Europe or America – too much ‘us against them’

Europe v America

Do you lean more to Europe or to the USA? What does your instinct tell you? I remember the question being posed in a radio debate a few years ago. It caught my attention then. It’s more than ever relevant now, as Brexit disparages and attempts to sideline Europe.

Why for so many is there an instinctive hostility to the EU? Is it just to the institution? Or does it reflect the way we engage with European culture and history? At a bumptious Boris Johnson ‘I can sing Ode to Joy’ level, or at a level more woven into our soul – into our identity?

Are we a European people, one of many, an outlier, but integral nonetheless? Or are we to all intents and purposes, though we wouldn’t admit it, just another state of the USA, just doing things a little differently.

We’re uneasy about the USA, it’s brashness, its noise, its superiority complex – but we go with it – it is, we feel, an exaggeration of our own character, the same substance, lacking the finesse. But they’re our comfort zone – not Europe.

Brexiteers by default lean to America, to trade agreements which will of course be on American terms. They hide this behind ‘global’ aspirations, and a maritime, ‘old Commonwealth’ identity.

I’d argue we are already global – and we are as engaged with the USA we need to be. Trump’s penalties for companies and banks breaking US-imposed sanctions against Iran underline the point.

 

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Europe v the world

So we’ve widened it. It’s no longer Europe v America, it’s elided into Europe v ‘the world’. We’re going global. As if we need to assert one identity at the expense of another. I’m proud to be a citizen of the UK – of Europe – and of the world.

Fraser Nelson, editor of The Spectator, trespasses onto this territory when (I’m quoting from The Economist) he criticises liberal Tories such as [Amber] Rudd ‘for misinterpreting Brexit as a vote for closing the borders rather than embracing a more global future’.

There are countless other such statements. The likes of Nelson have set up and pursued a false dichotomy, pitching a European against ‘a global future’. We were there of course already. The Brexit strategy will indeed involve (the shenanigans of current Cabinet debate on the subject will go down in history as farce) some kind of closure of our border with Europe, against a pie-in-the-sky chance of signing trade deals with further-flung countries that offset the damage that closure will cause.

Countless pages, articles, tomes have been written on both sides of the argument. It’s that deeper and false sense of a divide that concerns me here. The Brexit debate, and Brexit supporters for decades before the 2016 vote, have polarised ‘European’ and ‘global’, pitched one against the other, and we’re digging the divide deeper all the time.

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Don’t for heaven’s sake claim you’re an intellectual

I’m hardly saying anything new but it’s also an anti-intellectual debate. Don’t rely on argument, rely on instinct – it’s become a matter of belief. There’s a new book out about the French intellectual (The End of the French Intellectual): at least France has had such a person as the public intellectual. A species who in this country should expect to get as little appreciation from the likes of the Daily Mail as members of the House of Lords or the judiciary.

Leaping across the pond, we have Scott Pruitt, head of the American Environmental Protection Agency, barring scientists who have received federal grants from the EPA from sitting on boards advising the EPA on the grounds of ‘conflict of interest’. There are no restrictions on scientists who work for the industries the EPA monitors. Again, independence of mind is under threat.

And finally, that Ruth Lea, a long-time public figure, arguing that ‘the economics ‘establishment’, including the Treasury, were utterly wrong-footed by our economic performance after the Brexit vote in June 2016′. The economics ‘establishment’ – ‘commissariat’ is another term I’ve seen used. In other words, the great majority of economists. Maybe Ruth Lea hasn’t noticed how our performance has significantly lagged the rest of Europe – and taken on board the reluctance abroad not to let the UK slide too far – for in whose interests is that? Yes, arguments were too apocalyptic, attempting to match the Brexiteers’ approach of promising the earth.

The way is still down, it’s just taking far more turnings. As long as we inhabit this falsely polarised world that won’t change.

Spring, Michele Hanson, Pinker, Kahneman, Brexit, Ursula LeGuin – a few one-sentence blogs

Time is pressing and I’m off on holiday to an island where I’ll face south across the ocean and follow the sun, and climb up to the cloud forest behind. But there are blogs that I’ve wanted to write. So I thought – how about a blog of single sentence. (Max two, but you’ll see how this expands.)

Brexit: in his speech to his party’s spring conference yesterday, LibDem leader Vince Cable argued that “nostalgia for a world where passports were blue, faces were white and the map was coloured imperial pink” had driven some older voters to Brexit. In response to the uproar from some in the Tory ranks I’d simply say that some truths are self-evident – and add the reminder that without anti-immigrant sentiment Brexit would have been decisively defeated.

Michele Hanson: the Guardian columnist died a few days ago, after 34 years (I think) of writing a column for the Guardian. I knew her a little back in the 70s, we had mutual friends, and I’ve caught up today with a few of the columns I didn’t read, and found them both downbeat and upbeat, wise, warm and rather wonderful – whether she’s writing on care homes, dogs, family, personal hygiene – she engaged so many people with moments and issues in life they could connect with.

At the other extreme my old bete noir, the fluffy-white-haired guru Steven Pinker, paired in this instance with the 18th century Scottish genius-philosopher, David Hume, whom Pinker neglects to mention when talking about the enlightenment – and who stated clearly and succinctly that “reason is, and ought only to be the slave of the passions”. In other words, don’t give reason space which it oughtn’t to have – give it, I’d argue, shared space, let one inform the other, and take both out beyond our private lives into the public sphere.

Thoughts from Tim Harford in the FT, quoting Daniel Kahneman: “When faced with a difficult question we often answer an easier one instead, usually without noticing the substitution.” In the case of the referendum the difficult question being “Should the UK remain in the EU”, and the easier substitution “Do I like the way this country is going”.

The last item was two sentences – so I’m adding a third from Harford as a separate item – a rather obvious cheat. “No voter can master every issue … referendums instead invite us to ignore the question, give the snake-oil peddlars an edge, concentrate our ignorance into a tightly-focused beam, and hold nobody accountable for results.” Right on.

For something completely different … Alexander Harris in the Tate Etc Magazine: “So I became a collector of early autumn evenings. In the ancient analogy … the time of youth is spring. But I remember only one or two spring days from my childhood – it is all autumn: the orange of the late crocosmia flowers meets the spotted yellow fringes of hawthorn leaves; blue skies deepen above glowing stone walls, and then it all softens to a yellowy grey haze…” That set me thinking, and I only half-agree, and maybe that’s because my pre-eminent spring memory is of a day in May walking in the Cheshire hills with my first girlfriend, and spring was suffused with birdsong and a funny feeling of elation, of walking on air, that I’ve never quite recaptured …

(Treating Alexander Harris’ quote as one sentence …)

A quote from Neil Collins, an old-friend from the 70s who I haven’t seen in maybe forty years, in the FT, in the context of the collapse of Toys R Us and Maplins: “Is yours a zombie company… [zombie being] defined as a company that has failed to earn its interest cost for two consecutive years and is valued at less than three times sales. …[The Deutsche Bank] comprehensive analysis of the world’s 3000 biggest businesses implies that more of them [this year than last] have discovered a strategy for survival – [instead of just] clinging on, merely waiting a mercy killing from rising interest rates.” Two reasons for including: one, a reminder to me and anyone who enjoys abstruse speculation that there’s a hard business world out there, and if we choose to rant against capitalism we have to remember how bloody hard and ruthless the business world is  … and, two, whatever’s happening in High Street retail, things are getting slightly better – are they???

Rediscovering Ursula LeGuin, someone else who’s died recently: there’s a new book which collects together her non-fiction, ‘Dreams Must Explain Themselves’. She had Taoist beliefs … that established an instant bond – the Tao, or Dao, the way, is the wisest, simplest yet most all-encompassing of notions; and she admired Calvino, Borges, Woolf, Twain, Tolstoy and Tolkien. And how about: “To think that realistic fiction is by definition superior to imaginative fiction is to think that imitation is superior to invention.” I’ll add my own comment – never curtail that sense of wonder, of fantasy and myth – walk on the wild as well as the wise side.

Four sentences. Time to exit.

Slow investing, slow news

As an advocate of ‘slow news’ it was good to read Tim Harford’s article on ‘slow investing’ in the Weekend FT. He argues that ‘most investors should operate closer to the six-month timescale than to the frenetic fast-twitch world in which a coffee break lasts an eternity’.

Slow news – what do I mean by that? Maybe not six months (though I have tried a month, walking the Camino in Spain) – but always go for the long perspective, avoid the cumulative effect of ‘fast-twitch’ hourly fixes. And treat the big daily bulletins with caution: they’re no more than what takes the news editors’ fancy on any one day.

Likewise investment. Check your portfolio everyday and the pain of the downs tends, according to Harford, to outweigh the joy of the ups. There’s more reason to smile if you check less frequently: good years for investors happen almost three times more often than bad years.

(Check out Delayed Gratification magazine, published by the Slow Journalism Company.)

We obsess with detail. ‘To single out one murder during a battle where there is one person killed very minute would make little sense.’ (Quoted by Harford in his article.) Morally it does of course – we lose sight of the immediacy of violence if we treat the victims as a collective entity. On the other hand, we lose the bigger picture, and we become inured to violence by the endless repetition.

Detail obscures reality. The 2009 expenses scandal was arguably as much a media as a political scandal – a drip-feed of news day-by-day by media owners pursuing their own agenda. The Brexit campaign was (and still is) all about emotive soundbites obscuring the real picture.

I’d originally included comments about the scandal involving Oxfam employees in Haiti, but I’ve taken them down: who knows where truth lies. Enough to say, I’m treating headlines and assertions with caution, and not rushing to judgement.

But should I be making judgements? Slow news can’t be a pretext for disengagement. The zenpolitics blog has always been about engaging directly with the world, and yet maintaining balance. Upekkha in Sanskrit – equaninimity. It’s a tough act.

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Elsewhere in the FT there an obit of an American cyber-libertarian, one John Perry Barlow. For one, I love the idea of a cyber-libertarian. I’m not certain it’s for me, but I covet the name. He wrote of the death of his fiancée in 1994: ‘All hope has at times seemed unjustified to me. But groundless hope, like unconditional love, is the only kind worth having.’

That strikes a chord. Ride the daily news roundabout, and what hope are we left with? I don’t want to get into arguments about whether the world is getting better or worse. But take hope as watchword, take a long-term view, plan for the long term, avoid the news obsessed doom-mongerers – take hope, even irrational hope, as a watchword, and we will do a damn sight better than over-obsessing with the everyday.

Free trade – whatever the cost?

Free trade and a hard Brexit are all but synonymous. There’s an obsessive quality about free traders, men on a mission, who feel their time has come: seize the moment, lest it slip away.

Daniel Hannan and Boris Johnson recently helped launch the Institute of Free Trade, arguably duplicating the work of the long-established Institute of Economic Affairs. I’ve always had a sense of vast lacunae between argument and reality among free traders, and I turned to an article on the IEA website, by its chief economist, Julian Jessop, to check out whether this judgement was justified. For the full article see:  https://iea.org.uk/whos-afraid-of-free-trade/

Jessop expresses puzzlement as to why ‘the economics commentariat’ (i.e. most economists) had given a ‘sceptical, with some downright hostile’ response to two papers advocating a policy a free trade once the UK leaves the EU, by Professors Kevin Dowd and Patrick Minford.

It may be unfair to quote passages and not reproduce the whole article, but to my mind they do speak for themselves.

‘… it has been suggested that Prof Minford’s analysis shouldn’t be taken too seriously because his forecasts of the economic and market impacts of the vote itself were inaccurate. As it happens I don’t know what Prof Minford was forecasting in 2016. But nor, frankly, do I care….’

‘Professor Minford’s current and past work in this area has been challenged for using what some regard as a simplistic and out-dated model of world trade. But the ‘gravity models’ favoured by many of his critics also have their flaws. Even if Professor Minford’s numbers are only as good as his models (which is always the case) …’

The phrase, ‘the underlying principles are as sound as any’, is key: there is a millenarianist belief in free trade as a universal panacea, the UK’s adoption of which will open the eyes of the rest of the world, as Britain did once before, in the early 19th century. ‘Gravity models’ refers to the long-established and incontrovertible pattern of a much heavier weighting toward trade with one’s neighbours, than with more distant countries.

Nonetheless, whatever the correct interpretation here, these legal points do not weaken the more important economic argument that the UK would be better off lowering its own trade barriers regardless of how the rest of the EU responds.

Free trade it seems works because it works, regardless of circumstance. In what sense better off – who would be better off?

‘… of course, there would be some losers from free trade among consumers as well as producers …

‘….there would be some losers..’ The reality is that the disruption would be extraordinary.

Others have suggested that trade can never be fully ‘free’, because of non-tariff barriers. But this is tedious semantics. Even if unilateral free trade only results in freer trade, relative to the status quo, that would be an improvement.

‘…tedious semantics’? There’s an impatience here, a touch of the Gadarene swine.

What then about things that we do produce ourselves but where other countries have a genuine comparative advantage? Why should we subsidise domestic producers if consumers can buy better or cheaper products elsewhere?

A few suggestions as to why… Easily disrupted supply chains, sourcing expensively at long distance, security implications, quite apart from the disruption to urban and rural landscapes as industries close and new ones – we would hope – spring up elsewhere. But in the chaos, and the economic disruption, what certainty is there that new industries, competitive on the world stage, would rise up?

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Read the whole article: you may find you’re on his side, not mine.

Wishful thinking

…..and its consequences.

How do you deal with half-truth or dissimulation, with hyperbole – or simple wishful thinking? Or simply two versions of the truth – see my last post on the subject of identity. I might disagree with Roger Scruton, but I’d never doubt his integrity.

Government isn’t about certainties. Most government policies don’t deliver on their original intentions. But if based on clear principle and sound argument then we can accept them, for good or ill, as part of the political process. Not so wishful thinking, which can have malign consequences.

Workforce planning in the NHS  From the Department of Health, last December: ‘Brexit will be a catalyst to get [workforce] planning right.’ [Source: The New European] This in the context of a steep rise in the number of nurses and midwives from the EU leaving the UK. And the answer, we’re told, is to train more of our own nurses.

Why Brexit should in any way be a catalyst for workplace planning in the NHS I can’t see. There is an ongoing need to train more nurses, Brexit or no Brexit. Desperation, as we find our health services understaffed, is hardly the way forward. And if anyone has seen cold, clear planning on the Brexit side over last few months, please let me know.

Trade deals and food standards  ‘Mr Gove has insisted that the UK will not compromise on food standards, even if that means a “narrower deal” with the US.’  Retaining access to EU markets, vital for many farmers, ‘will require continued adherence to EU standards’. That access could be hard to reconcile with US demands for the UK to import chicken washed in chlorine and hormone-treated beef, both of which are banned by the EU. But in a speech this month, Wilbur Ross, US commerce secretary, said that if Britain wanted a trade deal, it needed to accept US rules on precisely such issues.’ [Source: Financial Times 25/26 November]

Remember the context: 70% of the UK’s food exports last year went to the EU. 80% of our food exports come from the EU.

Obama warned how difficult a trade deal with the USA could be. Maybe under Trump we wouldn’t be at the back of the queue – but only, as Wilbur Ross makes clear, only if we accept American standards, and abandon the EU standards we ourselves have done so much to nurture over forty years. The first lessons of negotiation are to be sure of your argument, and negotiate from a position on strength: neither would true of any post-Brexit US trade deal.

Remember also that this is the USA of Donald Trump, busily posting anti-Muslim videos produced by the British extreme right. More than ever, we need to stand our ground, and know who our friends are, friends who share our values.

A new generation  There’s a breed of establishment liberals, all avowedly Remain voters, who may see Brexit as an economic mistake, but ‘put the blame for the mistake on liberal leaders rather than the benighted masses’. Robert Peston is one such: I’m quoting here from The Economist’s review of his new book, simply entitled ‘WTF’.

This isn’t to say that ‘the self-renewing elite’ Peston refers to shouldn’t be in the dock. And I’ll leave aside my thoughts on whether ‘establishment liberals’ are true liberals. My focus here is on wishful thinking, and I’ll let The Economist’s review of Peston’s book speak for itself:

And his conviction that ‘out of the current swamp a new generation of politicians with credible ideas will emerged primped and pristine on the shoreline of our ageing democracies’ looks delusional. There is little evidence that Britain’s elites are prepared to use Brexit as a spur to bright new policies. There is ample evidence, by contrast, that Brexit is being handled in the worst possible manner: dividing the country still further and distracting attention from what ails us.

That last sentence, and the last clause, ‘distracting attention’, is key. ‘Wishful thinking’ in everyday life may help keep us all afloat, but in politics the damage it can do is extreme.

 

 

The fantasies of free trade

Walking and swimming, conjuring turtles (see my last post) and building castles… since the Brexit vote politics have been more a burden, less a pleasure – how we (as country and individuals) might hold on to our sanity while others attempt to build castles in the air.

Brexit has many castles, most of them air-borne, from the immigrant threat to free trade. Closing down on one, on the free movement of labour, runs directly counter to a fully libertarian approach to free trade – if this was a board game, or a novel, I’d want to see how it all worked out. As political reality, I hope not to.

Focusing on free trade, last week we had ‘From Project fear to Project Prosperity’, a report from the free-trading supply-siders ‘Economists for Free Trade’, chaired by one-time Thatcher adviser, Patrick Minford. Matt Ridley in The Times (21st August) pours praise upon them. We hear the old shibboleth, ‘Fortress Europe’, curiously used to describe 28 countries which have taken down the barriers and practise the four freedoms – goods, capital, services, and labour. Ridley argues that ‘external barriers are pure self-harm’, and you’d have thought that he’d take the EU as a shining example. Instead he focuses on the tariffs the EU imposes on non-EU countries – apparently the tariff on unicycles is 15%. What he totally and wilfully fails to recognise is that free trade isn’t a level playing-field, but self-interested countries seeking common ground on which they can co-operate – not for another’s interest, but for their own. We hear from Brexiters about countries keen to reach trade agreements with the UK – but on whose terms? On ours, on the UK’s?

Garvan Walshe on the Conservative Home website is helpful on the subject. (There is an awful lot of sanity still left in the Tory party – but the sane too often these days are the quiet and the cautious.) In trade between countries, ‘the distance relationship is paramount’.

The effect of that decision [the referendum]  is to forego [the EU’s] economic benefits, and they can’t be replaced by shallower trade agreements with other countries, because they are too far away. And while there could, as Minford suggests, be economic gains from deregulation, they won’t happen while Britain´s politics is moving leftwards … Far from bringing benefits through other trade deals, leaving the EU erects an enormous trade barrier with the rest of our continent. Economists for Brexit should have renamed themselves Economists for Protectionism.

Back to Matt Ridley: ‘…after Brexit, Britain should try unilateral free trade, no matter what everybody else does’. This would Economists for Free Trade argue benefit the British economy by as much as £135 billion a year. (Compare the NIESR – leaving would cut our total world trade by a quarter.) The Minford report assumes that we’d reach an agreement with the EU broadly comparable to what we have now, and a level of de-regulation which simply won’t, and shouldn’t, happen in the current climate.

Ridley is also guilty of a selective use of history, an old bete noire of mine. He quotes Sir Robert Peel in the 1846 Corn Law debate – ‘we should cease haggling with foreign countries about reciprocal concessions’. He argues that ‘the closer countries get to free trade, the more they thrive’ – and quotes Britain in the period 1846-80, and Hong Kong and Singapore today. In all three cases the circumstances are radically different – Britain in a period after 1846 when we could dictate the terms of world trade, and two city-states (treating Hong Kong a city state) operating as low-tariff entrepots.

Ridley also attempts a distinction between the Roman civil law ‘prescriptive, rules-based system’, and a ‘better’ common law (and distinctively English to his mind) approach, ‘which is principles-based, outcome-focused, consumer-friendly’. He continues: ‘Because of our history and the nature of our economy Britain can be an effective champion of this challenge.’

The risk is all ours.

We are back, happily for my argument, to ‘castles in the air’. There is no hard evidence that ‘free trade works’, no hard evidence that supply-side economics will deliver any of the benefits (above all increased tax revenues on higher output, and collective benefits deriving therefrom) it claims.

And finally… Adam Smith. Ridley tries to corral him into the Leave camp: ‘As Adam Smith put it, describing the European Union in advance, “in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer”.’

‘…describing the European Union in advance…’ – this is populist and emotive junk.

The founders of the Adam Smith Institute don’t do much better: ‘We both take the view that the UK now has the chance to trade freely with the rest of the world, since it will no longer be locked inside a protectionist bloc of diminishing economic and political significance.’

The EU isn’t doing too badly at the moment, and it carries political clout – the ‘diminishing economic and political influence’ will all be ours if Brexiters have their way.

Austerity versus stimulus

Don’t let anyone say I avoid the big subjects!

Whatever one’s instincts, where lies truth? Is there any definable ‘truth’ when it comes to this debate – stimulus versus austerity. A good starting-point is a book of that name, just published, a collection of essays edited by Robert Skidelsky and Nicolo Fraccaroli.

The question, as Robert Skidelsky and David Blanchflower argue, ‘is whether Britain should be compared to Greece… Britain could, the Keynesians argue, continue to expand its debt with no risk of lowering confidence in the economy, as long as that debt expansion was used to pay for growth expanding projects’. But does high government borrowing push up interest rates and inhibit private investment? – Friedrich Hayek’s argument.  Is there a danger that people will lose faith in the management of the economy? – Niall Ferguson.

The UK national debt will peak this year at 89% of GDP, the biggest since the 1960s and up 36% from a decade ago.  (Paul Wallace, Prospect, July 2017.) I’ve seen figures for the first quarter of 2015 indicating that the annual cost of servicing the debt was £43 billion, but a third of the interest in that debt is the government paying interest to itself – the result of quantitative easing. On the other hand interest rates are currently very low, and could rise, and in  Paul Wallace’s words, ‘The Treasury is right to worry about maintaining fiscal headroom to respond to a future downturn.’ But if we take out that one-third which the government is paying itself, then it doesn’t look quite so bad.

Comparisons with other countries are helpful, and confusing. My data isn’t up-to-date, but the USA debt was over 100% in 2011, and  Japan’s debt is approaching 200% of GDP. Paul Wallace quotes the IMF, which puts our public debt as the sixth highest of 26 advanced economies. The CIA World Factbook ranked us 18th internationally.

And what about total public spending, another key indicator? Down from 45% in 2009-10 to 39% now – which is its pre-crisis level of 2007-8.  Wallace points out that in the late 1980s Britain spent virtually the same on health and defence. Today we spend nearly four times as much on health.

What this tells me is that there’s a case to be argued on both sides. For stimulus and for austerity. But I’m a Keynesian at heart. Keynes understood that confidence is everything, investment and not retrenchment is the key, and that the private sector is the driver of all successful economies. At the same time there is nothing intrinsically wrong or to be frightened of when it comes to public expenditure.

I think the phrase I quote above is key, ‘as long as that debt expansion was used to pay for growth expanding projects’. So – just one example, but an easy one – scrap HS2. Any growth benefits will be miniscule compared to the benefits from investing the money elsewhere – not least in other infrastructure projects.

Where does this leave the NHS? Real spending on the NHS increased at a rate of 1.1% under the coalition, compared to 4.1% a year over the past few decades. In addition, much of social care is in crisis. Benefits will be pared back further in the coming years. Prisons are too often scary and ineffective places…. This where increases in current expenditure have to be focused. Not on re-nationalising energy supply or the railways, whether such goals are worthy or not. As for scrapping student loans – a contributory scheme, an adjustment to rather than a scrapping of the scheme, may be one way forward. Paying off existing loans would not be a sensible use of resources. And what of scrapping the 1% pay increase limit for public sector workers – a highly inequitable restriction, enforced for four years – and now the subject of very public bickering among cabinet members?

This takes us to current arguments about increased taxation, and how effective that might be. Could it be increases in VAT, and /or a mansion tax (highly controversial) – where revenue streams would be certain in a way that that increasing the top rates of tax or hiking corporation tax wouldn’t be.

With continuing impacts from globalisation, and automation, the future is massively unpredictable. My only sure conclusion at this time is that austerity, as currently enforced and anticipated, is unnecessary and counter-productive. But how we spend wisely – and at the same time promote investment and encourage business and international trade – that is another matter.

What is absolutely certain is that we don’t need the tomfoolery of Brexit. And we do desperately need a competent government.