10
Jul 12

Surely nobody thought “Fiscal Union” was really a good idea?

Far from being an Orwellian nightmare, I love the idea of greater fiscal and political union with our neighbours. Maybe it could even work… in 100-500 years?

But right now, as long as different countries within Europe teach different versions of history, value different types of trade, have different climates that affect their vastly diverse national identities – and not to mention different politics – I believe a single currency is a terrible idea.

Why? A given generation’s workforce in a given country (or ‘economic zone’) depends on the social values of its predecessor generation(s).

Example: let’s talk dinner parties. Your average dinner party of middle-aged professionals in Germany would hold an ‘engineer type’ in the same esteem we Brits hold ‘artist types’ (i.e. high esteem). The UK is largely numerically illiterate and, with the possible exception of medical professionals, we pretty much like to make fun of scientists.*

* I attend dinner parties (not with the middle-aged) with people who do like scientists. I am basing this on media representation, proportion of elected MPs who are actual scientists, the take-up of science subjects at ‘A’ Level or degree, school results in science and maths, and other soft statistics / observations.

If, within the global economy, money is to be made from science rather than art, then Germany is going to whip our asses, whichever metric you use to define economic success (GDP, GPI, etc.)

Now let’s say Germany and the UK were in some kind of hypothetical fiscal union. Given the above, the UK would need to become more competitive on a global scale, otherwise it would run out of money and not be able to buy drugs for the NHS or pay teachers to maintain a decent education system. It would have to ask Germany for a loan. Of course, it could go elsewhere looking for a loan, but I’m pretty sure Germany might have something to say about that.

Sure – in the short term, the ailing UK would benefit from being in the fiscal union, as it would mean it could pay for those drugs, teachers, police, prisons – and maintain some kind of status quo. But it really will need to buck-up its ideas. The problem is: how can it become more competitive? The UK can’t simply change its interest rates – they no longer exclusively control the bank! Businesses can’t magically pay their employees more to attract more talent.

British people won’t magically decide they suddenly like scientists over artists.¬†Worse still, the position of Germany would ironically make Brits dislike scientists even more.

(Aren’t we already seeing the above phenomenon, where although a country is benefiting from being in union with stronger country, they are ironically resenting them at the same time?)

Eventually Germany would have to say to Britain, “right. You need to become more numerically literate if this is going to work”. Germany would invest in education programmes in the UK for decades, but this wouldn’t address the core issue.

This scenario can only end in one of two ways:

1) an amicable break-up of the fiscal union
2) full-scale … wait, don’t mention the war …

The above is of course a hypothetical, over-simplified version of the truth.

But tell me dear readers, do you agree with the basic analysis?


21
Dec 11

The Pluralist Paradox

Deep down inside of me, there is a swing voter waiting to get out.

A true British I-don’t-really-know-what-I-think voter, someone who could go both ways. Hell, I could go three or four ways.

I know, dear imaginary reader, you are thinking, “but how can someone so … so – political – how can you not be true and loyal to a single party?”

Don’t get me wrong. The swinger inside of me is not the typical British non-thinker. Not the common man on the street who waits until there is a critical mass of others to think on their behalf so they can chime in at the last minute and back the winning party. Not the fickle man on the street who just loves to complain about whichever party is in power and backs the opposition because, “there’s no possible way we could have four more years of the same old [insert current governing party here]”.

No, my swinging tendencies come from much, much deeper within me. My struggle is thus:

On the one hand, surely our socio-economic outlook looks far prettiest when people are allowed to do what they want whilst not harming others; a liberal, pluralist society? What is wrong for you might not be wrong for me, and therefore we should agree not to legislate for what you consider to be wrong, because it would be unfair for me. Instead we should just hang out / do business with people who have similar views to our own.

Of course we should have high taxes and good quality public services. This isn’t a matter of politics, it’s a matter of economies of scale: pooling resources allows us to reduce overheads. (I’m talking theoretically, of course.)

But on the other hand – and please excuse my Newtonian worldview (blame my Christian parents) – given that humanity, if left unchecked, tends towards selfish and greedy behaviour, perhaps after all it doesn’t look that fabulous when people are allowed to do what they want.

Here I cite the global financial crisis as being caused by unfettered or poorly-regulated capitalism.

Or what about society and the family? It is horribly non-liberal to interfere with matters of the family: married couple tax breaks between man and woman, making it legally difficult and expensive to get a divorce, reducing benefits to single mothers and punishing walk-away fathers who don’t take responsibility.

Whilst the above may offend our sense of social liberalism, let us hypothesise what their long-term effect on society might be, and therefore the effect on our economy and, eventually, our wealth as a nation of individuals. In economic terms, those societies defined by people pulling together (be this around the traditional unit of the family, or otherwise) are the ones that generate wealth for their futures. Those societies that are fragmented and socially disorganised are the ones that get poorer.

Given humanity tends towards greed and ultimately destruction (we agree on this, do we not?), and given in my example of the family above this would mean men will love women then walk away from them unless there is a compelling financial reason not to, perhaps a liberal society with fewer rules is a less successful, inferior one?

I used the construct of family to make my point, but this could equally apply to other constructs.

And this is the crux of my indecision. Conservative rule is too socially¬†prescriptive. Labour rule causes too much fragmentation of society to allow for growth or progress. Liberal Democrat rule… well, our party just gets laughed-out or shouted-at most of the time.

What is my problem with political loyalty? Why do I mistrust staunch Labour party members, staunch Conservative party members, or staunch Any party members?

Is it that my world view espoused above is essentially flawed? Is it that I’m merely a liberal mind trying to get out of a conservative body? Or is it because my politics derive too directly from the existential questions in my head? Or is this a common Paradox of Pluralism?


10
Oct 08

Boom / bust

I don’t have an issue getting my head around the fact that the global economy appears to be collapsing around us; it seems logical that the economy is choking in proportion to the product of the frequency of the boom-bust cycle and the extent to which the previous boom ‘boomed’.

Visualise a graph of boom and bust, let’s call (a) the boom period, i.e. the length of time between the last bust and the current bust. And let’s call (b) the amplitude of the boom.

If that time is longer, the economy is going to fall a lot harder. Multiply that by the fact that, after a certain amount of boom-time, Stupid Banker People’s memories start fading, and they can no longer remember the bust, therefore throwing caution to the wind and increasing the risk of their investments – thus making the boom (b) far greater. When the boom is greater, and the boom period is greater, the resultant combination can cause exponential consequences. I say “exponential”, but it’s not true is it? The global economy will mend.

It’s really obvious if you think about it that way. Bottoms ALWAYS fall out of things. (Obviously I have a PhD in hindsight – like everyone else in the world – which is why I feel okay about framing it like this.)

I’m not sure why everyone wants an explanation.

Scarily ignorant prole on the street interviewed by BBC News 24 #1: “why should we pick up the bill for those banker people, they got themselves into the mess, why should OUR money bail them out? it’s got nothing to do with us.”

Scarily ignorant prole on the street interviewed by BBC News 24 #2: “I think it’s a disgrace, this money should go to the national health service, or something that really needs it”.

Scarily disingenuous bastard of an opposition political leader interviewed by BBC News 24 #1: “the current Prime Minister is responsible, this will be known as the “Brown Bust Era”” (true story).

How depressing.

One thing in common though: nobody wants to blame themselves.

I personally find it strangely reassuring that the economy has taken an enormous battering, and major corporations are dropping like flies. I do genuinely hope any readers don’t misunderstand my point here: I’ve no desire to see anyone suffer, be they disgustingly rich or pathetically poor, or the punters in between. Nor do I take pleasure in seeing fine upstanding historic financial institutions going under – I find it sad. Nor do I take pleasure in capitalism itself failing, per se.

The reason I find it reassuring is that, well, humanity is so greedy and destitute that I’m surprised we haven’t seen much worse to date. I’m thinking Gotham City here: widespread corruption and the rule of crime. Or an Orwellian state.

It’s just that it brings me back to what I know, what I learnt at primary school, the lessons of those GCSE readings of Lord of the Flies, the words of responsible adults who taught sensible things to me when I was young, generic sayings such as “it never pays to be greedy”. It’s the order of things that I was brought up knowing. Capitalism works, when people are relentlessly called to account.

I’m sure this is all no good to those who have to go into work for 20 hours per day, or who have no work to go into, or whose small enterprise – their lifelong dream – had to declare bankruptcy because their bank was Icelandic. Or whose American fixed rate mortgage is up for renewal. Or whose job is on the line because a decision they made 5 years ago to invest their local council’s funds in a folded bank has come back to haunt them.

I’m sure it’s no good to them what I am saying, some glib remarkster on the internet spouting righteous pap.

Honestly, I’m not like that. I’m not a righteous judgemental type. But frankly, you’ll all burn in hell.

(Joke)

No, I’m sure none of this comment is of use. But it should be.

Why? Because you watch Big Brother, the television show, without shuddering. You should be shuddering at the echoes of what is implied by that book. You shouldn’t find Big Brother a funny television programme to watch. That’s like wearing a poppy on November 11 and finding the whole thing a bit quaint.

And you shouldn’t go along with the media and laugh at the heroics of David Davis when he puts his job on the line for fundamental human freedoms.

I agree, it made no difference. But what the hell is the world coming to, when we simply refuse to accept a politician is doing a job because he believes in it? We whinge about how we are increasingly disaffected by politics, because politicians keep lying to us, yet when one stands up for something he truly believes in and makes an exceptionally eloquent case for his cause, we laugh him down?

I sit in my little room sometimes wondering if people have lost their minds. Are you serious you don’t mind living in a surveillance state? Are you serious you wouldn’t mind being locked up for 42 days without knowing why, how, what, who? Where your family is, what they are thinking? What you’ll do when you get out, if you get out, will you ever be able to work again? What happened to your job? If your life insurance has been invalidated?

Of course not – because it doesn’t affect you. Because you didn’t do anything wrong and it wouldn’t happen. Of course.

Just like it didn’t affect you that our financial markets weren’t regulated quite heavily enough.

It will.

And sadly the anti-terror laws have already been used against innocent people. And they wreck lives.

The frustrating thing for me is that there is a lesson to be learnt in everything, but people don’t want to learn it. Again, reader, perhaps you think this comes across as a little moralistic, but if the sudden unprecedented collapse of the global economy with no apparent warning can’t teach you something about allowing the manmade institution of government to go unchecked – that is, government who have much more power over us than corporations – then what can?

It should be very obvious that humans, when left to their own devices, when not called to account, become greedier for power and money. Given power and money are fundamental necessities in society, at least the way we do it now, it makes sense that we continue towards a goal of increasing regulation. This can be seen as working towards the epitome of societal sophistication.

I guess what I’m coming to, albeit in a meandering and somewhat streams-of-consciousness kind of way, is that I am a fan of regulation. Regarding our financial system, I think we Brits had it almost right, actually. Perhaps a little tightening of existing financial law, and a whole lot more power to the executive regulatory bodies, and we’d be pretty good. Wait, did I mention using our combined non-transatlantic relations to put an immense amount of pressure on the American government to reform political financial policy across the water? Yes – that would be the only other thing we could do.

End.

(Note, this little diatribe started off as a rant against American people, it went something like this:

“Wow. There seems to have galvanised an enormous amount of hatred for Sen. Barack Obama within the last week. It’s incredible how gullible people* can be with a little negative political marketing.”

* I had to stop myself saying “The Americans”, because sadly it’s true of the stupid Brits as well.)