Monthly Archives: August 2013

EU/Eurozone – Start Again or Plod On? – A New Government

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EU/Eurozone – Start Again or Plod On?

A New Government

The current machinery of government at the centre of the EU is probably the most contentious part of the whole EU experiment as far as the people are concerned. This structure was originally sold to the people as a mechanism to provide commonality where there is contention, provide interfaces between the nation states, and provide a common interface to the outside world. However the resultant structure mercilessly encroaches upon the sovereignty of the nation states, imposing rules upon the people of the nation states that the people expect to be considered by their own elected Parliament. What we actually have is a creeping expropriation of sovereignty of the nation states by an essentially unelected and faceless body – a United Europe through the back door, and without the consent of the people.

Currently each nation state has a national government elected by the people to represent their interests, debate requirements, pass laws, and secure the sanctity of the constitution. So why is this expensive body in Brussels assuming dominion over national policy? It is true that within each nation state the people appoint MEP’s to the Brussels machine to represent the people and reflect their views, but this is a materially imperfect system for a number of reasons. Firstly do the people take the election of MEP’s as seriously as they do their own Government – the evidence suggests that people still do not understand the process, and do not really see how it affects them. In the UK the election of MEP’s is not concurrent with a general election, and indeed can occur in the middle of a term of the current national government – the time at which the people can be expressing dissatisfaction with the national government. Thus it is not unreasonable to assume that the bulk of MEP’s could be members of the opposition party in the national government. We only need to look at the problems in the USA at this time as a result of the House of Representative being controlled by the Republican Party whilst the Senate is controlled by the Democrats – they neutralise each other, and thus the policies presented by the President. Is this really a mechanism for true representation of the people?

There are many forms of government systems operating in the world today. This blog attempts to define a parliamentary system of government suitable for a United States of Europe, and which embraces all of the relevant aspects of a modern and relevant democratic nation state. But first let us try to find an appropriate model upon which we can define and layer a government structure for our United States of Europe.

Without exhausting the word count of a blog in examination let me suggest that there is one tried and tested model which is accepted throughout the world – a multi-layered corporation. At the very top there is a Chairman/President, a Chief Executive, and a Board of Directors. For each subsidiary there is also a Chief Executive, and a Board of Directors. Typically the Chief Executive and Finance Director of the subsidiary will also be Board members of the parent company. For those who immediately say that these Boards are not elected please think of a public quoted company where the Board of Directors are elected by the stakeholders. As for those who say that a government has to consider welfare issues that would not be common to a corporate, I would remind them that until recent times there was most certainly a serious welfare dynamic to most corporates. It is only since the 1980’s, when shareholders became more global and thus faceless that profit/dividend became the driver and thus welfare provisions substantially reduce – but I have not lost hope that this will return as part of corporate responsibility.

The classic role of the Chairman/President is ambassadorial in that this person represents and promotes the face of the organisation to the outside world. This role is generally appointed, and need not be an executive role.

The Chief Executive has the responsibility to manage the corporation with the help of the directors, so his role is essentially inward looking. This role tends to be elected, on merit.

Can we develop a nation state government for our United States of Europe based on this known and trusted model?

A democratic nation state consists of a framework of government freely elected ‘by the people, for the people’ with oversight from an independent judiciary built on merit, not election.

In parliamentary systems of government, the legislature is formally supreme and appoints a member from its house as the prime minister who acts as the (chief) executive.

The primary components of a legislature are one or more chambers or houses: assemblies that can debate and vote upon bills. In most parliamentary systems, the lower house (Parliament) is the more powerful house while the upper house (Senate) is a chamber of review and advice.

Into this framework I propose to add an independent Central Bank whose duty is to manage the financial integrity of the country, issue and manage government debt, set interest rates, and maintain inflation within agreed guidelines.

The easiest way to differentiate the roles of the Parliament and the Senate is that the Parliament is the ‘voice of the people’ whereas the Senate is the ‘voice of experienced, considered reason’. Members of the Parliament are elected, and members of the Senate are appointed on merit.

In this structure the corporate Board of Directors is the Parliament. However, in a corporate the members of the Board are tried and tested professionals. Elected members of Parliament can come from all walks of life, are untested, might have no previous experience, and could just be career politicians. This does not promote the image of a safe pair of hands, thus the Senate (non-executive directors). The people in the Senate would comprise, by appointment and certainly on merit, people from a diverse range of backgrounds who have shown exception skill and wisdom in their life. This chamber would also contain representatives from the judiciary, and from each major religion to ensure that the Senate can be seen to have experience and integrity throughout the spectrum of the issues likely to be put before it.

Having an elected second chamber has proven a flaw in the USA constitutional structure resulting, on occasions such as now, with deadlock between the houses. The hereditary structure in the UK has all but been abandoned, but to move to an elected chamber would be a terrible mistake. A glimpse of this can be seen by the nature of the appointments to the House of Lords today. I think that the second chamber should have a committee that seeks out appropriate members, and then invites these people to become members of the chamber. Parliament should not be free to appoint their friends and party donors to the Senate.

Clearly a corporate board of directors does not consist of as many people as would be members of Parliament so a group of ministers would be selected, on merit, to form a cabinet under the prime minister, and these cabinet members would assume specific roles of government much like directors in a corporation.

How would this work in our United States of Europe? Firstly let us assume that each member state would retain a state assembly to address issues specific to the member state. Subsidiarity is a fundamental pillar of democracy, albeit that many countries struggle to find a balanced application of this principle. However a member state assembly would be the minimum layer underneath Parliament within this system, and in the UK, for example, all that would change in terms of subsidiarity would be that the current parliament would reduce to a member state assembly.

The electoral process needs to be relevant, and connect the people to their government. Therefore I am suggesting that only one set of elections occur for both the member state assembly and the Parliament. I further suggest that we can maximise the competence and integrity of the Parliament by changing the way that MEP’s are selected. My proposal is that the member state assembly be elected as per a general election, resulting in an incumbent executive and legislative. The majority political party would form a cabinet of ministers. This cabinet of ministers would then form the core of the representation in Parliament, spending a part of each month in Parliament, and the remainder in the member state assembly. In order to retain proportional representation in relation to population this core can be increased from other assembly members.

This structure ensures that the most capable political talent from each member state become the parliamentary representation of the people. The Prime Minister of Parliament would be determined by selection from the prime ministers of each member state.

I would suggest that Parliament and the member state assemblies serve for 5 year terms, and elections within each state occur at the same time. I also suggest that each member state be restricted to 3 political parties; a left of centre (Democrat), a right of centre (Conservative), and a centrist (Liberal). Fragmented multi-party governments have shown themselves to be ineffective because of the level of compromise to build a government – more compromise means more mediocrity and little effective output – Germany and Italy are good examples of this problem.

The benefit of this system is that it:

  • directly connects the people with their Parliament;
  • ensure the best possible members within the Parliament;
  • ensures direct connectivity with the member state assemblies;
  • is infinitely cheaper than the existing system.

You will note that I have not mentioned the Chairman (head of state). I think that an executive head of state is not necessary, and very difficult to sell to the people. Furthermore my previous blog of Republic versus Monarchy is a serious consideration in this process for a number of very relevant reasons. When considering, for example, an elected President of such a large and diverse culture country my thought go to the circus that occurs in the USA every 4 years. The process of selection takes 2 years costing an obscene amount of money. If an existing President is seeking re-election then they are not focussed on their role as executive for half of their term of office. The corporates who fund the campaigns expect a return on their investment should their candidate win, thus corrupting the democratic system. Furthermore a challenger for President would need to be wealthy in their own right thus limiting applications. This is not the way for the United States of Europe.

I commend this political structure to the community for analysis and comment.

Thank you for your continued interest in this European venture.

This blog is part of a series of blogs called ‘EU/Eurozone – Start Again or Plod On?’ and which examine the framework for a truly United States of Europe, and what would be needed to achieve it. Look at the archive index to find other blogs in this series.

I hope that you found this blog interesting, and will give it the ‘thumbs up’ below. You can also use the share options below to share your interest in this blog with others you know.

These blogs are intended to provoke thought and ideas so I look forward to any comments about the content. Just move to the beginning of the blog, click on ‘Comments’ and you can record your views, or ask questions.

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EU/Eurozone – Start Again or Plod On – Republic versus Monarchy

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EU/Eurozone – Start Again or Plod On?

Republic versus Monarchy

There has always been a general view that a united Europe will be some form of a republic, but is this a reasonable and widely held premise? Most of the republics around the world leave much to be desired in the stature of its president, or the continuity of national pride. This subject should not be an assumption for the future of Europe, but tested with the people, as should every facet of such a European integration process. In this blog we will quickly look at this issue in order for people to look at the possibilities.

The difference in formalising a United States of Europe and our template of the formation of the United States of America is that, in the case of the USA, it was a completely new venture, whereas Europe has functioning nation states with much historic ‘baggage’, extending back centuries in some cases. This ‘baggage’ will be a major emotional issue in creating a united Europe, as has been shown in the current EU/Eurozone model. Furthermore the integration of Europe looks more like a creeping expropriation of the sovereignty of nation states conducted by a faceless, unelected bureaucracy rather than an open integration by a consensual electorate. It might be worth mentioning that some of the countries of Europe seemingly have a long history but, in fact their history, as the nation state is today, can be little more than 100 years. I think of Italy and Germany as examples.

As an example of the legitimacy of this subject the UK has a constitutional monarchy having a current popularity rating around 87%. A further complication is that the Queen has a constituency of some 1.6 billion people throughout the world spanning some many countries including Canada, India and Australia. If reports from the USA are correct a free vote amongst the American people to adopt the English monarchy as the constitutional monarch of the USA would increase this constituency by a further 300 million or so (there were some 26 USA TV channels in London for the Queen’s Jubilee celebrations, and the marriage of William and Kate). Compare this with the total population of the existing EU member states, and the fact that if it came down to a choice by the citizens of the UK between full integration within the Eurozone (essentially becoming part of a republic) and retaining our monarchy – retaining the monarchy would certainly win. We are already seeing this obstacle in the attempt by the Scottish National Party to devolve Scotland from the UK – most of the people of Scotland do not wish to lose their link to the monarchy.

A recent referendum in Australia regarding changing to a republic resulted in an overwhelming vote to retain the monarchy such that any further discussion has been shelved during the lifetime of the Queen.

For the republicans amongst you the reason why the UK has such a high regard for the monarchy can be readily defined in a simple example. Since WWII the UK has had only two what could be called ‘world statesperson’ leaders, namely Winston Churchill and Margaret Thatcher. In between these two statespersons the UK has endured political leaders ranging from awful to passable. However the line was held throughout these periods by the steadfast presence and continuity of the monarchy with a Queen who has shown herself to be an extraordinary stateswoman. And it only costs some 50p p.a. (Euro 40 cents) per head of population of the UK to retain this safety net – no more expensive than a President, or even a cup of coffee. Politicians come and go, but a steadfast and committed monarchy maintains continuity, even in the bad times.

There is also a much loved and active monarchy in Spain, and there are more low key monarchies in other European countries such as The Netherlands, and Sweden.

I am reliably advised that many Romanians would happily restore their monarchy which was very closely connected through marriage to the British and former German monarchy. Romania has maintained the stunning Peles Castle at Sinaia throughout the communist years, and it is still functional today.

In contrast look at the shambolic collections of political heads of state in the republic states of Europe and the USA over recent years, riddled with sex scandals, fraud, and abuse of office. Do any in Europe stand out as a true ‘world statesperson’? I would willingly concede to Helmut Schmidt, but then I start to struggle unless I have missed anyone. Angela Merkel is showing some mettle, so the jury is still out with respect to her.

It would be very interesting to conduct a census of all European people about the restoration of a constitutional monarch based on the English model (being the oldest and having by far the largest constituency), and which was originally German (House of Hanover) in any event. As some countries already have a monarchy, and I think that I am safe in saying that Poland would vote in favour, I would not be surprised if the odds are in favour of a monarchy, especially if the various royal families can agree how to integrate into a single constitutional monarchy for Europe.

Thus I suggest that we cannot assume that our new United States of Europe will be a republic if the people have their say on the matter. Indeed we cannot assume that all nation states within the current structure consider a presidential democracy as a preferred option.

Could a monarchy of Europe be a focal point for integration by the people, especially as it would not be soiled by mistrust of the political process? When the politicians are totally out of favour the people need something they can look to for that comfort factor.

What do you think?

Thank you for your continued interest in this European venture.

I hope that you found this blog interesting, and will give it the ‘thumbs up’ below. You can also use the share options below to share your interest in this blog with others you know.

These blogs are intended to provoke thought and ideas so I look forward to any comments about the content. Just move to the beginning of the blog, click on ‘Comments’ and you can record your views, or ask questions.

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EU/Eurozone – Start Again or Plod On? – Common Language

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EU/Eurozone – Start Again or Plod On?

A Common Language

The cost of operating in so many languages in the EU is obscenely expensive, and probably enough to lift all children in Europe out of poverty. If we look to our template of the United States of America, and energise my rusty memory of the formation, and formulation of the US Constitution, one of the debates was which language would be adopted – English, French, or German. Even though there were strong, conflicting opinions as there were many immigrants from many European countries all speaking different languages, they all agreed that inclusion of everyone was important in the process and thus they had to select one language which would become the language of the country. Shakespeare won the argument. We see today that Spanish has emerged as a minor second language of the USA as a result of widespread immigration from South America, and there are still small pockets of German and Dutch (primarily Amish communities), French (New Orleans), albeit none are a replacement for the use of English.

During a discussion last year with a former Federal Councillor and Minister of Justice of Switzerland, and Swiss business people, there was a clear pride that Switzerland was able to function in 4 languages, i.e. German, French, Italian, and Romantsch. I posed a question regarding what language they would use for the military command centre in the event that Switzerland was attacked by a foreign invader. After a long silence of pondering, the answer came back as ‘English’. I could only congratulate this inspired response.

This question reminded the former Swiss Federal Councillor of a funny story where this language principle was taken to extremes. In Switzerland they have 2 cantons (federal states) where the boundary passes through the city of Basel, and even along the middle of the street. The language of one canton is German, and the other is French. Each canton, without consultation with each other, introduced different regulations regarding the behaviour of dogs on the street. However they did not succeed in teaching the dogs how to read these different regulations so the dogs could not know how to change their behaviour when they crossed over the street into the other canton.

This is a great illustration on 3 different levels. The first is the natural human reluctance of neighbours, who speak different languages, to try to communicate with each other – language creates its own barriers. The second is the breakdown in the democratic pillar of subsidiarity – there is no point decentralising government if there is a lack of communication at the lower levels. The third is the problem of someone living in the community but who does not converse in either of the languages of the regulations.

Language is about communication, and is meaningless if communication does not result. Even within one language a multitude of dialects can cause lack of communication (look what the Americans did to the English language), but the written word will invariably succeed.

Having used interpreters for business discussions for many years, and even afforded the time to work with the interpreter prior to the main event in order to familiarise the interpreter with my use of words and phrasing, much still gets lost in translation – result: lack of communication.

Therefore I propose that our United States of Europe move towards a single language for, at least in the first instance, government, business, finance, and law, as it already exists today in part. I would also propose that the most widely spoken language in Europe, including as a second language, is English. As English is also the most widely spoken international language in the world, especially for business, adopting this language also makes trading in the global markets much easier. It is also the easiest language for the younger generation to learn in that they are surrounded by media primarily in English. I remember one person I know, having studied English, was amazed at the increase to her watching pleasure on hearing the real voice of John Wayne, and Humphrey Bogart in Casablanca.

As regards relative population size the next logical choice word be German. However even Germany has recognised that the German language is practically exhausted in that there is little realistic capacity for expansion, and as such is not really a realistic choice for the future. Indeed the German language is already littered with English words where no suitable word exists in German.

In the late 1980’s I attended the annual American Banker’s Club dinner at the Savoy in London. The speakers were Jacques Delors, a senior French economist (I think Jacques Attali before he was head of the European Bank of Reconstruction & Development), and an Executive Vice President of CitiGroup. One comment from the French economist stunned the room into silence as he spoke of European integration and stated ‘of course the language of the resulting integrated Europe will be English’. The stunned reaction revealed the thunderous thoughts around the room that a French politician is stating that the language of Europe can only be English, and this was over 20 years ago.

I fully appreciate that, for the older generation and traditionalists, learning a new language can be a step too far. However, under the tenet of democracy, provision will exist for this situation, and I do not expect the other European languages to disappear in social society just as they have not disappeared in the USA or indeed in Brazil where a number of such languages survive, including Welsh. Full transition to a single language system will take at least a generation in any event. What is important in our model is to state that there will be a single language so that people can see the target and thus slowly, but surely, move towards it.

The major emerging economies of the future, such as India – a potential major trading partner, – already speak English. Thus the global nature of business and banking has already started the transition to a common language within Europe to meet the demands of global corporations, so all we need to do for our model is to formalise this process.

Thank you for your continued interest in this European venture.

I hope that you found this blog interesting, and will give it the ‘thumbs up’ below. You can also use the share options below to share your interest in this blog with others you know.

These blogs are intended to provoke thought and ideas so I look forward to any comments about the content. Just move to the beginning of the blog, click on ‘Comments’ and you can record your views, or ask questions.

EU/Eurozone – Start Again or Plod On – Why Integrate?

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EU/Eurozone – Start Again or Plod On?

Why Integrate?

Why does Europe need to integrate, or even unite, especially now that the reasons behind the original Common Market have long been overshadowed with more pressing issues – explain. This was a message from an economist friend, having read my blogs on the EU/Eurozone, who felt that I should at least make some attempt to justify yet another grand plan for Europe after so much pain, misery, and expense of existing failed plans. As he is a professor of economics I feel obliged to take note and thus attempt to explain the logistics behind my interest in this subject.

As Europeans we do have choices regarding the future direction of Europe. We can disintegrate the current debacle, and return to independent nation states. The other extreme is to totally unite into a new United States of Europe – the idealist model in this debate. What I do not think we can do is to continue with the current model of part this, part that, one foot in …….. crazy system of fudge upon fudge which has wreaked havoc on weaker members, and to which the people of Europe feel totally disenfranchised. The basic tenet of a democratic system is that it is created ‘by the people, for the people’ and the current situation does not even remotely look anything like.

Where does Europe sit in the World today, and where does it see its future in the grand scheme of the world? It is steeped in history. It is the birthplace of the industrial revolution, and technology. Its pioneers explored the world, and provided answers to many unknowns across the spectrum of the sciences, medicine and philosophy. It developed global trade and finance. It is the cradle from which mankind developed democracy, free speech, and equality for all. But this is all in the past. The various empires created have essentially gone, and new centres of power and creativity have emerged in other parts of the world challenging the once might of Europe.

Can the individual nation states of Europe hold their own in the world of today, and more importantly the world of tomorrow? The short answer is that probably only two or three of the current nation states could be influential, whilst the others become second division players. Is this really the end of a long and proud heritage? There is no question that the nation states of Europe have suffered some serious differences throughout history, and some horrific differences within living memory, but what of the future? There are current distractions such as the current sabre rattling from Spain regarding Gibraltar which echoes of ‘The Mouse That Roared’. Will Europe really just wallow in the past and make the future for its children, and grandchildren, one of ‘we were once at the centre of the world, and at the forefront of progress – but that was yesterday’. Or does Europe reinvent itself, and takes its rightful place as a key player in the world of tomorrow?

Thus there is a case for an integrated Europe.

Recent pioneers have recognised that Europe needs to do something to stay influential in the world, and, to date, Europe has tried market integration, economic integration, trade integration, monetary integration, etc. but national self-interest, and the vested self-interest of the various politicians, in varying degrees, have created such an unmanageable hotchpotch of multi-dimensional chaos and unintended consequences that the people no longer understand what the plan is, if they ever did, and feel that they have little or no say in their own destiny. The people from the Eastern European states must think that they have emerged out of one fire, into another. All the European people really know is that it is all very expensive, painful, and with little obvious benefit.

A quick look at some of the (real and perceived) issues that stir great resentment by the British people to what is happening in the EU/Eurozone show that they do not have apathy, but hostility – and hence the rise of the UK Independence Party (UKIP) who polled enough votes in the most recent political elections to demonstrate that these votes were not just a protest vote. For example a common view is that it feels like the whole process of the creation of the Eurozone was engineered by the Germans, in favour of Germany – they could not capture Europe by military force, so they now they try by economic force. There are still many people alive in the UK who can remember the misery of rationing and other shortages they experienced whilst the UK had to rebuild itself after the last War, selling state assets and begging for loans while Germany was being rebuilt using $ billions under the Marshall Plan, and of course people will always quote that it was 2 British army officers who engineered the first Beetle car starting a successful rebuild of the German car industry.

This attitude by the British people is very unfortunate and unhelpful as it breeds distrust and suspicion of the whole process, but it has foundation and thus requires sensitive consideration when looking for support for an integrated Europe. It does not help that Germany, until 2 years ago, was the clear winner from the introduction of the Euro, albeit that the disciplines associated with the Euro exposed hidden cracks in the economic condition of a number of the Euro nation states. I can remember in 2011 that, contrary to market sentiment, Eurozone interest rates rose to offset inflationary pressures within Germany causing much pain to other Euro members – not the way to win support. Sometimes one has to ask if Germany just arrogantly believes that their way is the only way, or whether it is just a cultural problem. Years ago Germany imposed withholding taxes within Germany on some types of International bonds that are specifically designed to be tax neutral, and then surprised with the number of Germans crossing the border into banks in Luxembourg to buy and sell these bonds to avoid the taxes. The recent attempt, led by Germany, to introduce a transaction tax on banks trading within the EU is another classic example of an ambivalent attitude to the global nature of banking and its importance, not only to the UK, but to the whole of Europe. As the UK is second only to Germany as a net contributor to the existing EU budget they have good reason to be concerned at this behaviour, and have no desire to become just another federal state of Germany – indeed this would be  seriously counterproductive to the desired outcome. I have many German friends, and clearly Germany is a successful country, but a nation is more than an economic machine and thus I think integration requires a new way of inclusive thinking, as was required by the founding fathers of the USA. Indeed Jacques Delors, President of the European Commission between 1985 and 1994, stated that ‘Europe needs a soul’. A further important consideration is that one cannot ignore the important historic influence of the UK throughout the world as a valuable asset to an integrated Europe. For both Germany and the UK integration will be 1 step back to take 2 steps forward – probably painful for both, but necessary for the peaceful co-existence of all nation states.

Can the current situation be fixed so that Europe can obtain a reasonable degree of integration that works without suspicion of vested interest by any nation state, and enables an appropriate external status in the World to be influential? For many this is probably akin to attempting to solve a Rubik cube blindfolded, and many, including nation state leaders, know this. For example while there are a multitude of nation state leaders all voicing their own views to the world, and seeking self-promotion, the outside world will not understand what an integrated Europe really means.

David Cameron, the British Prime Minister, has stated that if his party are re-elected at the next General Election, then he will give the British people a vote in 2016 on whether or not to stay in the EU. As a senior banker understanding the economic and trade benefits of integration my vote would still be ‘no’ in the expectation that, without the UK, the current European model will implode, and then we could start again with a seriously less wealthy Germany. I remember when Margaret Thatcher was being forced by her colleagues to take sterling into the European Rate Mechanism (ERM) – but she managed to include a time bomb which eventually imploded the ERM – another expensive, ill-conceived European political experiment that did not work.

Thus we are back to the underlying tenet of my proposed model. First seek the ideal situation, and then see how close you can get to it in practice without loss of integrity.

Many will say that full integration, i.e. my United States of Europe model, is not a new idea. This is very true – Jacques Delors, probably the founding father of the idea of a fully integrated Europe, constantly promoted this idea. But has anyone ever been able to explain and sell this idea to the people in a way that they can understand the benefits to them, their children, and their grandchildren, and thus fully embrace the transition? To date the debate has been about the technical issues of economic benefit, trade, financial stability, national sovereignty, no borders, etc. etc. etc.

Has any politician told the people that a fully integrated Europe, i.e. a United States of Europe, will:

  • be 2nd only to India as the largest democracy in the world;
  • will be a larger economy than the USA;
  • will have less overall debt than the USA (if the politicians step away and let the bankers solve the debt issues);
  • will be the centre of the global financial system;
  • will have superior, and less expensive organs of government per capita (if they get it right) than any other major power;
  • will be a major force in the global arena;
  • significant economies of scale should lower the cost of living, i.e. a better lifestyle for all;
  • will provide substantial new job opportunities as more international companies seek to be part of such a large market;
  • will certainly be a major, if not the strongest force in sport throughout the world;
  • etc etc.

People can understand these statements, and thus they can feel a sense of real value and belonging as a new European citizen.

We should look to the speeches of Winston Churchill during the Second World War. He was from an aristocratic family, and went to the top private schools – but he knew how to speak with the people to galvanise and instil resolve towards a common goal, especially in the dark days. In the hour of need cometh the man, but where is he/her today?

So back to our model to see if we can show the politicians what the people see as an integrated Europe, and thus what they could be prepared to buy into.

Thank you for your continued interest in this European venture.

I hope that you found this blog interesting, and will give it the ‘thumbs up’ below. You can also use the share options below to share your interest in this blog with others you know.

These blogs are intended to provoke thought and ideas so I look forward to any comments about the content. Just move to the beginning of the blog, click on ‘Comments’ and you can record your views, or ask questions.

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EU/Eurozone – Start Again or Plod On? – Model Outline

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The EU/Eurozone – Start Again or Plod On?

A Model Outline

Following on from my Intro blog yesterday what is the future for Europe – do we need a new European model, or can we fix the existing model? To date the politicians have held the cards, but is it now time for the people to speak. Even the countries of the former Soviet Union now have had enough time and understanding to know what is possible, and what they would like to see as a sustainable future. Do we revise the current model, or just as with the EEC and the ERM, we put it down to experience and start again with the benefit of hindsight? I am looking for input so I would like to start with a provocative statement or two as I would like to encourage discussion and comment on the future of Europe for our children and grandchildren.

I hope that this will be an evolving blog where interested parties feel that they can contribute to the debate with comments, and be heard. Non-Europeans are welcome to participate as all input is valuable input. The resulting model for Europe should not be insular, and it is important both in relations and trade that the outside world sees a friend and partner with whom it can engage politically, and conduct business.

For the purpose of this discussion can I propose that we call our new model the United States of Europe. I have an utter dislike of any name using the word ‘Federal’ (sounds like a police state), and any reference to the word ‘Republic’ automatically removes any debate about a monarchy, and I am far from convinced that many people in Europe feel that a republic is the only option. Furthermore I would suggest that the United States of Europe is fully inclusive of all countries in Europe, as with the United States of America.

So let us start with the provocation.

  • I believe that it is a fact that the EU has no democratic legitimacy. Has any member state to date asked the people to vote on whether or not their country should become a member? This should not be confused with referendums for treaty ratifications.
  • For over 2 years now the politicians have attempted to solve the financial problems within the Eurozone. I would suggest that if you put some of the best banking minds into a room for 4 – 6 weeks, devoid of politics, vested interests, and with open minds, workable solutions to the financial problems of the Eurozone can be achieved. The pills may not be sweet, but they would be equitable and sustainable in the long-term. For example Germany was by far the economic winner with the introduction of the Euro – now it must deal with the appropriate reciprocity.
  • We must start with the tenet that a democracy consists of a framework of a Government freely elected ‘by the people, for the people’ with oversight from an independent judiciary built on merit, not election. This Government needs to build a social and legal framework based on the rule of law, respect for human rights, free speech, respect for International law, and equality for all. In return the electorate need to respect the law, and take responsibility for their role in society.
  • A secure, self-sufficient, free market economy consists of a sustainable supply of raw materials and energy, a relatively cheap labour force, innovative skills (excellent education), technology transfer skills, manufacturing, marketing, with stable and effective financing (banking).
  • The existing EU/Eurozone is built on political, over economic, sensibilities, fractured by pandemic compromise, with political and national interests as serious constraints to sustainability.

A cursory comparison of the above with the structure of the current EU/Eurozone will reveal that the current structure shows that it:

  • fails to satisfy democratic legitimacy;
  • is incapable of resolving the existing financial problems, and responds too slowly in any event;
  • does not meet the recognised basic parameters of a democracy;
  • does not meet the requirements a self-sufficient free market economy; and
  • is constrained by the vested self-interest of the political leaders of the member states.

Rather than start by debating ‘Start Again or Plod On’ I would suggest that we start with a blank sheet of paper and identify what the people see as a credible European integration by building a model of an equitable and sustainable United States of Europe. Having developed and agreed such a model we can then compare it to what we have today to determine if we can adapt what we have to what we need, or whether we adopt our new model and move into it, leaving any unnecessary baggage behind in the old model. The other option, which is certainly on the table, is to completely abandon European integration.

Please forget ‘what is’ today in your thinking as details such as what side of the road we drive on in different countries is irrelevant to the future of our children and grandchildren. At the risk of alienation the green lobby can we also ignore what could be in energy terms and just look at the resource base that already exist. Too many people in Europe are currently below the bread line, distressed, and hungry. This problem must be addressed as a priority over any new initiatives. Indeed one of my drivers for this exercise is to divert wasted money in the existing EU into growth generation to create jobs for the millions currently without income. Dignity and self-respect derive from self-sufficiency, not charity. Also let your mind have free rein when considering all of the components of a self-sufficient free market economy. I would suggest that there are countries that could be invited to the party to strengthen self-sufficiency.

The classic method of solving complex multifaceted problems is to:

  • Understand the problem, and subdivide into logical components for analysis
  • Analyse each component part – Create an ideal solution
  • Adapt the ideal solution as little as is needed to make it work

When considering the way forward could we concentrate on what we need in our model to create a sustainable, prosperous, and equitable future for all, rather than what we want. Many people want a Ferrari car, but they do not need it to live their life in peace and prosperity.

I would like to propose 2 templates to guide us through the process. The first is the creation of the United States of America in terms of some of the hard decisions and compromises that had to be made to ensure inclusion of everyone. As the creation of the USA had the benefit of no historic baggage to deal with I want to use Switzerland as a second template being a country which functions in 4 languages, has a 700 year history, not currently fully compliant as a democracy, and has an unconventional government structure. If anyone would like to propose any other template I am open to suggestions.

In order to make the process manageable I propose to load a series of blogs over time, each one addressing a separate pillar of democracy, e.g. structure of government, judiciary & legal system, taxation, etc and throw in other considerations such as common language, nationality, republic versus monarchy etc. to complete the whole picture.

This is a serious attempt to find answers to the problems that politicians seem unable to resolve. Having spent some 30 years addressing complex problems using lateral and progressive thinking I can attest to the methodology which, on first sight appears too simplistic, impossible and/or unrealistic – but they said this about Keynes at Bretton Woods – until they sat and really thought about his ideas. We still benefit from his thinking today. The fall of the Berlin Wall was an unthinkable piece of lateral thinking after too many years of political bluster. I believe that the collective thinking of people from all walks of life seriously interested in the future of Europe can contribute to solutions to the problems that face Europe. If you have friends or contacts that you feel would find this process of interest then get them involved as well. Think the unthinkable, and enjoy the process.

I will attempt, in no particular order, to start the first discussion blog in the next few days. If you click on the ‘Follow’ tag you will receive an email as each blog is posted.

Thank you for reading my blog, and I hope that you feel it worth the effort.

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EU/Eurozone – Start Again or Plod On? – Intro

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EU/Eurozone – Start Again or Plod On?

Introduction

The Eurozone is still in crisis. Greece, Spain, Portugal, etc. all need yet more money, but who is prepared to make these funds available to these seemingly bottomless pits? A recent Top Gear program featuring a race through Spain with so-called budget-priced supercars revealed disturbing images of whole new towns developed to completion, even with the signs of intended occupants above shop windows, but without any signs of life or occupation. One of these urbanisations was on the outskirts of Madrid but was so empty that they could have a 5 km street race. A brand new international airport used for just one year and then abandoned. For once Top Gear actually provided a documentary about the situation in Spain more hard hitting than any visual newsreel that I have seen. The image of budget supercars in the £120,000 – £200,000 price range against this devastating backdrop made the experience surreal.

Do we need another Marshall Plan for the Eurozone, but on what basis – there has been no devastating war or natural disaster. So what went wrong with the EU/Eurozone? Can it be fixed, and if so who is prepared to finance it.

Is it broke beyond repair? If so we can’t just abandon it – there is significant collateral damage in the form of ordinary people living in fear of what their future holds. Unemployment is at unprecedented levels in post-war Europe, and we have a whole generation of young people with no apparent future.

I was fortunate enough some years ago to have Henry Kissinger sitting next to me on a flight to New York. I will always remember one comment he made during that flight. We were discussing the difference in attitude between Americans and Brits. He stated that the people in the USA provided far more economic value during their working life than Brits. His criticism of the Brits was that they gained years of valuable experience in the workplace but, at 60 – 65 years old, they were retired off and sent to the scrap heap. He said that in the USA the workforce retired only when they were no longer capable of valuable function, or they chose to retire. On valuable function, this included mentoring the younger generation to impart their valuable experience and wisdom. He said that Companies in the USA retain the older generation to mentor younger people and thus make the younger generation more valuable faster than conventional training.

This reverberates more today than it did then. In the UK we have the crazy situation of valuable resources and experience wasted only because they are over 50 years of age, and a younger generation out of work because education failed them and thus considered of little value to businesses already watching every penny of cost. Many businesses have a dumbed-down performance because their bright young things just do not have the knowledge and experience to keep standards high – another wasted cost? I accept that there is also a celebrity attitude problem amongst a percentage of the younger generation, but there is also a greater percentage that seriously do want the opportunity to perform. We have started to increase the retirement age, but it will be interesting to see if business will capture the older people and use them wisely, or just find other ways to remove them from the workplace. Why do we need a retirement age at all other than to identify when a State pension will be available. If one thinks lateral on this point the employer could offer a reduced salary to an older person receiving a State pension, rather than retire them off, and thus employ the younger person to be mentored at a nominal cost after applying the reduction in salary of the mentor. Two employment issues resolved in one simple move of increasing valuable contribution.

We also have a Government quietly encouraging businesses to prefer younger people over older people in spite of ageism legislation – for good political reason, albeit short-sighted. Businesses need talented people that can add value. Young people need knowledge and experience to be valuable. Older people have this knowledge and experience in spades. When do we bring the 2 together?

Now look at retirement ages in other Eurozone countries, especially those in trouble. Some of these countries scrap valuable resources years before they do in the UK. How much economic value is wasted in the EU with these crazy policies and attitudes – and at what cost?

How many of the towns in Spain would have been built if they had harnessed the knowledge and experience of the older people rather than promote younger people too quickly and thus making poor decisions. I am sure that this is reflected throughout Europe. Picture a young, bright, but inexperienced loan officer coming face-to-face with a known and wirily developer looking for large debt to equity ratios for his next (speculative) development – the loan officer being overawed. Then superimpose an older, very experienced loan officer into the same situation. I suggest we see the difference between ‘yes’, and ‘maybe’ – if you increase your equity input and show me some credit-worthy presales.

So what is wrong in the Eurozone? Just blaming the banking crisis is convenient for politicians, but otherwise short-sighted. Could it be that the formation of the Eurozone revealed historic cracks in economic policy that otherwise had been quietly hidden by politicians hoping that it would not be revealed on their watch. How many politicians in the Eurozone watched in envy as Margaret Thatcher broke the stranglehold power of the UK trade unions wishing they could do the same in their country. I sense that had Angela Merkel been in power at the same time as Thatcher then the German unions would have suffered a similar fate.

What I want to do over the following weeks, with the help of the blogging community, is to develop a serious framework that could work in Europe, and then examine whether or not the existing EU/Eurozone can be adapted to this new framework, or should the existing model be scrapped, as were the EEC and ERM before, and the whole of Europe move into a structure built more on economic and business-driven sensibility rather than the existing political mishmash.

I will post the outline of this process tomorrow.