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NEWSLETTER NO 157

Thursday 16 June 2016

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This week:

Highlighting news stories important to the Civic Republican view,
particularly those that are overlooked or little covered in the main media.

All these newsletters will be catalogued on the website


EUROPE

  • THE ONLY WAY IS BREXIT – Behind the Arguments

Peter Kellow, DRP Leader, writes
Courtesy Sky TV News

With a week left before the momentous decision of 23rd June on EU membership, IN or OUT, the arguments sound more and more like revolving loops. No one on either side has anything new to say. They just keep reiterating the same messages attempting merely to nuance their words to capture or move the public mood.

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Click to watch video

And, boy!, is it a big decision – probably much bigger than anyone imagines with a very long tail after 23rd, whatever the result, extending deep and wide into the future.

Referendums present themselves as politically simple events. It is like a junction in the road. Go east and one set of options follow. Go west and it is another. But one thing the Scottish referendum has well taught us is that this simplistic scenario is far from the reality. The referendum itself changes the landscape dramatically – even if the “let things alone” side wins.

Pandora’s boxes have had their lids removed; cans of worms have been opened; cats are out of their bags. Mixtures of metaphors will flood in as we try to discern the longer term impact in the slurry of change.

This piece is not another plea to vote LEAVE. There are plenty of those out there and the DRP position on IN-OUT was set out in the video in the last newsletter THE ONLY WAY IS BREXIT – WON’T GET FOOLED AGAIN. This newsletter is more about standing back and picking up some undercurrents in the campaigns of both sides that seem to have been mostly missed.


No Going Back

In the first place, there is now really no going back from exiting the EU - at least no going back to where we have been until now with regard to the EU

It is a mystery to me why the Leave side has not emphasised this. The grunions of Brussels hate us for holding an in/out referendum. There have been referendums before on various EU treaties in some countries but nothing so radical that it challenges the merits of the very existence of the Union, that challenges the very ideal - upon which so many political careers have been constructed

This is why a vote to Remain will precipitate a cartload of punishments upon Britain for daring to challenge the essence of the Union.

As Peter Oborne pointed out on The Daily Politics many EU decisions are hanging fire until the 23rd has passed. Then there will be an outpouring of integrationist policies and papers in which Britain will have no say.

Contrary to what the Remainers argue about staying in so we can have a voice at the table, Britain will have very little say in what happens in the EU. The holding of the referendum itself will see to that.

The fact of the referendum irrevocably weakens our position in Europe - if indeed we remain in.

And Cameron has annoyed the big beasts at the EU table with his antics earlier this year in trying to fudge the rules on immigration. If the vote is Remain, his petty disruptions will see him seated at the end of the table – his opinions discounted.

And this diminution of Britain’s place will be long term.


Now, understand why this has to be so.

Following the 23rd  many in other EU members will be demanding a similar referendum. Some already are. We do not know the result of our referendum yet but one thing we know for certain – having laid bare the divided views of the British public and British politicians will weaken our perceived commitment to Europe.

British politicians dealing with Europe will have lost the pretence of consensus. Thus the EU grandees will want to give out the strong message to other member nations that if you challenge the Union at its roots with in/out referendums your status within the EU, even if in wins the day, will forever be diminished.

The EU pretends to be a federation and aims at being a stronger one but it is not a federation of equals. As such it is a botched federation – an arena for domination by some and crumb gathering by others. A true federation is a federation of equals, more or less. There cannot be a gross disparity between the members politically, demographically or economically


The Economics of Brexit

Let us turn to the economic arguments for Leave or Remain.

The Remainers, and the Leavers to a great extent, rely on the views of contemporary economists, forecasters, official or unofficial, and financial journalists. Let us politely pass over the fact that none, but none, of these wise heads predicted the economic crash of 2008, (although your correspondent at the newsletter predicted it long before it happened - as I have been immodest enough to point out previously).

We should also, in the interests of decorum, ignore the fact that they were, and still are, unable to discern that it was the elevation of property values engineered deliberately by Chancellor Osborne that ensured the Conservative victory in May 2015. (This understanding enabled your correspondent to alone predict the result of the election.)


What is amazing is the way that economics, as currently practised, is a discipline that has almost no pro-active role. I suppose this is why we call it “economics” as opposed to “political economics”.

“Economics” is the gathering of statistics and entering them into a “model” to predict the future. So you get one set of figures if Remain wins and another if Leave wins. So, job done, mathematical “proof” that one course is better than another. In this form of analysis there are no actors with intentions and decision making wills, but only theoretically defined parameters that act and react according to the strict discipline imposed by the model.

In spite of this, we may mention, incidentally, that economic policy is, in fact, hugely pro-active, for Central Banks and Finance Minister, manipulate, cajole or simple corrupt the operation of markets as a matter of course. But economists have yet to evolve a theory to analyse these machinations for they cannot incorporate human will, leave alone human nature, into their functional thinking. So they are left staring blankly at their machine models.


The Leavers to their credit do often bypass the stupid models and proclaim that by leaving the Union we will be in control of our own destiny. But they still give some credit to models by providing their own versions that suggest more palatable scenarios – as if these meant anything in reality.

To hell with models! We are men and women. We decided what we want. We decide how to achieve it. We are not at the mercy of Adam Smith’s “invisible hands” or invisible anything. That is a myth that allows the government to opt out of policy making, leaving the field open to the richest and most powerful and their agents in the financial institutions to exert their gigantic muscle.

There is, in fact, one country in Europe that ignores the economic orthodoxy of invisible hands shaping our lives and falls back on its own contrary tradition in economics – Germany.

Germany unlike practically all other countries in the EU, has never accepted the Libertarian Adam Smith doctrine of laissez-faire and actually directs economic policy. This is not the place to go into this in detail. The difference between Germany and other countries like the UK is well set out in “Progressive Capitalism” by David Sainsbury, far and away the most important book on political economics or economics of this century.

(You can buy this book at Amazon. Being a book outside orthodox economics it can be bought very cheap second hand)

We should not resent Germany’s domination of Europe because it happens to be the only country running its economy on sensible lines. It is not Germany’s fault that it is surrounded by fools.


The Commonwealth

Let us turn to another argument that is largely left out of the picture in the referendum debate. This concerns our membership of a unique international organisation, the Commonwealth.

Today it seems that the only political person who is interested in it is the Queen for she never fails to mention it in her Christmas message. But of course she is its nominal head so she has a kind of vested interest.

Nevertheless, let us give thanks that at least once a year this international collaboration of diverse nations gets a name check in our living rooms. Apart from that most people only hear of it when the Commonwealth Games take place. I doubt that one in fifty of UK citizens under 30 have the least idea what it is all about.


In the 1975 referendum on leaving or remaining in the Common Market, as it was then, I voted "leave" for one primary reason.

Until we were taken into the Common Market by Prime Minister Edward Heath in 1973 (without his having any electoral mandate to do so, by the way), the Commonwealth (then the British Commonwealth) had always been central to British international trade relations and foreign policy.

It represented a natural fit between diverse nations. Trade was more cooperative than competitive – and so more mutually beneficial. The Commonwealth is unique in international organisations that it involves nations at all stages of development across the globe and these nations are loosely joined together for economical, political, cultural and, yes, sports, reason.

And of all the great international organisations it is unique in that its affairs are conducted in a single language – English – so no one has to have their heads clamped by headphones listening to disembodied interpreters' voices. Everyone is in a room directly communicating. The benefit of the common language cannot be overestimated.


And recently the Commonwealth has started to open up to include new members that do not have strong historical links with Britain. And why not open it up more? Many countries have English as a strong second language and we might think more about taking this noble idea forward.

But this realistically will only happen with the exit of Britain from the EU. This is as true in 2016 as it was in 1975.

But what a golden opportunity full of imaginative possibilities it opens up.

Instead of the slog through the labyrinth of EU bureaucracy and horse-trading we can join with different but sympathetic cousins. The Commonwealth bureaucracy was set up by the British Civil Service in its heyday and remains streamlined and usable. The contrast with the EU could hardly be greater


Shifting Sands and Sclerosis

Another elephant in the referendum discussion room is the fact that the EU is shifting sands.

Whatever you vote for now (or against now) will not be the same in two years time - leave alone in twenty. Both the Conservatives and Labour feed us the idea of relative fixity of the Union – a fixity that allows us to change it around the edges.

The Conservative’s line hinges around the tour Cameron had with members states trying to fudge bits of policy on immigration – the details of which I am sure escape pretty well all of us.

Key to Labour’s consistent endorsement of Remain is that Labour when in power will reform the EU as it sees fit. This is a fantasy that fools no one.

Labour’s decision to back Remain, when they could have simply avoided backing one side or the other, is surely one of the stupidest policy moves in recent political history. Apart from leaving them stranded if the vote goes Brexit’s way, they have blown a key asset – Jeremy Corbyn’s integrity, for this is the first time in his life he has supported EU membership. Bizarre.


However, “shifting sands” is only one side of the EU coin, for as well as powering ahead with the federal project it is bedeviled by an innate conservatism.

Because of its unwieldy political structures it is unable to countenance any move away from ideas that ruled the roost decades ago and that now many want to question.

Of course, it is exactly this conservatism that makes it attractive to its supporters. For instance, the EU is at this time forcing privatisation on the French postal and rail services. In Greece, it is making brutal austerity measures a condition of loans when such measures have lost their ideological lustre for all but the most rigid economic thinker.

So by being in the EU you abandon options that you as a nation may want to take and at the same time leave yourself exposed to the whirlwind of onerous legislation and rulings that constantly issue from Brussels.

Whatever the Remainers may say about having a seat at the EU table in the last 50 years they have not succeeded in pushing back the tidal wave of EU legislation by one teaspoonful.


Trade

Lastly I come to the matter of trade.

So they tell us, we have to be in EU because Europe makes up so-and-so percentage of our foreign trade, blah-blah. How will we get on without the trade deals with Europe?

It was Boris Johnson who pointed out that 73% of our foreign trade throughout the world is conducted without the benefit of any trade deals. How does that happen? Well, we just trade. Simple as that.

And we save on having armies of officials monitoring the trades. Sounds like good free booting capitalism to me!

But do we ever ask ourselves why we have any trade agreements, at all? Let us think about this now.

The reason given is that we need to ensure “free trade” and fairness in the trade relations we have with other countries and make sure their goods meet our requirements and in the process foster more trade.

There are two major elements in this business of trade that are never discussed or admitted and certainly do not obtain to discussions about trade with Europe


The first is that free trade is one of the biggest myths ever sold to an unsuspecting public.

We have got rid of the old “protection”, have we not? creating a level playing field for companies from different nations to compete on.

But “free trade” is rendered non-existent, not just by tariffs and quotas but also by another pesky item that we seemed to have forgotten about – subsidies.

The greatest advocate of “free trade” in the world is the USA but subsidies are endemic to its industry and agriculture. And there is a funny thing here. When is a subsidy not a subsidy?


Germany spends a lot of money on apprenticeships to ensure a good quality work force whereas Britain only tokenises its contributions to employee development.

Now is that not a bit dastardly unfair of those Germans to subsidise training when Britain (still under the spell of Margaret Thatcher) leaves a lot of it to market forces? Is that really playing cricket by those Germans?

The only significant difference between tariffs and subsidies is that with the former the tax payer makes a gain but with the latter the tax payer has to pay.


The simple point this shows that there is no such thing as free trade anywhere on the globe.

The idea, that it exists, is pure ideology and bunkum. We should opt out of every trade agreement from the World Trade Organisation to booze cruises.

With a Brexit vote, the EU trade agreements will be swept into the ether along with all the other EU nonsense. Will we have to renegotiate?

The only negotiation need be between someone who wants buy and someone who wants to sell. If our government wants to subsidise an industry they should do so if it will be for the greater good. If it wants to give us an "unfair advantage" by having a well educated workforce, so be it. We don’t need a Brussels bureaucrat breathing down our necks.


The second aspect to “free trade” is equally if not more important.

What is invariably left out of the discussion on trading is capital movement.

In general, it is fair to say that nations since their dawn have benefited from trading with each other. We could put in some qualifiers to that statement but let’s not go there for now.

Anyone who studies history, even going deep into the archaic past, will find the same story. Where there was trading between nations, generally everyone benefited. And I would go so far as to buy into the old-fashioned argument that trade fosters peaceful relations between nations and helps prevent war.

But capital movement is altogether a different story. Once owners of capital, start to move their capital around the world disparities and conflicts start to open up.

In a previous newsletter I explained how the First World War was driven by the desire by financial capitalist to move their capital out of the domestic economy and place it elsewhere. The motivation, in this case, as always, was to diminish the home employment market so forcing wages down whilst simultaneously increasing the production of cheap goods which can them be dumped around world markets and in consequence further disrupting industrial and agricultural production in favour of the holders of capital.


When we talk about globalisation it is all too easy to focus on the trading of goods and even services for that is visible before our eyes.

And the globalisers prefer that you don’t think too carefully about fortunes that our made off the back our developed society, with its education, legal system, civil service infrastructure and, yes, also all kinds of seen and unseen subsidies. They don't want you to reflect on how these fortunes are allowed to escape the country that kindled them and then to be used as weapons against our own prosperity.

Unregulated capital movement also leads to casino capitalism on a grand scale with nanosecond trading heaping up betting options and trades that make a mockery of anyone honestly trying to make a living in the real economy

The word then simply is: trade, yes; capital movements, no. That is of course a little oversimplified but the principle is essentially good.

Let us chuck out any trading agreement and just trade without them as we do in 73% of our world trading already. And with that we put severe limits on capital movements. The EU exists partly to facilitate these movements and creates the obscenity of water companies supplying water to British customers basing their company in Luxembourg so that profits are continually siphoned out of the country to fall down a tax haven hole, never to benefit the country that enabled those profits.

In the minds of the trade agreement makers, trade of goods and movements of capital go together. So we will chuck them out together


23rd June 2016

If the outcome is to be judged by which side is running scared, Brexit would be secure.

Unlike for the General Election of 2015 I have no sense of which way the result will go.

If Remain wins it will undoubtedly be because of fear of the unknown. We are a nation cowed by uncertainty and worries about the future and the future of our children.

Some see Leave as bold. But to others it is escape.

When you are trapped somewhere and fearful of the outside you can recoil against doing anything radical.

If the British people vote Leave next Thursday they will show a confidence and determination that will willl create inspiration and joy in the hearts of millions not only in Britain but throughout Europe.

It will be a magical day of optimism and courage - with a touch of revolution. The cheers will ring out through the land.

We could even pardon ourselves for taking gross liberties with some lines of one of our greatest poets

Bliss will it be in that dawn to be alive, 
And to witness Brexit - very Heaven!



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David William Pear, is a columnist writing on economic, political and social issues.
Regular columnist for The Real News Network, Op Ed News, and an editor for OEN.