Monday, 15 October 2012

No such thing as independence




So now a post on something not really Jersey related but something that’s quite interesting going on.

Today the Prime Minister of the UK and the First Minister of Scotland signed an agreement laying out the foundations for the 2014 referendum on Scottish independence. It’s confirmed that 16 year olds will be allowed to vote, and that the only question on the ballet will be that of independence (no question on further devolution). (The full thing can be read here)

The question of “independence” comes up a lot in various different contexts. Whether it’s Senator Bailhaches covert campaign for Jersey’s independence from the UK, the SNPs campaign for Scotland’s independence from the UK or UKIPs campaign for independence from the European Union.

I've been thinking about it quite a lot because I was contacted by someone from BBC Scotland the other day who wanted to ask me about what impact lowering the voting age in Jersey had, considering it was about to be done in Scotland. I might be interviewed for a program on that subject, but it's not confirmed yet.

Being a socialist and a democrat, you'd expect me to be against any sort of nationalism and in favour of self determination. I've expressed views on the Falkland Islands before, as well as my pretty strong views on Israel-Palestine. But the answer to any question of self determination doesn't always answer with independence. A people can, and in my opinion should, choose to be part of greater unions.

The world is getting smaller, we need fewer countries, not more. The world needs more co-operation and less competition.

There are obviously all the questions to ask about things like identity etc, which are important, but I'm more concerned about the practical implications.



On Scotland

The question of independence for Scotland is an utterly futile one. On such a small island as Great Britain, and with the context of the EU, frankly, there is no such thing as real independence for Scotland.

If Scotland were independent, it would have 3 paths it could go down. Independence away from the EU, independence in the EU with the Pound as its currency, or independence in the EU with the Euro.

All three of these have problems.

The first option, to be outside of the EU, isn't really feasible. For a start, look how Iceland turned out. Their economy completely crashed and now they are begging for EU membership. But Scotland could model itself on Norway which is a part of the European Free Trade Area and is doing quite well for itself. But the problem there is that that position requires a huge democratic deficit. To be a part of the EFTA, you still have to be subject to all EU directives and regulations, but because you aren't actually a part of the EU, you don’t have a seat at the table, helping decide what those rules are. You even have to make a contribution to the costs of running the EU! For Norway, that actually amounts to more than some of the countries that are actually a part of the EU.

But the stated preferred position from the Scottish Government is that Scotland would remain in the EU (the key word there is “remain”, rather than, “apply to stay in”) with Sterling. Of course you then have to ask yourself why being in a union with England is not acceptable on the island, but it is on the continent...

The Scottish government believes that an independent Scotland would automatically remain a part of the EU, though they have refused to publish their evidence for this, and there is plenty of evidence to the contrary.

If Scotland leaves the UK, it is doing just that, leaving the UK. It isn't ending the UK. The UK will carry on; just it will be without Scotland. It will be the United Kingdom of England, Wales and Northern Ireland. The well established international legal precedent is that when a part of a country secedes, it is effectively starting over fresh, whereas the country it left carries on with all of its legal obligations. When the Soviet Union split up, Russia took over its seat in the UN and the Security Council, and adopted all of the USSR’s treaties and diplomatic relations with all other countries. It was the countries like Georgia and Armenia that had to apply for new UN membership and set up their own embassies etc. The same happened to South Sudan quite recently.

It would be no different for Scotland. Scotland would have to seek to get its own signature on all the treaties it wanted to, but all of those would be subject to negotiation.

Now, whether Scotland had to apply to be a member of the EU is in a way irrelevant, because if it did, there is virtually no doubt that it would be accepted. It’s already implemented all EU legislation and, by virtue of having been a part of the UK for so long, it is at the required standards to join. The question that then arises is what conditions would there be?

The UK currently has many opt-outs from various treaty clauses that is has managed to negotiate. Things like not being compelled to join the Euro or join the Schengen Zone. The Schengen Zone is the area of Europe in which there are no border controls or need to present a passport. The UK has its own “Common Travel Area” with the Republic of Ireland and the crown dependencies, but it doesn't extend to the rest of Europe.

The problem Scotland has is that it will not inherit the UK's opt-outs, it will have to negotiate its own. A country of 5 million people will have far less bargaining power at the negotiating table than a country of 70 million has. Any country that joins Europe is required to eventually join both the Euro and the Schengen Zone. Both of these will be completely unacceptable to the Scottish people. Firstly because the Euro is in a bit of a mess at the moment that joining it now seems like too much of a risk to take. But it is also impossible to be a part of both the CTA and Schengen. If Scotland had no border controls with the rest of Europe, as well as none with the UK and Ireland, Scotland would become the point at which illegal immigrants used as their route into the UK. That would be completely unacceptable to the UK government and it would mean building border controls would have to be built between Scotland and England.

The island is too small for a partition like that, it would cause a huge amount of aggravation for ordinary people in both countries, given the massive business and also family ties the people have.

But then comes the final hurdle. Regardless of whether Scotland accepts the terms of ascension as they are, or by some miracle they manage to negotiate some exemptions, there will have to be a unanimous approval by the rest of the member states for Scotland to join, and one of those countries that will need to approve will be the UK. If the UK (or any other country for that matter) says no, it can’t join. End of. And as the Prime Minister has shown, he isn't afraid to jeopardise our countries relationship with Europe by using that veto if he thinks it’s in the UK's interests.

So if Scotland wants to join the EU, it will have to be extra nice to the UK. As it stands, the Scottish government position is that an independent Scotland would not inherit the UK’s debt, it would maintain control over all of the North Sea oil, the UK's nuclear weapons would be kicked out of Scotland (which also has implications for Scotland’s stated position of remaining in NATO), it would keep the Scottish army facilities and the Scottish banks that were bailed out by the UK government will remain the UK governments problem. The UK government won’t want to accept any of these.

I've already said that Scotland will have issues joining the Euro, but there are equally issues using the Pound. For a start, Scotland will have no say over what interest rates the Bank of England sets. At the moment, the Bank of England will take into account the economy of the whole UK when deciding the rates, but if Scotland isn't a part of that country, then it has no duty to consider them. So the current legitimate complaint from the Scots that interest rates are unfair on Scotland, will actually become worse if Scotland becomes independent.

An independent Scotland would be completely free to do whatever it likes with its taxes. I foresee two possible outcomes from this. If the people of Scotland didn’t see the SNP as being redundant after independence, and kept them on in government, they’d be likely to smartly realise if they lowered taxes, they could encourage wealthy people and businesses to come from England to Scotland. The rest of the UK won’t like this, and it will cause tension. The other possibility is that the SNP will become history and Scotland will become perpetually ruled by a more left wing Scottish Labour party who will do the opposite and raise taxes, meaning anyone worth anything will just leave to the rest of the UK (which will be perpetually ruled by Tories who will lower taxes).

Either way it is a race to the bottom that will mean both countries lose out on tax revenues.

Does the Scottish government really think that the UK would be happy to let them proceed with tax policies that they saw as being detrimental? Especially when the SNP says that an independent Scotland would want to keep using the Pound. As the Eurozone has showed us, a monetary union does not work unless there is a degree of fiscal co-ordination. If Scotland wants to use the Pound, it will have to have a fiscal pact or treaty with the UK, and as the greater power, it will be the UK calling the shots, and it will specifically bar Scotland from doing things, like lowering corporation tax, that it thought would harm the UK economy.

So at the end of it all, you have to ask yourself the question, what on Earth would Scotland benefit from by becoming independent? They wouldn't gain influence, they’d lose it, and they’d still have to concede a hell of a lot to the UK government and follow their rules. Some “independence”, huh?



But what this whole saga does is put a massive question mark over Britain's entire constitution and just what hell is exactly going on. When different parts of Britain and different sections of the population are pulling in various different directions and making different decisions constitutionally, you can end up with a country that is in disarray in how it is governed because of its inconsistencies.

Some in Britain are proud that we have an unwritten constitution, though in parliament virtually everyone concedes that the UK should be working towards writing one. The whole way the UK is governed needs to be re-examined, and looked at in the context of the whole country, and not just in the contexts of its constituent parts.

Scotland is likely to reject independence, but after the vote it is sure to get more powers for its parliament. The Welsh Assembly has indicated it wants to upgrade to a parliament. Then there’s Northern Ireland where no one is quite sure exactly what is going on. And England doesn't have any of its own institutions at all.

The problem with devolution is that it requires another level of politicians and any politician with any talent isn't going to want to waste them time in a devolved parliament, they'd rather be in national government. If Charles Kennedy led the Scottish Lib Dems, he would probably easily win government and become First Minister because he’s a very good politician. I'd guess Jim Murphey from Labour could do the same. But neither of these people have any interest, because their talents can serve far more people at the national level. Whereas the nationalists only care about their areas so don't bother as much with the UK parliament, which means they are destined to do better in the devolved parliaments.

When England has no assembly, a lot of resentment is caused by things like the West Lothian question where MPs from the other parts of Britain are able to vote (sometimes decisively) on issues that only affect England. You had the perverse situation where Scottish Lib Dem MPs were going on programs like Question Time justifying the rise in tuition fees, knowing perfectly well that they would go home to their constituencies that weekend and not have to justify it to their own constituents who weren't affected by it.

There’s talk of different ways to solve it, from creating an English Parliament, to just legislating to prevent non-English MPs voting on English matters, or just having the English MPs meet monthly to vote on English matters etc.

The problem is that none of these get to the real point, which is that there is inconsistency across the UK that needs to be addressed. There needs to be a debate on what the future of the country as a whole is.

My suggestion is this - The United Kingdom should be reconstituted into a Federal Republic. The national parliament should retain responsibility for pan-Britain affairs, defence, foreign relations, some taxes etc, but everything else should be decided in the local parliaments. But England shouldn't have a single parliament because it's too big and too diverse. It should be split into regions that make sense geo-politically and culturally. So there'd be parliaments for the North-East, South-West etc but also London could be it's own region. Each region would therefore have it's own First Ministers (they could also have directly elected presidents, if that was something desired).

That would be the most democratic, the fairest and most consistent way to run the UK. I've made my views on the monarchy clear enough, hence why I've said it should be a Republic, but that doesn't necessarily mean the Queen couldn't remain in some sort of ceremonial role alongside an executive president.


On Europe

Last week came the controversial news that the European Union had won the Nobel Peace Prize.

I've said on this blog before that I believe patriotism is the final refuge of a scoundrel, and I don’t believe in being proud of where you are from simply because you happened to have accidentally been born there, but I have to confess that upon hearing that the EU had won this award, I actually did feel pride.

The Nobel Peace Prize has always been something I've had a bit of disdain for because of how many completely undeserving recipients it has. From Barack Obama, several Israeli Prime Ministers, the Dalai Lama, etc, it just seems a bit of a laughing stock. But here I felt an institution that actually deserved the recognition was being given it, especially at a time when it is so important for people to remember why the European Union was formed in the first place.

I went to Paris a few months ago and spent some time in Les Invalides, the military museum, where I noticed this sign that initially confused me –





You'll notice the dates for the two world wars aren't what we generally perceive them to be. Most people would say that the First World War started in 1914. But when I thought about it some more I remembered that the French have a different perspective on these sorts of things than us in the Anglosphere have.

Forty four years before the First World War was another devastating war between Germany and France that Britain had not been involved in. It ended with a humiliating French loss and having to surrender a significant amount of territory to Germany. The resentment was one thing that led to the tension that led to the First World War and also the French desire to force harsher terms on Germany in the Treaty of Versailles. Then came the devastation of the Second World War.

For hundreds of years, Europe had constantly been at war with itself, hundreds of millions of lives were lost, and it always set back progression. But today, such a situation is completely unthinkable.

France and Germany, two of the most powerful countries in the world, going to war is just a ridiculous idea now, even though for centuries it was something that happened every 5 minutes. Whereas, for the decades after the Second World War, it was entirely feasible that America and the Soviet Union could go to war. A completely different situation.

The ultimate tool to prevent war is business. When America and the Soviet Union started co-operating more, the tensions reduced and both nations realised that there was nothing to gain from war. The same was true for Germany and France, though they realised it much sooner.

The creation of the European Coal and Steel Community (the precursor to the European Economic Community) was such a simple, yet genius idea. It brought joint control over their coal and steel resources, and thus made it physically impossible for the countries to wage a war with each other, because they were legally bound to co-operate on their resources for waging war!

I've always said that if America wanted to reduce tension with Russia and China, it should invite them both to join NATO!

Then from the ECSC it developed into EEC, the EC and now the EU, further intertwining the countries of Europe so they are so economically connected with each other that war between then is just impossible.

But all this isn't to say that Britain would instantly be at war with our European neighbours if we left the EU, but it does show that the EU and further integration is plainly the future and by not being at the forefront of it, the UK will be sidelined, so independence from Europe doesn't offer us anything.

There is all sorts of pathetic misinformation about the European Union that goes around in the right-wing press in Britain. As much as we may moan about the media in Jersey and it's constant inability to present things accurately, we should always remember that the UK national papers are often capable of the same level of incompetence. But as usual, it is bloggers that hold them to account and help get the truth out. My favourite source for finding information on the European Union is this great blog - http://www.jcm.org.uk/blog/

The fact is, the EU is nowhere near as bad as people make it out to be. It isn't that undemocratic (especially when compared with the UK system of government), it doesn't take away our sovereignty and it is good value for money.

Britain at the forefront of Europe would make the whole continent more prosperous and more peaceful. Independence is just built on petty nationalism that can only cause harm in the long run.


On Jersey

Do I even need to make the case?



Cheers,
Sam

32 comments:

  1. The first option, to be outside of the EU, isn't really feasible. For a start, look how Iceland turned out. Their economy completely crashed and now they are begging for EU membership

    Not sure that is the case. Given that the Icelandic government has decisively rejected EU-style austerity in the face of popular unrest and has chosen instead to hit the real villains of the financial crash - the bankers - where it hurts, I see no prospect of them getting EU membership any time soon.

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  2. Unfortunately, present events are showing that the EU, and more specifically the single currency experiment, may be having the very opposite effect to that which you describe.

    Greeks waving swastika flags during the most recent visit of the German Chancellor, showing opposition to the insistence of the continent's largest creditor nation that the country begin to manage their economic affairs on a resonable basis, are hardly demonstrative of the entente cordiale you describe. Ironic that this also occured on the day of the announcement of the Peace Prize award.

    Right or wrong, the theory that tying nations together in economic terms will lead to closer social ties is not that simple, and not necessarily that accurate. The single currency may indeed be the most potentially politically destablising factor in the developed world at the present time.

    And I'm sorry, but what relevance does the link from another poster about the States being fit for purpose have to this discussion ? Don't make your interesting work become easy to dismiss as simply another 'anti-States' propaganda blog.

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    1. Couldn't agree more with the last comment! (i.e. relevance of rico's post)

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    2. I think you may well have some interesting points there.

      The thing I say is though, these people that are getting violent and protesting etc, are doing it against their own governments. It's not like what we have had in the past where it has been governments fighting with each other. In fact European governments have never been closer. The people in Greece and Spain etc are in many ways with each other showing solidarity. It's not country against country.

      Either way, I suspect that things would be much worse without a Europe to bailout these countries.

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    3. It certainly looks like the single currency is failing in the ways that many leading economists predicted it would. The ability to devalue your currency relative to your neighbors is a powerful tool, one that France will soon wish it had, especially in the face of a huge economic shock.

      i.e. France's domestic consumption is in many ways at saturation point. If you take cars as an example, car usage has been declining for some time. For the motor industry to contribute to GDP growth then France will have to increase it's share of exports to developing markets (like India).

      However, unit production costs in France have increased by 28% in ten years compared to only 8% in Germany for the same period. On a competitive index France are placed at 21 whereas Germany is, I think, around 5 or 6. To compete with Germany (and France will want to compete with Germany, we can be sure of that) it will need to become more competitive which will be a very difficult job for a President voted in for his Socialist principles. Far easier to devalue a currency to improve competitiveness than to reform the labour market. A few more factory closures may see a Mitterrand style u-turn.

      Spain would also benefit hugely from a devaluation, having become too dependent on property (partly caused by the euro cheapening borrowing resulting in capital flows from Germany), and now finding itself uncompetitive (unit production costs up 35%!) in other industries. Again devaluation would be preferable to mass pay cuts (i.e. internal devaluation). Internal devaluation happens very slowly.

      It generally doesn't make sense to share a currency unless you share a lot of business, have high labour mobility and tight fiscal integration. Europe scores on the first (around 60%) but fails miserably on the other two. Cultural and language difficulties dampen labour mobility and fiscal integration is all but non-existent.

      When euro countries get into trouble the market raises the rate at which they can borrow because they are not in control of their own recovery (and nor is europe in the absence of fiscal integration). This makes things worse. What's known as a self-fulfilling prophecy!

      However, unfortunately, the countries that would benefit from a devaluation now tend to have high foreign debt, not a great combination!

      Breaking up the euro is inconceivable but there is no easy answer to saving it either. Labour mobility won't change dramatically in the short term and full fiscal integration is a long way away. I suspect more of the same for many years to come.

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  3. Sir

    Excellent blog. Well done. Nothing I disagree with. This blog deserves a Nobel prize!

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  4. On Rico's post -

    I've always said that I'll publish virtually any comment that is posted on here, so long as it's not needlessly abusive or spam etc.

    His comment might not be relevant to this post, but it is about Jersey politics and it talks about something I have touched on before on this blog and that some readers might find interesting. In fact I found it very interesting. I can't wait to see if Senator Ozouf changes his view on Plémont and Ricos post is helpful for me checking up on that.

    My blog is about Jersey politics and I don't want to stifle any discussion on here. I'm more than happy to publish any comment that takes the complete opposite view to Rico (so long as it's neither spam nor needlessly abusive).

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    1. Hi, If only rico was as open and fair as you. I posted a polite and well argued criticism of a point in his latest post and he appears to have censored me.

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  5. War may break out if they can't agree who's going to collect the award!

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  6. Protesting against their own governments ? I don't ever recall the greek's adopting the swastika as their national flag ?

    And the reason a number of countries now require a bailout is BECAUSE of the euro, given that it robs these countries of the ability to devalue their currencies to increase competitiveness.

    As well as the many good things it has achieved, perhaps the euros greatest weakness is that it has enabled profligate governments to provide benefits and services that far exceeded their ability to pay for those same services. It remains to be seen whether the recipients accept the changes to their previously unaffordable systems, or continue to blame other governments for enforcing the economic reality.

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    1. With the exception of Greece, most of the Eurozone kept their economies under control. Spain was in better shape than Germany in some respects. Spain (and Ireland) had a budget surplus and low debt. Italy was reducing its debt.

      Not being able to devalue their currencies may not have caused the current problems (but it does prevent them getting out of the mess).

      The Euro contributed to Spain's (and the other GIPSI countries) problems by lowering the cost of borrowing (because they became 'safer' places to invest) and causing capital to flow to Spain (mainly from Germany) fueling the property boom and causing trade deficits whilst Germany grew a trade surplus.

      In Europe as a whole, public/private debt is lower than the USA, inflation is similar, the eurozone has a balanced budget so it does not need capital from outside.

      Is it right or constructive to think of the eurozone as needing to punish itself with austerity for past sins? I don't think so (apart from Greece).

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    2. Yeah obviously I'm not including the Greek fascists in that description. They're fundamentalist nutters who will disappear into political obscurity soon enough. But I'm not sure their temporary rise can just be attributed to the Eurozone problems. After all Gert Wilders fascists and Nick Griffins Nazis in Holland and Britain achieved their success based on anti-immigrant policies and Islamophobia.

      The majority of people on the streets in those countries are just ordinary people, and most that have any political alignment it's towards far-left politics.

      Obviously Greece had some serious spending problems, but the thing that needs to be remembered is that before the financial crisis, Ireland actually had a budget surplus. So they weren't spending more than they could afford. They were actually being very responsible. It's not as simple as just blaming it on levels of public spending.

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  7. I'm not sure that all those people holding flags would class themselves as fascists, merely people protesting against another nation (which just happens to be germany) interfering in their domestic policies (this is actually the ultimate outcome of a single market when, as is happening, you head towards fiscal centralisation). There is also no way for you to determine that the majority of people protesting have a left wing political bent. That is nonsense.

    In Ireland, the problems stemmed from a meteoric rise, and subsequent crash, in the value of properties driven by low lending rates attributable to EUR membership (predicated on all nations theoretically having the same credit worthiness of the single currency's richest nations). When the 3 largest banks got themselves into trouble when the value of their collateral crashed and people stopped paying their loans, the Irish Government, emboldened by its EUR membership, decided to effectively guarantee all losses, shifting the burden of losses from the banks to taxpayers.

    I still find it difficult to reconcile your view of the single market and currency as a unifying force for good when we are witnessing the level of social unrest across the region, driven, in large part, by witless governments, and even more witless populations who believed that benefits they could not afford would be viable forever. This would not have happened in such a concerted, and largescale manner, without the Euro.

    As many people seem to forget, somebody eventually has to pay the bills, and if you can't repay, your creditors get to dictate your repayment terms, no matter how painful this might be. This is even more true in a system where you are constrained from devaluing, such as in the Euro.

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    1. Right, I've looked up that specific protest. I was confused because there are lots of protests in Greece organised by different groups. Some are led by the "Golden Dawn" neo-Nazi party, and others led by Syriza the leftist party in conjunction with the Greek trade unions.

      At Golden Dawn rallies they wave swastikas, I thought that's what was being referred to. They are fascists. But it is easy to tell what sort of people are protesting, you just read their banners. If they're waving trade union logos or Syriza stuff, then they're probably leftists.

      If you're struggling to reconcile my views then there's not much more I can do other than repeat myself.

      There may well be social unrest (as there is in this country even though we're not in the Euro...), but the peoples of Europe aren't at each others throats itching for a fight are they? It's ordinary people against the ruling classes, not nation against nation.

      It was a capitalist crisis that is causing the problems now. Whatever role Europe has had in allegedly exacerbating the problems has been because it wasn't integrated enough. The answer is more Europe, not less. They won the peace prize, not the economics prize. This sort of thing won't happen again when Europe is fiscally integrated. It's because they weren't totally true to their "ever closer union of the peoples of Europe" philosophy that any bad they have caused has happened.

      Economic problems and a depression in the 1920s and 30s led to a world war and a holocaust. That isn't going to happen this time, the worst will be the political class that let it happen will be replaced.

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    2. Sir,

      Complete fiscal integration (if it ever happens) will only leave the eurozone two thirds complete. To solve the current problems 'more europe' will need to include labour mobility. A very tall order indeed!

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    3. When you say labour mobility, what do you mean? Because all European citizens have an automatic right to live and work in any other European country, free from any visa requirements and they are treated as equals to the locals?

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  8. 'It was a capitalist crisis that is causing the problems now.'
    No, in the US and UK (And certain parts of Europe) it was a crisis caused by people borrowing money they couldn't afford to pay back. The capitalist system certainly provided the bullets to enable this stupidity, but the choice to fire the gun was down to borrowers. Banks cannot force individuals to borrow. People seem to forget this basic fact, but it was basic human greed, not any particular politcial credo, which was to blame.

    In most of Europe, it has been a crisis caused by largely socialist governments providing social payments they couldn't afford. Whether they genuinely did this for want of a better life for thier populations, or to ensure they were re-elected is a moot point. They are where they are, and that is, for certain countries, a very bad place.

    You are effectively arguing that civil war is preferable to inter-country war, which I realise may suit your desire to see class equality by making the rich poorer (because of the dead weight cost of tax collection and distribution, this generally leads to little but larger government, rather than a fairer distribution of wealth), but it is a strange position to take.

    I'm sorry that you have to display annoyance with somebody who disgarees with you, but you need to accept sometimes that your views are not necessarily right in everybody's eyes, and sometimes other people, who have experienced, and worked through, decades of differing economic circusmtances might have a bettter understanding of the situation at hand.

    You are articulate, and justifiably have strong self confidence, but you need to accept that sometimes your views and theories are not completely thought through, or based on sufficient real world experience. That's not supposed to be rude or condascending, it's just reality. People said the similar things to me when I was a strident 20 year old, and I thought they were just being dicks, but it is only through another 30 years life experience that I now realise there are certain things that just take years to understand properly, no matter how well I thought I understood the theory at 20.

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  9. I'm not sure where I displayed annoyance, I thought we were just having a discussion. The whole essence of debate is disagreement which is exactly what is happening here. That's a good thing because people learn more from hearing other peoples views and to argue your case you are forced into thinking through it more.

    I don't know why you have to insinuate that I have a problem with anyone that disagrees with me. I've never said I'm right and hold all the answers and everyone else is wrong. All I've done is put my case across and now I'm defending it and inviting others to put theirs across.

    I'm only interested in the arguments and debates. I've never held a grudge against anyone for disagreeing with me unless they get personal about it. If I thought my views were all right, I wouldn't facilitate these discussions would I? I also like it when those comments are anonymous, because there is no way of just judging their view based on who they are. That way the arguments have to stand out on their own merit. It's a shame that you have to resort to the trump card of "I'm older therefore know more". I'd never make an issue out of someone's age or experience, because at the end of the day, such things aren't a guarantee for being right. Old and experienced folk are totally capable of being wrong and young and inexperienced people are totally capable of being right. What matters is the argument, not their background. I'd never make an issue of someones age, so it's regrettable that you have chosen to.

    The problem is that you've put forward a case that hasn't convinced me.

    You say "Banks cannot force individuals to borrow" but banks aren't forced to lend either (that's partly why we're still in the mess). Putting it down to ordinary peoples stupidity is totally unfair. Banks are meant to be the experts, so if they tell someone that their loan is fine, most people will just accept their professional advice. The problem was banks wanting to be greedy and push the limits with their loans because they could get more interest payments out of people who were struggling to pay loans back.

    You're trying to put Europes problems down to governments spending too much. But Spain was running balanced budgets up until 2008. Ireland and Iceland had surpluses. Okay, Italy, Greece and Portugal had deficits, but so did Britain, France and Germany. So it doesn't prove anything by itself. It shows that there were other problems. Each country was different and someone countries that had some things in common are now in completely different states. The banking crisis was what kicked it off, not governments hiring too many nurses or building too many schools.

    Saying I want civil war is an argument you'll never win because it puts words into my mouth. I've clearly said I want more integration and the current political class to be swept away (maybe I should have specified that I want that to happen through elections).

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    1. Sir

      A popular view is that the banks simply did what banks do, i.e. lend, and the borrowers did what borrowers do, i.e. borrow and the real villains in all this are the governments who failed to regulate. Isn't that their job in a mixed economy?

      If a child spends all its pocket money on sweets and it's teeth fall out who do you blame? The child?, the sweet shop? or the parents?

      I blame the parents. In the banking crisis, the government is the parents.

      Maybe if more countries had followed the french model of limiting lending so that repayments can't exceed a third of income this disaster could have been avoided.

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  10. I too tend to agree you need a thorough understanding of Human Nature which comes from years of bitter experience, but it does make us 'oldies' seem like a depressing lot, LOL

    But please do keep at it, I think us cynics do go too far and need the fresh outlook of unjaundiced young blood to bring a bit of balance.

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  11. 'I blame the parents. In the banking crisis, the government is the parents.'

    'Sam Mézec18 October 2012 10:32 - Completely agree.'

    As a socialist, do you consider the labour government in the UK (1997 - 2010) as being to blame for not controlling lending ?

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  12. Sir, and anon

    To be fair the biggest contributor to the troubles of 2008 was the failure of the USA to regulate the shadow banking system (which had grown bigger than the regulated banking system) and the repealing of Glass-Steagall etc.

    Not much Labour could have done. At least UK avoided a property crash (for now).

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  13. As a socialist I don't have any instinct to defend Labour just because it's Labour. When they're wrong I'll be the first to say so.

    As the other anon said, it did start in America. So when people criticise Labours spending I get bugged because that obviously had nothing to do with it.

    What Labour got right was most of the response to the crash. Things like a new top rate of income tax, lowering VAT and increasing public spending were all good things to do that managed to get the economy onto the road to recovery. I despair at the pathetic job the Tories and Lib Dems are doing to wreck it all now.

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  14. Sorry, so you agree that labour were to blame for creating the crisis by not controlling private sector lending ? But when they committed taxpayers to the highest levels of national debt ever seen in the uk,by getting that same private sector to lend to them, they were doing the right thing ? It's as if you believe that it is terrible for consumers to get into too much debt, but if you call those consumers taxpayers, it's suddenly ok.

    Also interesting that you berate those heckling Milliband's acceptance that a labour government would have to cut government spending (or would face some 'tough choices' on spending) yet the current government is doing a pathetic job by implementing austerity measures, and reducing government spending ?

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    1. Firstly, you're wrong to say this is the highest level of national debt the UK has ever seen. That's just not true. The debt was much higher after the Second World War. The governments strategy to get out of that was to spend more on building houses and creating a national health service. Good plan I think.

      Debt is only a problem if there is no way of getting out of debt. If a consumer gets in too much debt they are screwed. But if a government has a sensible plan to get out of debt, then it's not a bad thing. People get into debt for all sorts of good reasons (starting a business, buying a house etc) but it only becomes a problem if they can't pay it back.

      If the government can stimulate growth, get people off the dole and into work, they can lower government expenditure and raise more tax money. Then when the deficit is gone, it can pay back the debt. An ordinary consumer can't do that, so it's not sensible to compare those two types of debt.

      I do berate them because they clearly don't understand that there are such a thing as harmless cuts. Not every cut is some evil Conservative attempt to dismantle the welfare state. E.g. Asking the NHS to print double sided rather that waste paper is a cut that doesn't harm anything. These people would oppose that, because it's a "cut".

      To pay back the debt, the deficit needs to be dealt with. You can do that by either reducing spending, or increasing income. But reducing spending in the wrong place can mean spending more in another place and reducing income. Like, sacking a worker means spending more on benefits for them and they won't pay tax.

      I'm in favour of cutting all wasteful spending, taxing rich people more, and government spending on programmes that will boost growth and create jobs. That happens to be the Labour plan. It's not perfect, but the fools booing him don't have anything better to recommend.

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  15. The labour Overnment were the first in history to raise public debt above £1 trillion. What I said is not wrong. You're interpretation of what I said is wrong.

    Every pound raised by the government in tax is one pound that will not be spent, and taxed, by a consumer. Every pound raised by the government in tax will not equal one pound of economic growth because of the costs of collection, running a government and the simple fact that people are not as careful to ensure maximisation of economic value with other people's money. There is also very little tax multiplier effect initially with government spending on the basis that the government rarely taxes itself.

    Taxation of wealthy individuals, the most economically mobile people in our country also encourages one other behaviour and that is migration. It would be interesting to hear your views on an individual's right to live where they wish, and therefore opt not to pay those higher tax rates.

    The assumption that economic growth can be magically attained by diverting potential private sector expenditure into public sector expenditure is incorrect, because of collection and administration costs before that money is spent. The government can spend money to do good things, like build new hospitals, or increase social legislation, or other worthy aims, but the net tax multiplier of these worthy causes will generally be lower than if that money was spent by private sector consumers.

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  16. It depends how you work it out, and I'd say that putting it in number of pounds is the wrong way to put it because of inflation. As a percentage of GDP, the debt after the second world war WAS higher. Much higher. It was around 250% of GDP, whereas after the crash it was around 70%, before the crash it was closer to 40% (which btw, was lower than what they inherited from the Tories).

    Your argument sounds like an argument for no tax, no spending and no state. The fact is, if the public sector takes a hit, the private sector will plummet. Public sector workers spend their wages in the private sector, providing demand and cash flow, that if they were just thrown on the dole they wouldn't do. Public departments contract private businesses for work etc. They are interlinked and spending on public does help the private.

    And as the current crisis is showing, when the public sector disappears, it is NOT automatically replaced by the private sector.

    You sound as if you think the money that is spent on admin just disappears into thin air... it doesn't, it goes on wages and buying stuff from private businesses. If the government stopped buying paper clips tomorrow, stationary companies across the company would go bust.

    If rich people want to go somewhere to avoid high tax rates, they could always move to Mogadishu. There isn't much tax there. There is plenty of money to be made in Britain, and people won't leave. Especially if tax is co-ordinated internationally like I've been suggesting (through integration).

    Your neo-liberal views were outdated in the 1920s I'm afraid. The government is a great tool to stimulate growth and it's demonstrable that it works.

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  17. Ahh, the old final standby insult of the defeated socialist, accusing somebody of being a neoliberal. (and a phrase first coined in the late 30''s, rather than being outdated in the 20's I'm afraid)

    You told me that I was wrong in claiming that labour committed the uk taxpayer to the highest debt of any government in history. I wasn't.

    You claim that i am arguing for no tax, no spending and no state. I haven't

    Everything you point out about the public and private sector performance being interdependent is true, and I don't believe I have claimed anything different.

    Your comment on Mogadishu is just odd. If you believe that governments around the world should be relieved of their ability to set their own tax rates, then you believe in a level of global financial dictatorship that I find abhorrent. If you believe that individuals should be relieved of their ability to live and transact business wherever they so choose, then you are advocating a level of state control over the individual that I find distasteful. That's not neoliberalism. Thats just personal freedom, something you obviously value less than I do.

    Odd however, given your advocacy for such a level of state intervention on the rights of the individual, that you feel the need to make such a defence of democracy when commenting on thisisjersey ?




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    1. Accepting that State = bad, private = good is neoliberalism. I didn't mean it as an insult, I meant it as an adjective.

      And no, you are wrong. The debt was not the highest. You hadn't taken into account inflation and the size of the debt compared with the size of an economy. Not taking into account inflation is mad. A pound today is not worth the same as a pound back then. If the debt is £1,000 and the economy is only has £100 in it, the debt is huge, but if the economy is £10,000, it's tiny.

      I never said governments shouldn't be able to set their tax rates, I said they should consult with other jurisdictions so that their tax rates are mutually beneficial. I also never said people shouldn't be able to move, if they want to, nothing should stop them, but I think the state should be allowed to do what it can to make sure people don't make extortionate amounts of money in this country without it being taxed properly, no matter where the business is based and the government should not be prepared to just accept businesses shutting down and moving to China, losing jobs here because someone over there will do it for 5p an hour.

      Read my "Economic Dictatorship" article. Democracy is politics is only half the story.

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