. There is something of the Thomas a Beckett about the chaos in Donbass: Putin says "will no-one rid me of this Turbulent Priest" and before you know it, two provinces of Ukraine have declared independence backed by significant invasions of Russian regular soldiers. Putin cannot back down without losing face, but cannot escalate for fear of provoking NATO. The shooting down of MH17 was the moment the Ukrainian donbass separatists over-stepped their mark, but there's no way out for either party. Ukraine faces an existential threat, and the Russian regime is based on never showing weakness.

With a frozen conflict in Ukraine, things can escalate rapidly. It is the Nature of Putin's cult of personality, he needs constant action to keep the narrative of strength going. This was the ultimate reason for the Deployment of Russian Forces to Syria - to get a limited war onto Russian TV that can be used to demonstrate the Greatness of Mother Russia, which makes the sacrifices the long-suffering Russian people worthwhile. But Russian forces have pulled out of Syria, and there's little glory in the stalemate outside Mariupol. What next?

Sweden and Finland, neutral during the cold war, are inches away from Joining NATO, so threatened do they feel. Swedish subs are continuously dealing with Russian incursions. The Russians are actively buzzing US warships in the region. The RAF having to scramble to intercept Russian Nuclear bombers is a weekly occurrence. It’s constant provocation. A Russian flotilla sailed through British waters last week.

Putin may be a master tactician, but he fails as a strategist. This is, to my mind the single biggest risk of the UK leaving the EU. Brexit would send a message (whether or not this is true) that NATO's number two power is no longer serious about its commitments to its allies. He'll have split off Europe's most potent military power from the EU. This will embolden Putin to try to further split the west, because it suggests our Nations' commitments to each other isn't as strong as it was in 1989. This is especially true if there's further success for "anti-establishment" politicians like Donald Trump. If Putin has an opportunity, and he's an expert opportunist, he is likely to take it to try to break NATO, having already broken the EU. We do not want to tempt the Kremlin to gamble on the UK's willingness to spend blood and treasure to defend Narva. Because if the UK won’t, the USA won’t. And if the USA won’t, NATO is finished. And if NATO is finished, the whole of Eastern Europe could well come under Russian suzerainty again. And that, we think (as well as the Survival of one Mr. V.V. Putin) is the ultimate aim of the Russian state.

Now is NOT the time to be upsetting the international institutions which have been so crucial to delivering peace and prosperity to so much of the former soviet empire. “Brexit risks war” isn’t as silly as it sounds.

Wednesday, 20 April 2016

'Leave' Has Just Lost its Economic Argument

Michael Gove, who is likely to be the person most responsible for setting the parameters of Britain's negotiation with the EU after a leave vote,  indicated on the BBC Today programme the UK will not stay in the common market. We would seek a free trade agreement like Albania, or Iceland.

This means the risks of #brexit have gone up. The prospects of a risk-free slip into the EEA have gone. We must therefore run the risk of the foreign investors on whom we rely to cover are triple deficit (current account, fiscal and trade) going on strike.

Where this to happen, In order to tempt them back, the Bank of England would need to raise interest rates , which slows growth. The UK may not be a default risk , but as a country with I need for constant inflows of foreign capital we may need to print more money to cover the bills . Investors will therefore need a higher return to compensate for the risk.

This is one mechanism by which leaving the EU could slow growth. There are others. The UK may become a less attractive place for foreign companies to invest. And not just because of access to the single market. For all its faults, the EU has been consistent in its application of laws surrounding state intervention in business and preventing government's interfering too much in markets. Leaving risks that benign business environment.

The risk therefore of a catastrophic cycle of interest rate hikes and currency issues has to be set against the sheer paucity of the potential benefits from leaving the EU . Just what are we hoping to achieve? Why are we risking prosperity in this way?

An honest answer would make use of Gandhi's aphorism " it is better to be governed badly by oneself, than well by other people." If it is simply about democracy, then supporters of brexit will need to be honest about the potential economic costs.

The post EU UK could become the free market prosperous business-friendly place of brexit fantasy, but it could equally become a paranoid insular protectionist hell hole of UKIPpery, or worse yet, the Labour Party could nationalise everything in sight. These are both outcomes European Union protects us from.

The problem is brexit becomes a tabula rasa on to which everyone can paint their own ideal post EU UK . Then arguing against brexit becomes an argument against everything that person holds dear. Many have spent decades seeking confirmation for a prior belief that the EU is behind all the bad things. Nothing can persuade these people that leaving the EU isn't a panacea to solve all the UK's ills. It's a peculiar Mania.

The lesson of the ERM debacle is not that the EU is evil, but that the UK should not have joined the euro, and we didn't. It doesn't follow we should leave the EU too. The EU is not the enemy. The UK is not going to join the euro. EU is not going to Force the UK into a superstate, a European army, or a single currency.

The European Union is a collection of some the freest, most prosperous and happiest democracies on Earth. The Euro project has impoverished half the continent on the altar of political vanity. But that is not the question we are asking in this referendum. We are asking specifically whether the UK should leave the European Union.

What are the benefits of leaving the EU? If they aren't economic, they seem mostly to accrue to politicians who gain greater freedom to interfere in our lives. And what do we the people gain, to offset the probability of a negative economic outcome?

Will we lose the right to live, work and travel at will from Helsinki to Lisbon and from Warsaw to Dublin? Probably not, but it's a risk. Will UK be better off economically speaking speaking? Probably not. That means people will lose jobs.

The risks are real, the benefits seem ephemeral. And very fact that we are having this referendum now means should the EU develop in a way that is an anathema to British interests, for example if  as I am told is "inevitably" going to happen,  the Euro is forced upon the UK, we can always leave another time. The very fact of this referendum undermines fatally the sovereignty argument.

Thankfully the polling seems to indicate the remain campaign is winning.

Monday, 4 April 2016

I dislike the EU intensely. I'm voting to Remain in.

I get it. You hate the EU, and Jean Claude Juncker's a twat. I get it, the desire to kick Guy Verhofstadt in the bollocks. I understand on a deep and visceral level the desire to headbut Martin Shultz and wedgie Neil bloody Kinnock and hang him on a clothes peg by his underpants until they rip. I want pour itching powder into all their underwear drawers. Jaques Delors especially. But for better or worse, in the EU or out, we have to work with these bloody people, and the tin-pot countries they come from which show precious little gratitude for the British blood poured into their soil over the centuries for the privilege they still enjoy to not speak German (or French or Spanish). Instead they must speak English...

I get the desire to send RAF Typhoons on punitive strikes against the wasteful and absurd Strasbourg Parliament building, with or without the MEPs still inside. I understand the desire to have HMS Dragon, the most modern air-defence destroyer on the sea to be deployed against Spanish fishermen. I get the desire to set fire to French sheep (mainly because you'd get in less trouble than you would setting fire to French farmers). I too deplore the wasteful CAP. Above all, I want the entire commission, parliament and bureacuracy of the EU lined up and bogwashed by the smelliest upper-sixth prefect, one after the other while they practice their English irregular verbs. All right-thinking people agree.

I'm still voting to 'Remain'.

The most likely scenario should the UK leave the EU, is that not a lot would change. There will of course be some disruption before people realise this, probably leading to a small recession. But upon UK leaving the EU, slipping into the EEA will feel like a more comfortable shirt. Long-run, we may even be better off and happier. This will likely suit our historic national desire for "the open sea" over the continent. But  UKIPpers will still be grunting about immigrants, and deplore the fact we still have to obey EU rules. But as we will no longer have any formal means to influence them all that much, they'll have to lump it. Thankfully without their MEPs (and EU money) they'll fade away.

We'll be free to trade with the world (as if we aren't already...)? Well here's the Economist suggesting it's nowhere near as easy as Brexiteers pretend to negotiate new trade agreements.  This EEA scenario holds no fear for me. But it's by no means a given, and nor does it achieve much beyond 'not being in the EU'.

If we aren't staying in the EEA, then negotiating a new arrangement with Europe will likewise be nowhere near as simple as Brexiteers will have you believe - and it will be negotiated in an atmosphere of bad blood. There will be a recession, and probably a long and deep one. We will in the short to medium term almost certainly be worse off.

However there is a broad strand of 'Leave' thought that wants the UK to be the catalyst for the collapse of the entire EU project. The problem is with Brexit, a systemic collapse is far from just being a 'KIPper's mastubatory fantasy, it could happen, and there exist outside forces, who've already got influence, that will be urging it on. This systemic collapse WILL cause a massive recession, both here and even worse, in the EU, and lead to all the geostrategic points that I've been raising in all my previous essays on the subject. Vladimir Putin would be delighted. World trade - heretofore liberalising albeit at a glacial pace would go back by 30 years.

You can't have it both ways: glory in the imminent collapse of the EU AND paint the downsides of that scenario as 'Project Fear' when it's absolutely what most brexiteers desire, when the mask slips.

You can EITHER control EU immigration OR keep all the trade benefits of the EEA, but not both. Leaving the EU can either be low-risk OR you can control EU immigration and "get our country back". Not both. 

Even the best case scenario of EEA membership, (which I suspect most Brexiteers only favour to have any chance at all of securing a 'Leave' vote at all) will leave the UK not much better off, with significant risks all on the downside, should any more damaging scenarios play out.

Leaving this bloody stupid organisation our idiot neighbours built simply isn't a good gamble. Stay in, and keep the more excitable Federast knobbers under control as best we can is in the best interests of the UK, and that of our friends and allies on the continent. Basically that means staying in, to work with the Germans to prevent the French screwing everything up. Again.

If leaving was government policy, and I knew therefore which of the options I'd be voting for, and the risks and benefits were clear in advance (and we were opting for EEA...), I'd probably go for it. But it isn't, they're not and so I won't. I'm not taking a risk with my prosperity, just to please idiot 'KIPpers. That's that. 

Thursday, 17 March 2016

The 2016 Budget; Things Other Than The Sugar Tax...

There is much to like, and much to deplore.

The steady cuts to personal income taxation continue the trend under this Government of moving the tax burden from income to consumption. The continued cuts to corporation tax are welcome, and whatever idiot journalists say are virtually cost-free to the exchequer, as money not paid out in corporation tax mostly ends up in wages (to be taxed more highly) or investment (which everyone says we don't have enough of). Companies don't pay tax, people do, so corporation tax is a fiction and always has been. Did I mention we don't have enough investment? Capital gains tax has been cut. Because taxing capital is silly. And the ISA allowance has been raised for the same reason.

Now the only people who pay capital gains taxes are people with large lump sums outside ISAs. These are people who're so rich they can afford to save more than £15,240 a year, and those who inherited money. So big ISA allowances are moderately progressive.

So far, so good. But there are further disincentives to selling property: namely the increase in stamp duty for buy to let landlords. And there are further tax privileges for the first home in the form of the 'help to buy' ISA into which the Government bungs some taxpayers money to help first time buyers "get on the housing ladder".

The UK's insane system of property taxation of encourages home-hoarding, and entrenches the perverse idea in the British public's mind that your house is an investment, not just something to live in. In most of the world, rent and purchase are more-or-less interchangeable. But in the UK, the disincentives to sell are behind much of the continual ratchet up of house prices. The problem isn't that there aren't enough houses - everyone has a roof over their heads after all. The problem is that the UK housing market is insufficiently assortive: people can't afford the RIGHT housing in the right place and must therefore pay through the nose.

We need to scrap stamp duty on property entirely, and increase the taxation of property values giving empty-nesters an incentive to sell that property on to someone who might value its space higher. Unfortunately council tax, which needs re-banding, is a political third rail.

Families cannot afford family homes, because family homes are being held onto by people whose families have long-since flown the nest. So families are being brought up in rabbit hutches, because Granny has no incentive to downsize. Indeed she has an incentive to rattle around in the big house until she dies, when that house will be once more privileged in the inheritance tax system. She will then pass it on to her children, whose own children will have already flown the nest too, and so the cycle continues.

Meanwhile, the assault on Buy-to-let landlords means the supply of rental homes will dry up too. The "housing crisis" will be made a little worse by this budget.

If a family wants a family house, either Daddy has to be very, very well paid, Granny has to die young, or be very, very generous. And the Tories have a massive blind-spot about people's houses. Thatcher's dream of a "property-owning democracy" casts a long shadow, and measures to facilitate this, are now actually behind the sheer unaffordability of property for the average worker, while working against increasing the supply of reasonably priced rental homes.

One thing I will say for the Chancellor, the Sugar tax has done its job. It's a pissy, regressive, fabian authoritarian little bit of nanny state spite. If you think taxing sugary drinks is about obesity, I've a bridge to sell you. It's a bone thrown to the Daily Mail authoritarians, gets a noisy and oddly influential mockney prat with a fat tongue to support the Government and because everyone's talking about it, It's an effective dead cat, flung on the table to distract from controversial cuts to benefits, income taxes and corporate taxes, which are mostly going unnoticed; as is the "miss" of fiscal targets.

Ah yes, the targets. The worst thing about political journalism is the absurd weight that is put on Office of Budget Responsibility fiscal forecasts. If there's one thing less interesting than the deficit, it's an official guess as to what the deficit might be in 5 years. Then, armed with this utterly fictional state of the finances 5 years out, journalists hyperventilate about whether the Chancellor has "hit" or "missed" his target to balance the books by the end of the parliament, and go on, and on about how much he "has to spend" or "has to find" in the future. So the chancellor puts measures in that may or may not come to to be superseded in future budgets, just to "hit" a "target" that only really still exists in the minds of journalists.

Labour excoriate the chancellor for "missing his own target", while opposing anything that might bring the books into balance. The deficit is falling, perhaps not as fast as many would like, but debt to GDP isn't rising all that much, and may soon start to fall. Thus the deficit is under control, to the satisfaction of international creditors, and there's no risk of a run on Sterling. So the target to balance the books, and get the debt burden down is a noble one, it's also pretty low on a sensible chancellors list of priorities right now. The rabbit he's hoping to pull out in the next few years is a big increase in productivity which will finally close the "output gap" bring down the deficit and raise people's living standards, and cover the "living wage" without increasing unemployment, all in one go.

I don't think there's an awful lot the chancellor can do to increase productivity, though cuts to corporate taxation will help a little. We're still dragging ourselves out of the mother of all balance-sheet recessions, which means investment is low, productivity growth is low, nominal wages aren't rising fast enough, and the economy sits on a permanent risk of deflation.

Personally I think the Chancellor's threading the needle between "stimulus" and Japan-style debt mountain pretty well in what remains an extremely cash-constrained fiscal situation. But let's encourage him to deal with the perverse incentives in property taxation that have long poisoned the British economy, before bleating about fictional forecasts or whining about a silly nanny state sugar tax. The fixation people have on stuff that really doesn't matter is beyond me.

Monday, 7 March 2016

I don't buy Any of the Arguments for Brexit

If you listen to Brexiteers, the EU is holding us back from trading with the world. The only thing stopping the UK having free trade with everyone is the EU. Upon leaving the EU, we'd lose none of the trade advantages with the EU (on which more later), nor the 50-odd trade agreements we've currently got with EU membership, and everyone who doesn't already have an agreement with the EU would be clamouring for a trade agreement with the UK. Let's think about it for a second, and does it seem remotely plausible? 

Now, Pete North argues that out of the EU, the UK would sit in the WTO and have more influence than as part of the EU. No-one (with the possible exception of Lord Owen) who's actually been there agrees with this view, which even if true, isn't the slam-dunk he thinks it is. The EU is influential as the world's largest market, and the UK is influential in the EU. There *may* be advantages to leaving the EU in our ability to negotiate trade agreements, but you need to be wildly optimistic to imagine the short-run disruption wouldn't be greater than the benefits of extra trade agreements.

The short-run effects of Brexit will be a recession, probably costing 2% of GDP or so. Not disastrous. But I don't believe the mechanisms by which faster growth can be achieved will work over the longer term. Simply because there's little that does, bar free trade, something Brexit risks impeding at least as much as we'd gain with trade agreements elsewhere. Because of the single market the UK economy is 10% or so larger than it probably would have been absent EU membership. If you do the maths, that's a tiny, tiny increase in annual growth over 40-odd years, but such is the power of compounded returns. The UK would need to work very hard to maintain trade advantages with allies to whom brexit would represent two fingers, and take advantages elsewhere. It is possible Brexit could benefit the UK in trade terms. But it's moot, and there is certainly a risk brexit could damage the UK's trade.

"The EU needs the UK's  market more than the UK needs the EU". This is just mercantilist fallacy. Even accepting the silly idea exports, not imports, are the purpose of trade, the EU takes 45% of UK exports. The UK takes 10% of EU exports. Who is more important to whom?

"We're shackled to a corpse"? Well the UK has been the best performing advanced G20 economy for some time, during which the Eurozone has lurched from crisis to crisis. It doesn't seem to have held us back, any more than any other major trading partner being in trouble would have done. In 1972, the UK was the sick man of Europe. It isn't now. It's simply not credible to argue the EU has held us back in any significant way, and nor is it credible to argue on this basis, "the real risk is staying".

"Immigrants, waaaa!" Most of Britain's migrants come from outside the EU, and under most Brexit scenarios in which the UK retains access to the Single Market, we'd accept free movement. Like the Norwegians. So I don't think #Brexit would have much effect on immigration, unless it caused an economic catastrophe.

The UK is impotent in the EU because "We lose more votes in the Council of Ministers than any other nation"? The second "least influential" country by this measure is....


In any case, the UK is in the winning majority 87% of the time. But these lost votes are a measure of assertiveness, not supplication. France, like the UK did under Blair, votes for stuff with which it disagrees, in order to preserve consensus. It's France, not the UK running up the white flag in Qualified Majority Voting. France disagrees with the EU on free trade, and has to suck it up, mainly because the UK and Germany won the argument long ago.

Does anyone still buy the "£[insert made-up number] billion we send to Brussels" argument? Most of which, if we want access to the single market, we would have to pay most of our current contribution anyway. Most of the gains from leaving will have to be spent subsidising British farmers.

"It's NATO not the EU that has kept the peace in Europe". Of course NATO was the shield, but the EU helped win the peace. Enlargement (another British win against the French who feared rightly it would prevent "ever closer union") pulled former Warsaw pact countries firmly into the Western orbit, and made them richer and free. Brexit will at best, change nothing bar a slight reduction in contributions, at risk of antagonising allies, and emboldening our principle adversary, at a time when the west needs to present a united front to prevent WW3. The carrot of potential EU membership has been used to improve the behaviour of Governments for many years. Watch, as the carrot got snatched away, Governments in places like Ankara and Kiev backslide on democracy, corruption and human rights. To imagine the EU had no role in the successful transition to democracy in Poland, the Balitc states, and central Europe is ridiculous.

"The EU is open in its plans for a Superstate".... and this has been a dream of the more starry-eyed official and Europolitician since its inception, but this has been resisted by... all its nation-state members. The Eurozone may yet become a superstate, if the Germans can be persuaded to allow fiscal transfers to Greece. I'm not holding my breath. As for the UK, we can leave at any time, if the dastardly plot to take over the British army becomes any more than a pipe-dream of a few Brussels eurocrats. An EU superstate, even one which the UK is not a part of, would be harmful to British interests. Staying in, we can continue to prevent it happening.

"The UK would gain influence if we left" The EU is one of the Major clubs of the west. The UK is the only country in all of them: NATO, 5-Eyes and the EU. We are the hinge on which the alliance of democracies turns, a vital cog linking the USA, Europe and the Commonwealth. If you don't think that position brings influence and advantages then I've a bridge to sell you.

Brexit will diminish both the EU, which loses a major commercial, diplomatic and military power, and the UK, which loses its position at the pivot of western alliances. It's difficult to see much in the way of benefits from leaving, and much in the way of risk.

Wednesday, 2 March 2016

The Madness Stalking Democracy will Pass.

"Has there been a general election, Mr Blackadder" asked Mrs Miggins, unaware, until Edmund points it out, as neither she nor Baldrick have a vote. "Hardly seems fair to me" she says.
"Of course it's not fair -- and a damn good thing too. Give the like of Baldrick the vote and we'll be back to cavorting druids, death by stoning, and dung for dinner"
And that, in a nutshell is the problem with democracy. You simply cannot allow the enthusiasms of the noisier, politically enthused bit of the population to be indulged. The young prats currently cavorting after Jeremy Corbyn and Bernie Sanders seem blissfully unaware of the misery that socialism wrought even within their parents' lifetimes. Nativist chauvinism, a yearning for the "strong leader", the admiration of Vladimir Putin by the likes of Nigel Farage, Donald Trump or Marianne Le Pen: we've seen this before too.

This is why "elites", in most of the world limit the choice available to electors to people within the bounds of reasonable discourse. It is possible to expand the bounds of reasonable discourse over time, to move the centre of politics around which that "overton window" opens. Clement Atlee did, Margaret Thatcher did. But what is happening right now, in response to a decade of stagnating living standards, is different.

One way of looking at it is a revolt of the left behind. That is behind the rise of UKIP, Le Front National and Donald Trump. After a hollowing out of the traditional working class, as the most able have moved on and up, and after generations of assortative mating, the shallow end of the British gene pool face competition from far more able and energetic immigrants and they don't like it one bit. If you listen to a 'KIPper, you'll hear that they're "fed up" about "not being listened to" by the "metropolitan elite". Cameron offered these bloody people their referendum. They now hate him even more. This mood cannot be pandered to, because the policy solutions they demand don't work. If your response to a few years of stagnant wages and a Polish couple moving in next door is to try to elect Nigel Farage, then you don't deserve to be listened to. You deserve to be told to shut up and do your homework again. These people have captured the Republican party in the USA, and the party will not elect a president until the "elites" get control back.

And on the left, the highly educated marxists who once would have been guaranteed solid middle-class status as teachers, lecturers and officials, are now competing with self-employed tradesmen who often earn far more, for housing and schools. People, once solidly middle-class find themselves outcompeted by people they regard as inferior, and they don't like it. The erosion of the status of the Nomenklatura vs. "trade" offends their sensibilities, and panders to an old snobbery against grubby money-making. The old socialism espoused by Corbyn plays to these prejudices, offering status at public expense. Thankfully most people going to University ignore the student politics of the hard-left, and seek a qualification to enable them to compete. And in competing they make themselves, and society richer. These student trots who never grew up are creatures of ridicule. They have however completely captured the Labour party, which is finished as an electoral force for at least a decade.

Morons, it seems favour either full socialism, or some form of fascism, because these ideas simple, easy to understand and wrong. It's time for those of us who understand the world to stop imagining the grunting ignoramuses or starry-eyed ideologues have a point at all. They deserve ridicule. Point at the Corbynista or the 'KIPper and laugh for having been taken in by nonsense.

Meanwhile, in the middle you have the broad mass of people doing OK. Unemployment is low. Most people are getting small annual pay rises. Price rises are low, and for capital goods, prices are falling. However people like nominal rises more than they like real rises. And the low-inflation, low interest rate reality means even as people's real wages, even after housing costs (outside London and the south east anyway) are rising strongly. A lack of nominal increases makes people grumpier than they should be. There is sympathy for Farage and Corbyn shaking things up. Thankfully, the broad mass of the basically OK middle are sensible, and when push comes to shove, see the status-quo is far from intolerable. And those doing basically OK are far greater in number than the UKIPish left-behind and the Socialist-minded Corbynista class.Traditional politicians such as Cameron, who can reach out to this broad middle while keeping the coalitions of which their party is made together, will still win elections.

Assuming the Tory Party holds together after the referendum, and doesn't go EuroBonkers, they will need to find another politician who can reach out to the broad centre. If they can, Labour, entirely captured by voter-repellent lunatics, will offer no resistance to another decade in power. Over the pond, Trump will attract a little more than a third of the vote. Everyone else will hold their nose and vote for Hilary Clinton however crap a candidate she may be. And in the rest of the Democratic world, people will flirt with lunatic populists along these lines, but will mostly vote for a steady-as-she-goes mainstream candidates.

Democracy - keeps testing these bad ideas, but mostly seems to work. This madness will pass.

Tuesday, 23 February 2016

The Eurosceptic case for voting 'Remain'.

I came of political age as the ERM debacle and Maastricht ratification process corroded the Tory party. Saving the pound against its "inevitable" inclusion in the Euro project made me a Eurosceptic. The Queen on the money, the ability of the state to finance itself *is* sovereignty, and the ability to generate our own finance has been the United Kingdom's saviour in three world wars, and it would be a profound piece of treason to give up a world reserve currency.

Next to currency, any other pooling of sovereignty is trivial and easily unwound. NATO which extends from the Arctic to Asia Minor, the area to which the UK MUST respond to any attack is arguably a far greater pooling of sovereignty than what remains of the EU. I will NEVER accept the United Kingdom adopting the Euro and I'd take to the rooftops if necessary to prevent it. I am deeply hostile to the idea of ever closer union, and any conversation with one enthusiastic about a federal Europe often has me reaching for a cudgel. I am a Eurosceptic.

Too many people like me, blooded in politics in those bitter divisive battles which pitched Tory business-toadying against Tory patriotism in a civil war whose skirmishes continue to this day, want to restart the war. For many, trust in the EU forever lost, they have spent 20 years believing every anti-EU pitch from the UK press (however untrue), and simply not considering any benefits of being in the club, hiding in an intellectual jungle pretending like Hiroo Onoda that the war wasn't over. So satisfying, so heady was the victory over the Euro, they now yearn to defeat the EU itself, and so they have worked themselves into a hysteria where the EU is a silent enemy poisoning everything.

All this willful cognitive bias by the 'leave' camp means going into their campaign that they have so long demanded, with some truly dreadful arguments, based on exaggerations, lies and wishful thinking. You can almost hear in their words a background by Elgar, the sound of a merlin engine, the image of a lone Tommy in battledress standing on the white cliffs of dover, fist raised to Europe as the Supermarine Spitfire roars overhead he yells "Very Well, ALONE!"

I shouldn't need to say this. The European Union isn't Hitler's Germany, nor is it the USSR. It is a collection of some of the most successful, happy, free, prosperous nations on earth who seek to do business together, and yes, club together to solve problems (environmental, political and financial) that face us all. Shielded from many of the worst problems by our Island fortress, the British experience is different. And our unique experience is reflected and recognised. No-one serious now expects the UK to join the Euro, or Schengen. The UK's implacable hostility to a "Euro-Army" has prevented one being formed. Without the UK, an EU defence policy would be worthless.

For all the grunting about immigrants' benefits about which I simply don't care, what Cameron has achieved is a recognition, even from the likes of Guy Verhofstadt that the UK's status is special, and that should be reflected in the treaties. An opt-out from "ever closer union" was in-effect achieved in Maastricht with our Opt-Outs from the Euro (with Denmark) and Schengen (with Ireland), and this development achieved by Cameron is symbolic, but not meaningless: future treaties will be easier to negotiate because a UK opt-out is already considered a possibility from the outset.

A UK vote to leave the European Union wouldn't be a disaster for the UK. The UK is a big, powerful, influential country with nuclear weapons, aircraft carriers (soon...) and a permanent seat on the UN security council. To imagine we need the EU in any serious, existential way for our prosperity or security is laughable. 3,000,000 jobs "depend" upon the EU? These kind of nonsense numbers discredit the people that make them, no less than the 'KIPpers wanting to pull up the drawbridge. But it would be a disaster for the EU, and that would harm our interests in the long run, to very, very little benefit.

To What Problem is 'Leave the European Union' a Solution?

The most likely 'Brexit' scenario would be to leave the European Union but remain in the European Economic Area, so we'd still have access to the single market, have to take on board a lot of the trade legislation and still pay dues at much the same rate. Not sure what this achieves except getting out of the decision-making process which at the very least allows us to keep an eye on the French. 

Without us in the EU, the EU will run off and integrate. Great, you may say, good luck to them, but that would betray 500 years of British foreign policy. They will become more protectionist, and that won't help us, not at all. A messy European collapse after Franco-German mismanagement will inevitably need the Anglosphere grown-ups to pick up the pieces. Again. Better to prevent that happening. The Zero-sum thinking by many on the 'Leave' camp - believing what's bad for Europe is good for us - is particularly toxic and idiotic.

From 1975, when the UK was "the sick man of Europe" to now, when we're seriously expecting to overtake Germany (and even Japan's) GDP,  it's simply not evident that the EU has held the UK back. I don't credit the EU with all, or even much of this turnaround in the UK's fortunes. But the idea we're "shackled to a corpse" is absurd. The EU isn't preventing the UK being the USA's 2nd largest investor, after Japan for example.

In 40-odd years of EU membership, the UK's economy hasn't aligned at all to that of Europe. We are still the home-ownership obsessed mid-atlantic economy, hypersensitive to interest rates that we were. This gives the lie to the "inevitable" integration to which we're allegedly subject.

We do get outvoted more than any other nation. That is why we're negotiating a special status and all our opt-outs. This isn't evidence that the UK is put upon or suffers under the Euro-yoke, more that the EU, but that the UK is a steering and restraining influence. We cannot always have our way, but being outvoted on lots of trivialities, it does seem we have set the EU agenda on enlargement and free trade.

"But they make all our laws" I hear you say! So what? Really, who cares where the law comes from, and the idea much of this would change were we out is absurd. Most of what the EU sends is intragovernmental negotiated directive on international things the EU is supposed to be for like climate change, or high-volume, low-impact trade law. As EU referendum points out all the time, most of the trade regulations come from world bodies anyway. I just can't see why he thinks this a compelling argument for 'leave'. The fears of EU law being "supreme" that the "roman system" will replace common law and that we'll all inevitably be dragged into a superstate are just paranoid fantasy. We've secured the opt-outs to remain a free, independent nation. The Eurozone will integrate, and we will lead the 'outs' who won't.

What about immigration? Well if you want access to the free market, you have to accept free movement of people. Free movement of people is a good thing. What about the Syrians, I hear some of you grunt? Well, Didn't Cameron play a blinder there? Most of the refugees will not become EU citizens so there's no "danger" even if "they" are all itching to cross the channel as soon as they've got their German passport. Our biggest source of immigration is India, which, last time I checked, isn't in the EU.

It's simply difficult to see what benefit leaving the EU for the EEA has for the UK, over what we've already achieved, and so many of the other arguments sound like paranoid fantasies of people who're desperate to justify an emotional loathing of the EU.

And now the case for 'Remain'.

First, let's get "project fear" out the way. Businesses hate uncertainty. From the 'Leave' vote to any certainty as to the business environment post withdrawal, there will be investments put on hold, weakening of Sterling, projects delayed as decision-makers wait and see. This will probably cause a recession. People who advocate for out must persuade me the benefits outweigh the damage of an unnecessary recession. Thus far, they haven't.

Where many see "the EU" as a disaster, I see "the Euro" as the disaster in much the same way ERM was a debacle for an otherwise excellent government. The Euro is not the same thing as the EU.

The European Union - it's extension to the East and the very Free Market we all hope to keep were british-driven projects. While it's true NATO has delivered peace, the EU has done a good job in institution-building in post-fascist Greece and Spain (sadly, much good undone by the Euro-catastrophe).

When the Berlin Wall came down, Ukrainians and Poles had the same living standards. Poles who were able to orient west, were able to enjoy significant benefits and investment from the EU. Democratic institutions (admittedly currently being tested by 'Law and Justice') have been built and corruption squeezed. There is still much work to do, but former-soviet eastern and central Europe has done well out of the EU, and we have benefitted from their growth. Ukrainians want some of that - an association agreement due to be signed in 2013 is not an "act of aggression" by an "expansionist" EU to appease "fascists" in Kiev, it's part of making the world a better place through trade and investment. Putin, however threw his teddies out of the pram, and thousands of people have died.

Putin hates the EU, and fears it. He fears it, because it offers the people of former soviet satellites evidence that the Russian embrace is not warm or friendly. It is paranoid, and parasitic. The EU gives hope to the people who want these places to become as free and prosperous as Tallinn or Warsaw. The EU offer a way to quietly destroy enemies by making their people rich. The only world leader itching for a 'Leave' vote is Vladimir Putin, because he knows the UK is important to the European union, and now is not the time to be having an almighty row with our allies.

You may say "our interests are not served by Europe" and in narrow, financial terms you may be right (though I'm not convinced by that, and there's plenty of evidence the EU makes us richer). But in the broader interests of a free, confident, rich and united west who can look the totalitarian masters of Russia or China in the Eye and say "do your worst" the EU is part of that process. Because standing together, the West, in its clubs: NATO, the EU can still set the agenda. The USA wants the UK to remain in the EU for the same reason it wants Scotland to remain in the UK. The USA is a hegemon, but one that desires its friends to be as united, strong and free as it is. While Russia, by way of comparison wants its satellites, poor and dependent. The EU is a bulwark against totalitarianism. Perhaps the Carrot to NATO's stick. The UK's role is to be a leader in all major clubs of the west NATO, 5-eyes and the EU as such we are the hinge on which the unity of the Atlantic west rotates. The UK leaving leaves us, and our allies weaker and more divided, just as we need to be unified in the face of a newly dangerous world.

Now is not the time

It is possible sense could prevail, and a post-EU UK could be a free, open, prosperous and happy place. But I suspect any leave vote would be driven not by the open-minded, but by the dull-witted sour old gits who want to pull up the drawbridge and return to 1956. It's possible a 'Leave' vote could have 'Falklands effect' in restoring the national mojo, a return to national self-confidence. But it could also trigger a recession, Scottish independence and the collapse of everything I hold dear.

Now, with the SNP in Holyrood, Putin in the Kremlin and the world recovering from the biggest financial crisis in a century, there is no need to roll the dice. The ephemeral benefits simply aren't worth the risks, and there's no evidence the EU is doing us harm beyond losing a few votes in the Council of Ministers over things that don't really matter.

All the Brexiteers needed to do was wait until the next treaty and turn that into an in/out thing. But they were too stupid to see even that.  When perhaps, the threat of Scottish independence will have receded, and Putin's safely swinging from a gibbet, and then I might say "very well, alone". But now is not that time. They wanted the battle too much, the 'KIPpers; they hated the wrong enemy with an intensity and passion that has completely blinded them to new threats. And that, ultimately is why they will lose; their foul chauvinist miserablism looks worse even than turgid bureaucracy of the EU.

Tuesday, 16 February 2016

On Those EU accounts that "haven't been signed off"...

They have. Each and every year.

It's sad that such a central trope from the 'Leave' campaign turns out to be an outright lie, but there you go. I suspect it's because grunting 'KIPpers cannot tell the difference between "material error", around 4.8% (which is lower than the USA's 5% but well over the UK's 1%) and "the auditors not signing off the accounts". But 5% of the money goes missing doesn't make for an easy soundbite, because just 5% going missing sounds like a pretty good job, for a government.

The EU spends its money in places where corruption is rife, and the institutions of Government are weak, like Romania or France, not in places with strong institutions like the UK or Germany. And the European union funds are going into especially corrupt sectors like construction. Perhaps this error rate is understandable. Building roads and airports in Romania is going to help the Romanians, and eventually us. Just as the Marshall plan rebuilt Europe after the Second World War, and gave the USA a rich continent to trade with, rather than a poor continent which needs supporting in a little over a decade, Western Europe should have been MORE generous to the East when the wall came down.

Had Russia been treated after the Cold war like (west) Germany had post 1945, then perhaps Russia would not now be having its tantrum, and  threatening to nuke everybody.

So, the closer you look at the arguments being deployed by the 'Leave' side, the worse they get.

  • The cost? Non-EU Norway pays 90% of our fees per head for access to the single market (which we want, right...?), UK's EU dues are falling.
  • Democracy? The belief the EU rules the UK is overblown fantasy. The UK remains a democracy, in the EU or out. The EU spends 5% or so of UK managed expenditure, and shovels a lot of high-volume, low impact trade law to us much of which we'd implement even if we were out. This really isn't a big deal.
  • We'd be free to trade? I think this is the weakest argument of the lot: The EU's trade deal with India was scuppered by, urm.... the UK, citing immigration concerns. You think we could do better alone? Australia and NZ would welcome us back with open arms? Possibly, but they both see the USA as far more important. The USA is ridiculously protectionist, despite which, the EU might get TTIP through. I doubt the UK could do much better. The EU isn't hampering our trade with the USA or Australia. And in any case, the EU is THE champion of free trade in Global fora, mainly because of British influence.
  • We'd control our borders? Well most of our immigrants currently come from outside the EU (mainly the Indian subcontinent), where we do in fact have control. I doubt much would change here. In any case the immigration of hard-working polish plumbers is less of a problem to most people than 'KIPpers imagine.
  • We don't want to be part of a superstate? And we're not. The Eurozone may become one, but the non-Euro countries will not be part of it. 
I am persuadable. I don't like the EU. C'mon guys, you've been itching for this referendum for 20 years. Is this the best you can do? To what practical problem is 'Leave the EU' a solution? Because I cannot see it. 

Tuesday, 9 February 2016

Why the UK Won't Vote to Leave the European Union

Supporters of the UK leaving the European Union are excitedly sharing the latest YouGov poll which suggests a 4-point lead for leave. Thus Louise Mensch former MP for Corby said Out will win because the PM's deal is so "disastrous". I offered her a bottle of champagne that it won't. The bet is recorded for posterity here.

Louise is right, the PM's deal is pretty small beer. But it doesn't matter, and here's why: The EU is pretty low down the list of voter's concerns. Those who're noticing the "debate", have already made up their minds. While Leave's supporters are busy hopping up and down, talking to each other about the polls and about Cameron's "betrayal", Remain voters aren't listening, and won't take an interest until the campaign is actually called.

Then there's the polls, whose problem is internet panels are self-selecting. When there's a decent back-record allowing you to weight your sample, such as in general elections, then the polls are pretty good. But while the poll may be reporting the right number of Conservatives after weighting, I suspect the Euro-obsessive breed of Conservative is more assiduously seeking out polls to answer. This is somewhat counteracted by phone polls' doing the selecting. There may be a differential propensity to respond, but this is probably smaller than the self-selection of an internet panel.

I suspect there is a big differential in propensity to respond to polls between 'Leave' voters, for whom this is their one and only chance, and will excitedly respond compared to 'remain' for whom voting for the status quo is mostly a tiresome duty. How much this is captured in polling methodology, only time will tell, but I suspect the polls, phone and internet overstate the support for 'leave' for much the same reasons they consistently understate support for Conservative party.

For every half-dozen internet polls there's only one or two phone polls. And when the two methodologies diverge, go with the phone poll.  Phone polls are still showing a significant lead for 'remain', though it's true there hasn't been one since Cameron's renegotiation terms were announced.

The reason Remain is probably ahead is simple. The UK is a vastly better place to live and work, its economy vastly superior than it was in 1972, in both absolute and relative terms. That may or may not be because of the EU, but at the very worst, the EU hasn't noticeably held the UK back. The status quo is therefore clearly not untenable. 

Nor would the alternative be: the UK is the world's 5th (soon to be 4th) largest economy on earth and quite capable of standing alone. We are NOT a "small country". But the Leave camp must persuade sceptical voters that going it alone would benefit them, and that remaining risks their prosperity. On the evidence of the last 40-odd years, that is going to be a hard sell. The press leans Eurosceptic, but is much less powerful than in the past, and the BBC will be neutral, leaning 'Remain'.

Even if the the case for Britain to leave is not a crazy one, but the people selling it, (the delightful Mrs Mensch aside) are mostly a toxic bunch of odd-balls, has-beens and worthless onanists. Meanwhile the Prime Minister, Most of the Cabinet, Most of the Parliamentary Tory party, most of whats left of the Labour party, the SNP, the Liberal Democrats, most sensible figures from the Arts and Business are all going to be voting for 'Remain'. Boris Johnson, the UK's most popular politician (how that annoys the lefties) will probably see which way the wind is blowing and break for 'Remain'. The uncommitted voter tends to notice these things.

It may be there is a huge differential in turnout favouring 'leave', but differential turnout is the perennial hope of the loser. The status quo has a habit of getting out its vote just enough to stop the excitable mono-maniacs. And I suspect the turnout will be high. There is still all to play for. The polls, as Scotland showed can change enormously during the campaign. But I cannot see the public voting with Nigel Farage against the Prime Minister.

Cool heads will prevail and so I got evens on an 80% bet ("No chance" of 'leave' winning is clearly overstating the case...). Those are good odds, Louise, and I look forward to a Wine-Bottle-shaped package from New York some time after the Referendum.

As for me, I have no dog in this fight. I don't much like the EU or most of its works, but think we should stay in, mostly as a means to thwart the French & German desire for a European empire (as is Britain's historic mission). I certainly won't campaign for Remain and will not be at all upset if we do leave. I merely seek to predict, and profit from that prediction.

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