Search This Blog

Sunday, June 19, 2016

The BREXIT Campaign – The Facts

We will soon be voting on whether to remain members of the grand European project or to leave it.  I present below some observations. 

Britain is currently the world's fifth largest economy based on total Gross Domestic Product (GDP) – Britain’s GDP currently stands at $2.8 trillion. The list below (at least in terms of relative position) agrees with the World Bank, UN and CIA world Factbook position on global GDP trends.

IMF World GDP Ranking 2015

GDP (Millions of US$)

      United States

      United Kingdom

World trade declined 1.7% in the first three months of 2016.  It is this trend that is the main threat to British prosperity and not the hysterical projection of BREXIT proposed by champions of the Remain campaign.

The reverse projection, bumper growth, would put Britain on course to become the world's fourth largest economic powerhouse ahead of an ageing Japan and Germany in the 2030s, according to the Centre for Economic & Business Research’s latest world economic league table.  The total cash value of the UK economy will grow to around $4.7 trillion by 2031, but is expected to be quickly overtaken by Brazil in fourth spot by the 2040s.

That is if we place our trust in economic star-gazing.

The UK is the fifth biggest economy in the world.  44% of our exports go to the EU. However, the EU benefits from maintaining a healthy economic relationship with us to a far greater degree.  Britain in the year ending 2015 had a £68 billion trade deficit with the EU.  So no, the European Union is not going to threaten us with dire consequences when the potential material damage would be far worse for them than for us.

Europe is declining in financial importance while Asia and South America are ascendant.  The EU currently represents about 20% of Global trade but that percentage is declining. It is estimated that in the future the EU will be no more than 10% of the global economy.  The EU has no trade deals with the worlds’ largest economy (the USA).  Nor does the EU have trade deals with Brazil, India, Australia, or China.  If we left the EU we would remain its biggest single export market. 

We are a net contributor to the EU budget (we give Europe £10.1 billion per year more than we receive from Europe).   The Remain campaign focuses on the £350 million that the exit campaigners remind us, is sent to Brussels bureaucrats every week, to be spent by unelected European politicians. They aren’t entirely straight with us. We receive in terms of university, research and agricultural grants (amongst other items) £156 million per week from the European Union. That still leaves Britain with a net figure of £194 million per week haemorrhaging from British coffers. This is where the excess payment figure of £10.1 billion originates.

I do not have a principled objection to paying money into an integrated Europe except that Europe is neither integrated nor is it unified towards one purpose.  I will explain.

A friend of mine is a keen cyclist who likes to follows the route of the Tour de France on his bicycle.  He does cycling trips around Europe.  On his trips to Spain he has observed that there are entire stretches of A-class road that he and his friends would cycle along where they would not see a single car, often for many kilometers.  The hundreds of millions of Euros those roads cost to build across Spain were simply the visual manifestation ‘proving’ the power and influence of corrupt local Spanish politicians.  There was no local benefit to their construction, there was certainly no regional or national purpose served by their planning and implementation.

What those empty, meandering roads epitomized were the corruption as well as the greed at the heart of the current European project.  That attitude we know from history is core to any project or grand historical scheme benefiting entrenched tribes or factions usually at the expense of some other tribe or faction.  The issue the EU faces today is that there is no accountability and no public recognition that anything is wrong.

The reluctance to forego any diminution of its own financial benefit is the big problem killing the EU – corruption facilitates decline, it does not engender democracy, human rights or world peace.  Corruption creates national bottlenecks that embitter the losing faction (the ones missing out on all those truckloads of cash).  ‘Priorities’ may be significant for one nation but completely insignificant for another.

The EU, if it is to successfully pool its resources and focus on integration of all of its citizens has lots of questions it is not even beginning to discuss. For instance: If countries have entirely different pension or taxation policies then their individual cost and revenue streams are going to be always out of synchronization with each other. Inequality breeds exploitation and resentment.  If the people in each country in the union do not enjoy the same opportunities then the basis for a stable relationship does not exist. Good governance is measured by equality of risk. That also means however that in order for the EU to succeed it must have fiscal integration as an end target and that requires uniformity of fiscal policy.  Without it, the perception of institutionalized corruption will continue to drag down the EU project. Shouldn’t we be addressing those issues? 

In the United States of America there are 50 states and the District of Colombia.  Only the federal government is permitted to run a deficit while individual states are forbidden to do so.  But then, the EU is not a federated system but a confederation. The difference is crucial.  A confederation is a union of States individually maintaining primary sovereignty over their affairs while devolving some authority to the central bureaucracy. In a federation, primary sovereignty is given to the central government which exercises control over every member state in areas defined by but not exclusively including the military, diplomatic relations and the economy.

The predicament of the EU is that political unity means having a single army, a single currency and unified border controls.  The contradictions that define a confederation make it inherently too weak to maintain the union and too conflicted to bring about the equality that is needed to unify its separate units. In order to work the European Union has to be an integrated i.e. a federated entity.

If the European Union is working towards a federated, possibly even a two tier unity then it explains the Incrementalism which is fundamental to current EU policy. But because of the inherent dishonesty within this approach the EU must be reformed and this reform is not liable to happen under current conditions where the debate over intentions has not even started.

In one lecture I attended (with thanks to Professor Brendan Simms) it was proposed that Europe was not a club that many were clambering to join but a shared destiny. “Europe is Greece, Rome and the Enlightenment” (apologies but I don’t know who said this).  The rejection of enlightenment principles (some Eastern European nations as well as Turkey have little experience of the Enlightenment) means that common interests are not always the reason for joining.  Turkey understands the union as a confederation rather than as a union so it can never agree to fulfill all of the conditions of full membership. It is on record as having repeatedly reminded Turkish expatriates that their primary loyalty is to Turkey and that they must not integrate into their host society (going so far as to threaten those people who stand aside from the Turkish nation).

People are selected for a European political sinecure as a means of rewarding them for past service to their party or as a means of ridding the party of an individual who has become a political liability or embarrassment. Direct elections to the European parliament and for top jobs in the European Commission would enhance the prestige of the European Parliament; it would also herald in an era of political transparency and accountability. Both are necessary for a healthy democracy to remain so and entirely missing from the current European project. 

Brendan Simms pointed out that Poland in 1717 and the Holy Roman Empire (in 1806) disappeared because they could not reform.  Contrast this with The 1707 Act of Union which consolidated power in the United Kingdom and similarly the USA in the 1780’s.  Both created frameworks for unity and a common identity guaranteed by the power wielded by centralized authority.

“There was a pharaoh and he knew not Joseph” (Exodus 1.8) this refers to the arrival of a new Egyptian king who did not know Joseph or his generation of immigrant workers. The textual reference to forgetting Joseph raises questions about the extent to which oppression is linked to a minority group's involvement in, and commitment to the larger society.  But it also raises questions about the historical tensions between host societies and their guest workers/immigrants and the fears, whether rational or not that makes the debate so difficult to present.

Simms said that the World War 2 generation are dead and even their children are in the 70’s (at the very least).  What happens when they forget the war? The German people are still very embarrassed by it.  But is it not relevant that Poland, Germany, Greece and France have all got significant voting populations that have embraced the National Front?  I will just point out some of the other countries with recent electoral results below.

The Swiss People’s party is a right wing, populist, political party and the largest party in the Swiss Federal Assembly.  It is also Eurosceptic.  In Denmark’s general election in 2015 the Danish People’s Party (described by the media as right and far-right wing) secured 21% of the vote; in Hungary, the far-right Jobbik Party (described as radical nationalist) won over 20% of the parliamentary vote.  In Austria the Freedom Party polled 49.7% of the vote on 22nd May 2016. Norbert Hofer came within 0.6% of being elected President of Austria.  His party, founded after WW2 by “former” Nazis is nationalist and anti-immigration, its credentials are toxic.

Throughout Europe, nations are not rejecting greater union; they are fighting an identity crisis they do not see being adequately addressed by their political elite. The issue of immigration and refugee absorption are part of the debate over European identity that again, is being ignored because the issues they raise are apparently too complex for our simple brains to comprehend.

It is this disrespect that politicians and bureaucrats have for us all that is at the heart of the rise of fascism in Britain and throughout Europe.

No comments:

Post a Comment