Economics, Politics

Brexit is a stand off between Conservatives and Socialists

I’ve been wanting to write a piece about Brexit for a while now, above and beyond my strong feelings about the British fishing industry which the Brussels Common Fisheries Policy has all but destroyed, but I’ve not found much time recently to put fingers to keys. The arrival of the young pup has taken up a fair bit of my spare time. It’s been good to have time to think though, as I now have more consolidated views on the subject.

First I need to talk about the Brexit coverage in the press, and while this is an obvious point, you need to remember that everyone who has an opinion on Brexit (and any other topic for that matter) is speaking from their own selfish, self-interested point of view. If I have learned one thing from my years on earth it is that people are selfishly oriented, and if you accept that as the basis of who they are what they say and do, things will go smoother for you.

Now, it is also worth saying that some of those selfish people do care deeply about other people, and so their selfish approach involves what they deem to be best for other people, but they are benefitting themselves personally at the core. When you hear politicians, the IMF, any government organisation, Scientists, Arts funds, anyone, making a view about the larger government organisation that sits above it, and from which it does or doesn’t receive funding (the EU), know that whatever view they hold is because of how it benefits them.

What is sorely lacking from the debate is how the ordinary man on the street, how you and I are going to be affected by a change to the status quo, by a severing of bureaucratic ties to brussels. Economists for Brexit have had a go, and put forward the case for Brexit, led by academic Patrick Minford, these 8 independent economists have discussed the various elements of the debate and argue for the free market, deregulated model. Essentially they are individuals who at their core believe in the economic benefit of the free market, over the protectionist customs union, and a centralised, unelected, undemocratic government. Just look at Greece). Of course we may have the very same happen to us here. We might choose, like the Greeks, to vote no to the EU, and be overruled anyway.

If you’ve read any of the articles on this site, you will know that I am vote leave. I’d even reduce the control and power of the UK government if I could. UK politicians might well choose to vote to remove power from the EU government, so that more of it returns to them. But at least we vote for UK politicians, so there is some accountability, unlike the European government decision makers. In this article I will spell out my arguments for leaving the EU, and why you might choose to also vote leave on the 23rd.

Decentralisation

This topic deserves a whole book to itself; the subject of the 21st century is decentralisation of power, physical power in the form of decentralisation of electrical power generation, decentralised mobile communications, decentralisation of publishing (kindle and ebook publishing), the media and how having a Facebook or Twitter account makes you a creator as well as a consumer of media, decentralisation of business via the internet, the decentralisation of money from banks by bitcoin and the blockchain, and now the decentralisation of government away from large bureaucracies to more and more devolution and self government. Large organisations become unwieldy, ineffective and cut off from the world, stuck in their own ideas. Like the captain of the Titanic proudly steaming forward into an iceberg field.

You can try to stem the tide of decentralisation, but you will only hold it off for so long. Just as the Scots nearly voted out of the UK, but fell for scaremongering, so a remain vote this time around would only put off the inevitable in a few years’ time. It is fair to say that we end up livingbegat the general consensus is, and if the consensus likes being part of a modern Austro-Hungarian Empire, if they like being told what to do by people who have very little understanding of the them of their specific lives, this is what we will get. Do you like self government, or do you like being told what to do? You’d be surprised how many people just want to be told what to do and follow those orders. Do you like being able to boot out politicians who don’t perform, or would you rather have them thrust upon you with little say?

The EU Economy

In case you hadn’t noticed, the EU, largely because of the terrible idea of monetary union, is in verg poor condition. The ‘real economy’ isn’t doing so badly, but the financial infrastructure which sits behind our money systems has been allowed to concoct too many, too-clever-for-their-own-good financial instruments, things like derivatives which on paper alone make for a pretty good way to hedge risk.

This problem has come about because of market meddling. When markets are not allowed to function as markets, they get skewed, and businesses which would have in the past paid for their poor decision-making with bankruptcy, instead of going to the wall they live to make another bad decision, and another, and another. They are encouraged to make ever more risky bets. Eventually we end up in a place where moral hazard prevails, because everyone is now a winner, interest rates are zero, and people are forced to look to ever and ever riskier ‘investments’ to get a return on their cash.

The financial system in the UK, US and Europe was never allowed to crash, to clear out the rotten institutions and processes which had brought it to the brink of death in 2008,  this cancker has been allowed to spread through the rest of the tree. Central banks have been pumping liquidity into the global financial system to try to revive the arresting economy, but it has done very little but pump up asset prices. Europe is a mess, USA is a mess and the UK is a mess. The banks are ready to blow up as the extent of their liabilities becomes evident. JP Morgan Chase’s Jamie Dimon is using the Brexit referendum as a handy excuse to lay off 20% of his workforce if the UK votes to leave the EU. Nice move Jamie.

There’s no point trying to pretend that the countries in the Eurozone are the same; they clearly aren’t, and trying to peg them all to the same currency is only going to end in tears for some. In normal economies, as a country excels in exporting, its currency overvalues, which acts as a natural brake, restoring balance. While poorer countries have the opportunity to devalue their currencies and become competitive. But when the south of Italy or Greece has the same currency as Germany, the stronger country is going to do disproportionately well at the expense of the weaker one. Is this a bunch of people we want to hitch our economic fortunes to? Or would leaving them to it be the best course of action?

It is clear that a political union called Europe cannot exist without a common currency called the Euro. Given what has happened in the last 24 months in Europe with the Euro, do we really want to be a part of something with such fundamental flaws? Oddly nobody seems to think that the Euro is a bad thing, that what has happened is just a blip on the radar. These are the people who read the papers and digest what they are told, never really thinking about the real issues which lie behind them, the fundamentals and how wrong they are.

The political position of brexit is a fascinating one, which is transcending even party political boundaries; we have rifts in the Tory party as politicians take sides, and each takes swipes at the other. Both the leavers and the retainers know how important the vote is, paling into insignificance even a general election which is, lets face it, pretty much like picking from a line up of ugly girls. What we are seeing is the true blue versus red. Let me explain.

Leave = Conservative

In his excellent book, Life After the State – Why we Don’t Need Government, Dominic Frisby put into words a great number of points which I had observed and desired to be different in my own life, but had never managed to put into words. Frisby is a free market libertarian, and I share many of his views on Government; namely that it should exist to provide essential public services which need to be centrally organised, but that it should not be a key decision-maker in its own right. The government should exist to carry out the will of the people. People vote, and the government does what they vote for. How novel.

Conservatism is about self-empowerment, about creating the atmosphere where individuals can make for themselves, can stand up and be counted (community charge rather than council tax bands), where individuals; husbands, wives, parents and even children are best placed to decided how they live, which laws are passed, and where they spend their money. Not given away in taxes to large bureaucratic organisations which inefficiently divvy it out to the causes that they consider to be worthy, keeping a fair chunk of it to pay for their own expenses, of course.

Conservatism is about acknowledging that everybody has value, and that they can make a success of their lives if they are only given the opportunity to make their mark on the world. What does that look like? Well, clearly it looks a lot different to the current state of affairs, because I don’t see very much conservatism going on. I see a lot of people still of the government payroll, whether the UK, or the EU superstate. Once milk is flowing from the nipple, it is hard to say no. The UK gives handouts to the underachievers or Europe, much keeping them in their wretchedness rather than demonstrating how to thrive to the rest of europe, we would rather sit in the tub with the others and do what the british do best; whinge.

I have often thought that the Brits wouldn’t appreciate a land like Switzerland where everything is logical, where things run on time, towns are clean, where money is spent transparently, where people have pride in their achievement. We Brits would have nothing to whinge about.

Remain = Socialist

Socialists have embedded deep inside them views which effectively say that there are good people in the world and bad people. The good people are poor and the bad people are rich. The good people are usually socialists, because they hace an innate tendency to agree with the unfairmess in life. They mean well. The rich, usually conservative, self empowered types apparently got their ill-gotten-gains through some bad behaviour. They took more than their fair share and so they should give some of their wealth to those who have-not.

The ‘remain’ camp either believes in the injustice of capitalism, that people can have too much money, or they are those who have benefitted from the status quo and want to keep things that way. They believe that government is good, and that centralised planning and expenditure is better than decentralised power. Either that, or they can’t be bothered to sit down and actually think about how politics works.

They believe that a centralised government is better placed to take your money and spend it on your behalf, precisely because if the government didn’t take you money and give it to these ‘good causes’ that no human being would ever choose to do so himself. Socialists believe that man is inherently bad natured, and that he cannot be relied upon to show compassion for his fellow man, and so we don’t even get a chance to try. All compassion is outsourced to the government. When we see a beggar on the street, our natural response is “I pay enough in taxes, go and get a hand out from the government like all those other sponges who don’t contribute to society.”

When you hand over your human responsibility to your fellow man to a faceless government corporation, you become less human in the process. This is the irony of socialism, in trying to make people more humane, it actually takes away their humanity.

If you’ve ever worked in or for a public sector organisation, you will be well aware that your taxpayer money is being spent in an inefficient manner. These businesses are not real businesses which have to make ends meet, if they were private sector businesses they would have folded decades ago. The people who work for them have a view that they know best, and the way they deal with the private sector is self important because they have the money, that private sector businesses want.

EU ‘Resources’

“But we get handouts from the EU government!” I hear you cry. “We can’t vote to leave the EU.” OK, and where, pray, do you think those funds come from? Do you think the EU government is a productive organisation generating its own cash? It doesn’t take long to find out where the EU gets its money from, and it won’t surprise you. On the EU website, the source of its “own resources” is clearly stated:

Traditional own resources

The EU get’s it traditional ‘own resources’ from the following:

  1. Customs duties on imports from outside the EU – [this increases the cost of our goods] – the EU takes 75% of this money – UK and other governments get 25% of this money collected to cover the cost of collection. 25%!
  2. VAT percentage levy (worth €14bn)
  3. Own resource based on Gross National Income (GNI) A standard percentage levied on the GNI of each EU country. It is used to balance revenue and expenditure. Although designed as a balancing system, this has become the largest source of revenue – €92.7bn in 2010.

Like any bureaucracy with growing aspirations, the EU budget has got out of hand and it needs more and more cash from members to fund itself and its schemes. The balancing system becomes the largest source of revenue. There is a bit more money from EU fines (usually big, successful US businesses), taxes on EU salaries, and contributions from non-EU countries. So how much do you think this giant bureaucratic machine costs to run? Well, in 2011, the EU administration costs were €8.3bn. Quite expensive, and no wonder people on the EU gravy train want to keep things ticking along nicely……

Subsidies are Phoney Baloney

The EU is a private members club, a gated city where the rich EU ‘members’ (the terminology speaks volumes) live and do business with each other. They want nothing whatsoever to do with the poor people who live outside the tall, policed iron gates, and while they could very well trade with them and give their citizens goods at a lower price, in order to keep their own goods makers rich they charge import duties on the goods coming in from oupside the trade block. The citizens of the Gated City pay more for their goods than they otherwise might, raising their cost of living.

Inefficient organisations which wouldn’t survive without this protectionist mechanism are encouraged to go on in their inefficiencies. The government of gated city believe that enriching uncompetitive manufacturing businesses is worth the high price on increased cost of living, because some of that money is paid to individuals who work for these companies and earn wage. It doesn’t stop the poor people living outside the city trying to scale the dangerously high walls to get inside to improve their lives, and they come in their thousands. Many of them die making the journey, others fall from the walls and perish before they even land foot in the city. One wonders whether it might be a better idea to just allow them the opportunity to trade with those in the gated city on a global level, thereby enriching themselves where they currently stand rather than leaving them like a beggar on the street. It’s the same argument; Socialist vs Conservative on a bigger scale.

Subsidies are the opposite of a free market, and yet the EU loves to hand out money to organisations who are not competitive, rather than allow them to adapt and improve they carry on, like a blundering public sector organisation, never being forced to adapt or die.

Regulation = Interference = Inefficiency

The EU loves to regulate. Regulation quashes the free market. Regulation affects your competitiveness, because you have rules to comply with. You can’t just get on with what you are doing, you need to comply with the regulations, much of which gets in the way of a productive, efficient output. Go and work in a public sector organisation for six to twelve months, and you will know what I mean. Very little gets done, even though there are people scurrying about all over the place, doing their best to look busy, so that they can collect their pay cheque and do the bare minimum necessary to prevent from getting sacked.

The free market is the reason I will vote to leave the EU, the opportunity to give capital a chance to work once more. Capital works though market forces to find the most appropriate place to go. I’m not saying have no regulations, I’m saying set your policy on things that matter (e.g. pollution and not CO2), immigration which encourages talent, taxation which encourages innovation and entrepreneurialism, regulation which is light enough to do the same. We want to give people a chance to make for themselves, not be reliant on handouts, whether on the dole, or benefits, or taking subsidies from the government whether the EU or the UK, or working on some phoney government project.

Is Boris Johnson paid by the hedge funds to vote for a Brexit? Possibly. He doubtless has many friends in the City of London following his stint as mayor. Removing regulation would be a good thing, as would letting banks which fail go to the wall. This is the only way to make them accountable, not by propping them up against all sensibility. I do believe that Bojo and David Cameron are both Conservatives who want a Brexit for the UK. If you don’t believe Dave wants Brexit, watch his Bloomberg speech on youtube. For some reason Cameron has changed his mind after his visit to brussels, I wonder how the conversation went?

As for the rest of them, the IMF, the OBR, the OECD, John Major, Scientists, Actors, and even Barack Obama are obviously all benefitting from the EU in one way or another. But are you, the men and women on the street? I suspect that unless you work for a protected industry, you will be better off out of the EU working in a more real economy.

If you vote to remain, you are essentially saying that you are happy to have no control over your political system, the laws and stifling regulations which will will be passed upon you by unelected representatives who we cannot remove if we don’t like.


Also published on Medium.

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