Category Archives: Global Economics

Do the political problems in the USA over recent weeks indicate that democracy in the USA is flawed, and now, with self-sufficiency in energy, can they be trusted with the obligations of a global reserve currency?

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Do the political problems in the USA over recent weeks indicate that democracy in the USA is flawed, and now, with self-sufficiency in energy, can they be trusted with the obligations of a global reserve currency?

The brinkmanship demonstrated over recent weeks between the Executive, House of Representatives and the Senate reveals a total disregard for how a few ultra-right wing politicians can cause great concern in the international markets. I argued in my blog, EU/Eurozone – Start Again or Plod On – A New Government, that having the upper and lower houses in a democratic system both elected, especially at different times in the economic and political cycle, can result in stagnation of the governmental process.  This has to be a flaw in the democratic system, especially when just a few people can hold the World economy to ransom. The USA has shown time and time again that, in any global issue, their own interests are most certainly the top priority. Albeit that, if my calculations are correct, this stand-off stagnation has occurred 18 times during the past 30 years does this fact make the global uncertainty created any more palatable? As USA debt reaches levels that are unassailable in terms of any hope of repayment is it time to seriously look at this problem?

The debate that I think is needed is related to the introspective nature of the USA, as provider of the global reserve currency. Only some 15% of USA citizens have passports, very little is taught in their schools regarding the World at large, they are taught that America is the best place in the World, they are the biggest and the best at everything (they have a World Series in a sport that is only played in the USA), and very few can indicate on a map of the World where major countries are located, let alone cities. Indeed I took my teenage daughter to the USA some years ago where she was told that a nominal relief in Boston was the largest relief in the World, and when we walked past the CBS building in New York there was a screen proclaiming ‘America, the oldest surviving democracy in the World’. Is such a culture to be trusted with the broader obligations of the holder of the global reserve currency?

Up until recently one of the fears within the political circles of the USA was their increasing dependence of the greater World for strategic resources such as oil & gas. This did provide a more tempered approach to how they dealt with international issues. However they have now become energy self-sufficient so will this change attitude to international issues as they recede into their natural state of introspection?

The other side of the debate is what is the alternative? Forget the Euro or Renminbi replacing the USD as the global reserve currency as neither is remotely qualified to assume this role. However it was not so long ago that the USD, and thus the World economy, was linked to the Gold Standard, and this was removed overnight; driven by the UK. Can we devise an alternative that can both commands the level of confidence required by the World markets to be acceptable, and disconnected from the introspective political wrangling that artificially impacts it credibility, and thus stability.

I am reminded of structures in the past such as a basket of currencies, e.g. Special Drawing Rights (SDR’s) but these can be unduly influenced by stronger participants, albeit more dampened than the impact of the USD as a sole reserve currency.

My thoughts are that there is a lateral solution out there, and long overdue. I also suggest that recent events make a solution to this problem ever more urgent as I do not see the USA reforming its political system to prevent the stagnation we have seen over recent weeks.

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IPCC Fifth Assessment Report on Climate Change 2013: Does the lack of media interest indicate that this group have cried ‘wolf’ once too often?

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  IPCC Fifth Assessment Report on Climate Change 2013: Does the lack of media interest indicate that this group have cried ‘wolf’ once too often?

The 5th Assessment Report on Climate Change was published last week, but did anyone notice? Where were the media? Scant reference in the visual and radio media, and very little in the printed press – the London Evening Standard, having the lead over the daily newspapers, had all of 2 column inches on page 4. Have these climate change disciples cried ‘wolf’ once too often, and no-one believes them anymore?

Intrigued by this lack of obvious interest, even by the serious news stations, I waded through the 36 page report summary, and the press release, over the weekend to see what it had to say – the full report is a real tome. The striking feature throughout this report is the obvious desperation to convince the reader that this time they have it right. They have better observation techniques, better data, blah, blah, blah. However, without boring the pants of one and all, the essence is that mankind is a major contributor to global warming (around 50% – compared with the 99%+ stated in 1999) with a 90% degree of confidence. It also indicates that some 9,000 scientists around the World agree with the findings of this report. So what does this really tell us?

Many moons ago in another life, when I started my training as a scientist at the Atomic Energy Research Establishment, we were given a number of books that we should treat as lifelong companions in our pursuit of truth. One of these was called ‘The Use and Abuse of Statistics’ and was intended as a constant reminder that the data must paint the picture, and not used or abused to create the picture that one would like the data to paint (e.g. in order to receive continued funding). I still have this somewhat battered book as I found it very useful when studying the data presented by the ultimate protagonists of such abuse – Politicians. Obviously this book defines how data can be presented to fit the required message, and the difference between relative levels of ‘confidence’ and ‘certainty’ as there is a big difference between confidence and certainty. You need to have a very clear idea of these classifications in order to make any sense of this IPCC report. I also know how frustrating it is when there is an unexplained hole in the data when you are under pressure to present your findings. Do you mention the hole, or assume it of little relevance and ignore it.

Let us consider a typical statement in this report: “The atmospheric concentrations of the greenhouse gases carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) have all increased since 1750 due to human activity.” The first part of this statement is probably a true and accurate – even an objective statement. But then the integrity is shattered by the second part of the statement i.e. “due to human activity” which indicates a level of certainty which can only be interpreted as desperate arrogance – it needed a qualification such as ‘probably, primarily, likely’ to be acceptable without absolute proof to the contrary. The remainder of this paragraph does not support the indicated certainty.

Just as a comparison on a Universe basis (as in climate change) I asked an astrophysics friend who had worked on the Mars Voyager mission if they would have launched Voyager with only a 90% degree of confidence in their calculations that Voyager would reach Mars – absolutely not. They needed to be better than 99% degree of certainty subject only to cosmic collisions that could destroy Voyager.

Let me be clear in that I fully accept climate change. Indeed the climate is constantly changing, and we are familiar with the climate change over the past 10,000 years since the last ice-age since when we are told that sea levels have risen some 110m and thus cities that were once on dry land are now beneath the sea. We are also told that there is evidence that sea levels have been some 10m higher than they are today in past history so our climate is a continually evolving system. My reservations are to what extent mankind influences changes in climate versus natural change as the earth continues to evolve. Leaving mankind to one side for a moment we are told that changes in the activity of the sun will render earth uninhabitable by humans in some 140,000 years’ time in any event. If science revealed with substantial levels of certainty that the behaviour of mankind was impacting climate change by, say 30%, then I think that mankind needs to be creative and resolve this influence. What I do not accept is that the arrogance of mankind can suggest that the full force of mother nature is a known and fully understood process, and that man has the capacity to change it, even unwittingly – something akin to King Canute standing before a tsunami.

Why did this report need to state that some 9,000 scientists agree with the content of this report? Do we know how many scientists disagree with this report, or even if some 9,000 scientists is a representative group in the global scientific community. Do we remember that when Copernicus (1473 – 1543) developed his treatise on a heliocentric model of the universe with the sun at its centre he was so afraid to publish that the first copy was placed into his hands on his death bed. When Galileo (1564 – 1642) assumed the mantle on behalf of Copernicus, and added description of the orbits of other planets such as Venus and Neptune he was branded a heretic and committed to house arrest for the remaining 9 years of his life. In the 15th century Christopher Columbus found it difficult to find a crew for his historic voyage of discovery because the general belief was that the earth was flat and thus he would sail over the edge into iniquity. History shows that the view of mankind, based on lack of real knowledge over arrogance, can lead to serious misunderstandings. This is where I see the claims of mankind’s influence over climate change today.

What this IPCC report really indicates is that, since their first report in 1999, there has been a number of step changes in thinking and understanding of the complexity of the problem – but without enough understanding to define a universally accepted solution. This is progress, but the contra argument is that we are still in an embryonic stage at the front-end of the curve of discovery. But the frenzy caused from the imposition of such imperfect science has reaped havoc in energy policy throughout the World, and thus my reference to crying wolf.

Using the UN to put their weight behind emotive propaganda regarding climate change has provoked responses from the environmental lobby that has delayed political decisions regarding replacement of current energy generation stock. Surely the UN has enough problems dealing with the issues relating to the essence of its being. Furthermore the people are being taxed to fund clean energy policies for which, to date, there is no proven argument as to the urgency. Blue skies science has traditionally been funded by benefactors, philanthropists, etc and so should climate change science until such time as the evidence is irrefutable. Public funds should not be invested in such embryonic science or technology. I have absolutely no problem with development of new energy technologies as this would be against my fundamental scientist instinct. However, as shown by our wind power investment, there is no payback in any respect to the people whose taxes, in whatever form, are used to develop such technologies so they get a double whammy with also trying to manage their lives in this period of austerity.

As for the IPCC report predicting what will be in 100 years from now I can only comment that had we asked the most eminent progressive thinkers of their time 100 years ago (before World War I) what the World would look like today, how wrong would they have been? My concern, and should be the concern of every one of these 9,000 scientists, is what do we need to do today in whatever reliable form to ensure that we can provide the required energy capacity needed in 10 years’ time to safeguard the momentum of mankind. What we do not need is energy starvation with the ensuing likely chaos and anarchy – even from those banging the drum about clean energy today. And please let us stop kidding ourselves that wind and solar can play any primary part in such delivery.

The irony of energy policy delay in much needed high capacity base load energy generation (as I will argue in a blog already in progress) is that the beneficiaries of these delays will be none other than the fossil fuel production companies – home goal for the environmental lobby.

Perhaps a glowing example from history from which we should learn is the story of the Mayan civilisation from around 2000BC – AD250. The mathematical and astronomy skills of this ancient civilisation are well known, and form part of our calendar today. There are many theories as to how this highly advanced civilisation suddenly collapsed. Their scholars spent most of their time observing the universe, and even lived high in the trees or on platforms never really taking much notice of life on the ground. The popular view to their demise is that their population exceeded the carry capacity of their environment, exhausting agricultural capacity, over-hunting, and converting their forests into cropland thus reducing evapotranspiration and thus rainfall leading to a lack of water. Are we focussing on the wrong end of the universe? Should we take our heads out of the clouds and look to how we manage the fundamentals of life such as food, water, energy, etc. Certainly the research needs a watching brief on the impact of human activity but do we really need to continue with the massive costs of this climate change circus when there are more pressing matters right under our noses?

 

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NUCLEAR REACTORS – Are the new generation worthy of our trust?

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NUCLEAR REACTORS – Are the new generation worthy of our trust?

Why should people put their trust in nuclear energy production in light of recent accidents and the problems of dangerous, long half-life hazardous radio-isotopes that have to be stored in underground bunkers for many years? Having referred to ‘new generation reactors’ in my blog ‘ENERGY – What does the future hold?’ I have been challenged to explain my view that nuclear is the cleanest safe form of base load energy generation.

Firstly there are two basic forms of nuclear reactor – ‘fission’ and ‘fusion’.

Nuclear fission, generally known as a chain reaction, is a process in which neutrons released in fission from an unstable heavy isotope such as uranium causes additional fissions in at least one further nucleus. This nucleus in turn produces neutrons which then go on to cause further fissions. This process can be controlled (nuclear power) by absorbing some of the neutrons thus preventing them causing further fission, or uncontrolled (nuclear weapons). The nuclear chain reaction releases several million times more energy per reaction than any known chemical reaction. This is the process used in current nuclear reactors.

Nuclear fusion is a nuclear reaction in which two or more atomic nuclei are rammed together at a very high speed to form a new atomic nucleus. During this process, matter is not preserved because some of the mass of the fusing nuclei is converted to photons (enormous amounts of energy at incredibly high temperatures). The energy that the sun emits into space is produced by nuclear fusion reactions that happen in its core due to the collision of hydrogen nuclei forming helium nuclei. The problem to be overcome by the Ifer project is the containment of this vast energy to allow it to be harvested. I cannot comment further on this subject other that suggest a look at the Ted lecture by Taylor Wilson (link at end of blog).

The current types of nuclear fission reactors use specific fissile isotopes to make energy. The 3 most practical ones are:

  • Uranium-235, purified from mined uranium. Most nuclear power to date has been generated this way.
  • Plutonium-239, transmutated from Uranium-238, refined from mined uranium. Plutonium is also used for nuclear weapons.
  • Uranium-233, transmutated from Thorium-232, refined from mined thorium.

The new generation reactors are the generation III uranium-235 and plutonium-239 fuelled reactors which incorporate evolutionary improvements in design developed during the lifetime of the generation II reactor designs. These include improved fuel technology, superior thermal efficiency, longer life (60+ years), passive safety systems (they close down themselves, if necessary), and standardized design for reduced maintenance and capital costs. The first Generation III reactor built was at Kashiwazaki in 1996.

By way of example the contrast between the 1188 MWe Westinghouse reactor at Sizewell B in the UK (generation II) and the generation III AP1000 of similar-power illustrates the evolution from 1970-80 types. First, the AP1000 footprint is very much smaller – about one quarter the size, secondly the concrete and steel requirements are less by a factor of five, and thirdly it has modular construction. These modules comprise one third of all construction and can be built off site in parallel with the on-site construction.

However these reactors still produce long lasting, albeit less, hazardous radioactive waste.

The International Atomic Energy Agency claims that the world currently has 442 nuclear reactors. They generate 372 gigawatts of power, providing 14pc of global electricity. They say that nuclear output must double over the next twenty years just to keep pace with the rise of the China and India. If a string of countries cancel or cut back future reactors, let alone follow Germany’s Angela Merkel in shutting some down, they will most certainly shift the strain onto gas, oil, and coal. Since the West is also cutting solar and wind subsidies, we can hardly expect these industries to plug the gap – even in the unlikely event that they could.

What is more, nuclear power generation is under intense scrutiny due to the recent Japanese disaster (see my thoughts on this in my ‘ENERGY – What does the future hold?’ blog). Nuclear programs across the world are re-evaluating regarding their future power source with politicians hiding behind citing safety concerns. Solving the real and perceived dangers of nuclear power is critical to future investment. However perspective would argue that, setting aside what may emerge from the Fukushima disaster, (as yet none of some 15,000 deaths are linked to nuclear failure) there has never been a verified death from nuclear power in the West in half a century.

The exciting new development, however, is the Liquid Fluoride Thorium Reactors (LFTRs) – albeit work started in the 1960’s – 1970’s primary at the Oak Ridge National Lab’s (ORNL) in the USA, but abandoned because it does not produce weapons-grade plutonium. LFTRs have distinct safety, environmental, and economic advantages over uranium-based and solid-fuel nuclear power. It has a higher neutron yield than uranium, a better fission rating, longer fuel cycles, far safer, substantially lower construction costs, and does not require the extra cost of isotope separation. As a happy bonus, it can burn up plutonium and toxic waste from old reactors, reducing radio-toxicity, and acting as an eco-cleaner.

Over the past decade Oak Ridge National Lab’s (ORNL) LFTR research from the 1960s–1970s has been revived in various global programs. A private Japanese company is seeking funding for a LFTR called FUJI. Canada is researching a fast-breeder LFTR design in their current CANDU research. Thermal LFTRs are part of the generation IV reactor research in France. China announced a LFTR development program in February 2011. At the U.S. federal level, Senators Harry Reid and Orrin Hatch support providing $250 million in federal research funds to revive the ORNL research and draft specific resolutions. This has all passed unnoticed – except by a small of band of thorium enthusiasts – but it may mark the passage of strategic leadership in energy policy from a potentially inert and status-quo West to a rising technological power (China) willing to break the mould.

The greatest advantage of LFTRs is that there is very low chance of a catastrophic, explosive meltdown like Chernobyl, or a partial meltdown like Japan’s Fukushima-Daiichi or Three-mile Island in Pennsylvania. In the event of an earthquake or other disruptive event, a simple freeze drain plug would melt, allowing the fissile material to flow into a containment chamber where the system could be air-cooled. Electricity and active controls are not required for this process. LFTRs operate near atmospheric pressure with little possibility of a containment breech or explosion. By using air cooling, instead of pressurized water, hydrogen gas, which caused the explosions at the Fukushima-Daiichi site, cannot be produced. The liquid fuel allows for online removal of gaseous fission products, such as Xenon, for processing, thereby these decay products would not be spread in a disaster. Furthermore, fissile products are chemically bonded to the fluoride-salt, including iodine, caesium, and strontium, capturing the radiation and preventing the spread of radioactive material to the environment. Former NASA scientist and thorium expert Kirk Sorensen (see link to his Ted lecture below) notes that because LFTRs operate at atmospheric pressure, hydrogen explosions as happened in Fukushima, Japan in 2011, are not possible. “One of these reactors would have come through the tsunami just fine. There would have been no radiation release.”  Meltdown is impossible, since nuclear chain reactions cannot be sustained, and fission stops by default in case of accident.

Just as an illustration that there is no perfect safety the Didcot Power Station (coal fired) was being built whilst I was at AERE, Harwell. The ground upon which the 500MW turbines were being installed was not the firmest. Thus we computed the likely impact should one end of the turbine casing drop 2cm causing the turbine to leave its mounts whilst at full load. We computed that it would cut a channel all the way to Cornwall (around 100 miles or 160km) before coming to rest.

Professor Robert Cywinksi from Huddersfield University said thorium must be bombarded with neutrons to drive the fission process. “There is no chain reaction. Fission dies the moment you switch off the photon beam. There are not enough neutrons for it continue of its own accord,” he said. Professor Cywinski, who anchors a UK-wide thorium team, said the residual heat left behind in a crisis would be “orders of magnitude less” than in a uranium reactor.

The earth’s crust is estimated to hold some 80 years of uranium at expected usage rates. But thorium is as common as lead. America has buried tons as a by-product of rare earth metals mining. Norway has so much that Oslo is planning a post-oil era where thorium might drive the country’s next great phase of wealth. Even Britain has seams in Wales and in the granite cliffs of Cornwall. Almost all the mineral is usable as fuel, compared to 0.7% of uranium. There is enough to power civilization for thousands of years.

It is nearly impossible to make a practical nuclear bomb from a thorium reactor’s by-products and thus of no interest to rogue Governments or terrorists. According to Alvin Radkowsky, designer of the world’s first full-scale atomic electric power plant, “a thorium reactor’s plutonium production rate would be less than 2% of that of a standard reactor, and the plutonium’s isotopic content would make it unsuitable for a nuclear detonation.

The quantity of construction materials is reduced because large cooling towers and containment structures that handle high pressures are not needed. LFTRs operate at high temperatures allowing use of higher-efficiency Brayton nitrogen generators rather than steam generators, raising thermal efficiency from 35% to ~50%.

At the end-of-use phase, significantly fewer radioactive materials remain. LFTRs produce one ton of spent radioactive fuel per GW year. The volume of waste products from a LFTR is approximately 300 times less than that of a uranium reactor. The fissile waste is 83% spent within 10 years and below background levels in approximately 300 years. Conventional nuclear reactors take thousands of years to decay. LFTRs therefore eliminate the need for a multibillion dollar containment facility.

China’s Academy of Sciences said it had chosen to develop a thorium-based molten salt reactor system not least because the system is inherently less prone to disaster, and the hazardous waste will be a thousand times less than with uranium. So the Chinese will soon lead on thorium technology, as well as molten-salts. They are doing mankind a favour.

It has come as a surprise to most to learn that such an alternative has been available to us since World War II, but not pursued because it lacked weapons applications. Others, including Kirk Sorensen, agree that “thorium was the alternative path that was not taken”. According to Sorensen, during a documentary interview, he states that if the U.S. had not discontinued its research in 1974 it could have “probably achieved energy independence by around 2000”.

Summarizing, thorium can provide a clean and effectively limitless source of power whilst allaying all public concern—weapons proliferation, radioactive pollution, toxic waste, and fuel (uranium and plutonium) that is both costly and complicated to process. Nobel laureate Carlo Rubbia of CERN, (European Organization for Nuclear Research), estimates that one ton of thorium can produce as much energy as 200 tons of uranium, or 3,500,000 tons of coal. Coal, as the world’s largest source of carbon dioxide emissions, makes up 42% of U.S. electrical power generation and 65% in China.

From an economics viewpoint, U.K. business editor Ambrose Evans-Pritchard writes that “Obama could kill fossil fuels overnight with a nuclear dash for thorium,” suggesting a “new Manhattan Project“, and adding, “If it works, Manhattan II could restore American optimism and strategic leadership at a stroke”.

So where should our trust lie, in technology that can answer most of the problems, or politicians who have ignored this technology firstly because it could not produce weapons-grade plutonium, and then to win favour (votes) with the environmental lobby. I am reminded of the ending dialogue in the film ‘Three Days of the Condor’; a film about securing energy resources for the USA, and starring Robert Redford. The essence of the conversation is what would happen if the lights went out and the fuel pumps ran dry. The CIA chief stated, quite correctly in my opinion, that the people would look to the government to restore power and fill the gas stations quickly, and they would not care how it was done. I asked an ecology activist what she would expect to happen if we did not have enough reliable base load capacity. Her reply was that people would have to learn to use less energy. I think the CIA chief was much closer to reality, and thus we must trust the technology – it is probably safer than self-serving politicians.

Links:

Taylor Wilson: Yup, I built a nuclear fusion reactor

http://www.ted.com/talks/taylor_wilson_yup_i_built_a_nuclear_fusion_reactor.html

Kirk Sorensen: Thorium, an alternative nuclear fuel

http://www.ted.com/talks/kirk_sorensen_thorium_an_alternative_nuclear_fuel.html

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ENERGY – What does the future hold?

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ENERGY – What does the future hold?

There is much debate today about energy, whether it be renewables versus fossil fuels, nuclear, or the Armageddon view that by 2020 the lights will go out. I find these debates emotionally charged, and far from any form of reality.

Having been invited to express my views on the future for energy as someone engaged in energy in one form or another all of my working life I would like to expand these arguments and attempt to present a more sober and objective view of the energy requirements of the future, and how mankind, in its perpetual thirst for discovery, will most certainly overcome, and indeed it will be our contempt of the forces of ‘mother earth’ that are likely to prove the more formidable than anything that the consumptive excesses of mankind can create. So let me move away from the typical discussion about energy and take a more controversial, or as someone remarked, a ‘Clarkson approach’ to the future of energy.

Let us start with a short trip back into the 18th century to the start of the industrial revolution. Prior to this time wood had been the main source of energy in Britain, used for fuel in homes and small industries. But as the population grew, so did the demand for timber. As forests were cut down, wood had to be carried further to reach the towns. It was bulky and difficult to transport and therefore expensive.

Coal was the fuel which kick-started the Industrial Revolution – and Britain was very fortunate to have plenty that could be easily mined. Coal is a much more potent form of power, providing up to three times more energy than wood. Political, economic and intellectual conditions would all contribute, but at the heart of the industrial revolution was our use of this new and abundant energy source. Throw in the thoughts of Isaac Newton for good measure and we have the transformation to make the world in which we live today. Indeed coal is still in use today, some 250 years later, and there are still vast reserves throughout the world.

Since then we have developed oil and gas as energy sources, and yet again, and contrary to the view of the doomsayers, there are still substantial reserves of both. Experts in the USA are now stating that fracking for oil and gas in the USA will make the USA self-sufficient for at least another 100 years, and energy prices in the USA are already reduced by some 20%. It would appear that fracking will realise substantial supplies of oil & gas in the United Kingdom and many other countries.

So what are the issues that will determine the energy requirements of the future?

  • The impact of the continued use of fossil fuels
  • The development of renewable/clean energy generation
  • The (increasing) demand for energy
  • The Malthusian controversy (population increase)
  • New technologies

We are told that carbon emissions resulting from the use of fossil fuels are causing global warming and/or adverse climate change. As a nuclear physicist by training at the Atomic Energy Authority at Harwell, and working on such projects as fission control in fuel element tubes in nuclear reactors, flow dynamics of oil and gas throw pipelines in different climatic conditions, and nuclear geophysics techniques for the in-field analysis of boreholes in the search for minerals, oil and gas I am used to public outcry at new technologies – my first University degree course had to be renamed Physical Electronics to avoid the onslaught from Michael Foot and his ‘Ban the Bomb’ movement.

One project that I was aware of in those days, and still persists in the shadows, is the attempts by scientists to alter our weather. We are all aware of the use of cloud seeding by the Russians in the Communist era to prevent rain on their May Day parades, and even by the Chinese during the 2008 Olympics. The story is far bigger. The first such experiments were an attempt to change the fierce weather patterns in the Bay of Biscay because of the continued loss of shipping – indeed I vaguely remember that Lloyds of London may have been a sponsor. Later the computer simulations moved to a reliable irrigation of sub-Sahara – the common view of recent heavy snowfall in Riyadh, Saudi Arabia is that it is not the result of climate change from greenhouse gasses. Then we have the urgent desire in Australia to irrigate the mineral rich outback of Australia so that these massive reserves can be exploited – could this explain the recent severe flooding in regions of Australia.

The earth’s climate has been significantly affected by the planet’s magnetic field that could challenge the notion that human emissions are responsible for global warming. “Our results show a strong correlation between the strength of the earth’s magnetic field and the amount of precipitation in the tropics,” claim the two Danish geophysicists behind the study, Mads Faurschou Knudsen and his colleague Peter Riisager of the geology department at Aarhus University in western Denmark.

Actually changing weather conditions is well within the power of man as this involves disturbing the earth’s magnetic field in the depths of the oceans where weather patterns are determined. However the vast array of variables in the equations have to be reduced to a manageable level of primary, secondary and tertiary impact, discounting the lesser impact variables, as decided by man, to facilitate ‘solutions’ that should work – or maybe not. All of this experimentation is undertaken with good intention, but……………..

Then we have the problem of the ‘eminent’ climate change scientific community, and one particular group who I refuse to give them editorial credit because of their celebrity over fact status, who wrote a critically acclaimed book in 1999 stating that the earth’s contribution (volcanic activity, etc.) was only around 1% of current greenhouse gas emissions, and have since had to revise this significant upwards over 3 subsequent revisions, and I now hear that there has been a gross miscalculation of deep sea geothermal activity contribution plus the release of once frozen methane gases from the ocean bed (as was witnessed during the recent BP disaster in the Gulf of Mexico). I often wonder if the climate change scientific community are aware of the experiments described above, or even alive to the reality of the impacts due to the natural progression of ‘mother earth’.

Whilst I am prepared to accept that man is playing a part in so-called global warming I consider it disingenuous to ‘mother earth’ to think that mankind has control of their destiny on this planet. For example lurking beneath Yellowstone National Park in the USA is a massive underground reservoir of magma, capped by the park’s famous caldera, a huge reservoir of superhot liquid rock and poison which could blow at any time. USGS geologist Jake Lowenstern, scientist-in-charge of the Yellowstone Volcano Observatory, suggests that most damage would come from “cold ash” and pumice borne on the wind, and considers it “disasterous” when enough ash rains down that it creates a layer of 10cm or more on the ground poisoning land and waterways – and this would happen in a radius of 500 miles or so. The gasses released would have a global effect on temperatures. “Any big eruption causes a cooling of the atmosphere, especially with that much ash” claims Lowenstern. In 1812 the Mount Tambora super volcano eruption in Indonesia lowered global temperatures, and a caldera-forming eruption in Yellowstone Park would be bigger, so climate change would almost certainly follow, albeit would possibly only last for a few years.

The so-called Thera eruption of Santorini in the Aegean Sea, circa 1630 BC, left a large caldera surrounded by volcanic ash deposits tens of metres deep (compare depth of ash with the above view of Lowerstern) and may have led indirectly to the collapse of the Minoan civilization on the island of Crete, 110 km (68 mi) to the south, as a result of a gigantic tsunami. A popular theory holds that the Thera eruption was such a devastating event felt thousands of miles away that is the source of the legend of the demise of Atlantis. Plato quotes Critias’ account of the legend, as told to Solon by one of the Egyptian priests:

 “Now in this island of Atlantis there was a great and wonderful empire which had rule over the whole island and several others, and over parts of the continent . . . But, there occurred violent earthquakes and floods, and in a single day and night of misfortune. . . the island of Atlantis . . .disappeared in the depths of the sea.”

The effect on the climate of the Northern hemisphere of the Thera eruption is being detected in tree rings as far north as the UK. Although the eruption of Santorini is recognized as one of the most explosive volcanic eruptions in historic times, the event is only a single eruption in a continuum of eruptive activity associated with subduction. The island group exhibits on-going seismic activity, and both fumaroles and hydrothermal springs are common features around these islands. It seems clear that we can expect another eruption, and we cannot rule out the possibility of another catastrophic eruption reminiscent of ~1630 BC.

Do the Earth’s volcanoes emit more CO2 than human activities? Probably not, but when a large eruption occurs the results are instant and devastating. The ecologists are speaking of a 2oC rise in temperature by 2100 from man-made global warming, but a major eruption can reduce the earth’s temperature by this much in a few weeks.

Another aspect of greenhouse gas emissions I feel worthy of note is the current debate about all automotive vehicles being compelled to use headlights during the day. If we take an average light wattage of 180 watts per car, with an average population of 4 million cars on the road throughout the day the consumption is equivalent to 720MW – a fairly large power station. Where does this energy come from – the car’s engine (burning fossil fuels). I have occasion to make trips to Switzerland and Italy by car. My preferred travel time is through the night, but returns are typically through the day. My fuel consumption increase through the night versus the day has been measured on a number of occasions and ranges between 5% – 8% of additional fuel to travel through the night. This is the additional energy requirement to power my lights. So this proposed policy not only will increase consumed fuel costs by between 5% – 8%, it also creates additional CO2 emissions equivalent to a large power station burning fossil fuels. Truly a contradictory policy.

Thus I have a cynical view of the man-made greenhouse gas/climate change argument. Indeed had I written this essay some 10,500 years ago I would have been sitting on some 30m of ice which has been melting ever since, mainly as a result of natural climate change.

Of course we must not forget the Malthusian controversy, especially if we reach the estimated planet population of some 10 billion people by 2050. Ironically I do not see this as an energy problem as far greater impacts will be the need for potable water, and the devastation to the animal kingdom.

What of future demands for energy? Propaganda suggests that energy demand will triple by 2050. I have attempted to rationalise where this multiple comes from. 20 years ago we had 100w incandescent lamps to provide lighting. This was replaced by 50w halogen lamps. Today the equivalent is an 8w LED. Think of the old cathode ray tube TV sets consuming around 400w now replaced with 60w LED TVs. When computers were first used in commercial applications in the 1970’s they required many kiloWatts to run them. Today you can have the same computer power using milliwatts of power. Thus the trend is far more function for significantly less power.

Of course there are people whose consumption of energy can only be described as blatant excess, but behaviour change is not possible with these people so ‘save energy’ propaganda or taxation will not achieve anything with such people. I know people from the most ignorant to very intelligent, but all having the common denominator of financially comfortable, and to whom there is no price/elasticity for energy. If you tripled the cost they may moan for 10 minutes, and then continue as before. But their consumption is a microcosm against total energy requirement.

What annoys me is that, in pursuit of political favour from noisy eco-voters, our politicians have allowed energy companies to extract essentially a duty from all people for so-called ‘new energy’ development. The payment of this duty includes the people struggling to pay for the energy they actually need to support their families. Instead of the Government using a more reasonable proportional taxation process they cause unnecessary hardship to many to win votes by satisfying the eco-lobby and claiming that they are not raising taxes.

So what of the future? We see a major political push in the development of so-called renewables such as wind power and solar with people seriously believing that these can be anything more than secondary or more likely tertiary energy sources. In 2012 I was asked to analyse 4 such projects for financing purposes; in the USA a 100MW solar thermal, a 60MW vertical axis wind, and a biomass still in development, and in Italy a 18MW biomass plant that had already been built, but was now for sale.

In the case of the 100MW solar thermal proposal operating cost was $56 per MWh including State ‘green’ grants, with then base load off-takes around $72 per MWh (they expected to achieve a PPA at $98 per MWh). Fracking results bought base load off-takes below $50 so no possibility of finance.

The vertical axis turbine project was interesting because it offered substantial advantages over conventional propeller-style wind turbines.  Functionality, ease of maintenance and operation, lack of electronic interference, no ground resonance, a more acceptable profile, capable of tolerating a wider range of wind speeds, quieter in operation than propeller-style turbines, and no bird or bat kills in over 12 years of turbine operations. But again this project relied on State ‘green’ grants to make it commercially viable (I am reliably informed that there are no Federal grants for ‘green’ energy in the USA). Again fracking results caused cessation of the State grants.

The biomass plant relied on an energy conversion process that had only been proven on a small scale in a university laboratory thus needed technology transfer finance. However it was clear that this technique relied on so many cost variables that no-one was interested to engage. It is also worth mentioning that I came across a number of bankrupt ethanol plants during this process.

I was invited to analyse the biomass plant in Italy as due diligence just as the investor was about to purchase it. It was already working having received grants from both the EU and the local Municipality. However the operator had taken all of the capital value out of the project, including the carbon credits, and was trying to unload the project on some unsuspecting pension fund at around an 8% yield – but only achievable if the energy subsidies on the feed-in tariffs from the Government were maintained – very unlikely. The owner realised that there was no commercial future for this plant, especially if energy prices stagnated, or reduced. The investor walked away as a result of my analysis.

I have yet to examine any such projects that are commercially viable without subsidies. The exception is waste to energy plants which, if the dioxins and heavy metal issues are properly addressed, can be a very effective use of waste.

Obviously there are a number of other fuels and technologies in the process of research and development, and I am aware of at least one energy source that has been suppressed because it provided direct competition to the majors in that it would be a cheaper fuel than petrol or diesel. This is a fuel developed by the Germans during the war, but they could not stabilise it. A group of scientists found the notes relating to this fuel in a bunker and developed a way to stabilise it such that they could use it in a conventional car engine. The waste product is water, so completely clean, and can be produced in most countries. Unfortunately all 3 of the scientist mysteriously died within 3 months of each other.

If the ecologists can win the argument then nuclear, (and hydro where possible), are the only existing sources of reliable base load clean energy. But why have we not built the reactors that we so desperately need? The anti-nuclear lobby have jumped on the Fukushima Daiichi nuclear power plant disaster as an argument to delay the development of new generation reactors. This argument is invalid because the Japanese Government was informed by the IAEA over 10 years ago that these reactors should be de-commissioned. The Japanese economy was in dire straits so the various politicians, since the warning, criminally gambled with the lives of many through wanton negligence. Even when the tsunami triggered the incident they failed to raise the alarm in the international community to seek help that could have avoided many of the problems that subsequently occurred. Don’t blame the reactors, look to the politicians who abused the technology constraints. Those reactors worked well for years fuelling the Japanese economy. Until we have new reactors fossil fuels will reign, regardless of the environmental lobby.

The real future is in fusion. The international nuclear fusion project – known as ‘Iter’, meaning “the way” in Latin – is designed to demonstrate a new kind of nuclear reactor capable of producing unlimited supplies of cheap, clean, safe and sustainable electricity from atomic fusion. The claims are that if Iter demonstrates that it is possible to build commercially-viable fusion reactors then it could become the experiment that saves the world in a century threatened by climate change and an estimated three-fold increase in global energy demand. Of course this statement assumes much in terms of global warming and demand, but there is no doubt that this technology, once perfected, will open completely new horizons in wholesale clean energy generation.

On a final note I consider it an insult to the intelligence of our successors that people of today think that future generations will not find solutions to the problems that we face, or think we face. I appreciate that the loud retort will be ‘sustainability’ but the progress of mankind over the past 100 years has seen incredible exponential advances, and this will continue. Who is to say that some brilliant chemist will not find a digester to extract the CO2 out of the atmosphere if this proves to be a real problem. But let us first check that it is mankind who are causing the real problems, or is ‘mother nature’ relentlessly progressing through her life, and we just have to adapt.

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

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EU/Eurozone – Start Again or Plod On?

Conclusions

During a speech in Zurich on 19th September 1946 probably the greatest statesman of the 20th century, Winston Churchill, called for the creation of a United States of Europe modelled on the United States of America singling out the essential need for Franco-German co-operation. Churchill did not envisage the UK’s role as anything other than promoter (broker). In May 1950 Robert Schuman, the then French Foreign Minister, took up the idea of Churchill and put forward a plan.  We are now in 2013, some 67 years later, and what do we have that remotely resembles this vision?

On July 2nd 1776, the Second Continental Congress, meeting in Philadelphia, voted unanimously to declare the independence ‘of the thirteen United States of America’. Two days later, on July 4, Congress adopted the ‘Declaration of Independence’. The drafting of the Declaration was the responsibility of a Committee of Five, which included, among others, John Adams and Benjamin Franklin; it was drafted by Thomas Jefferson and revised by the others, and then by Congress as a whole. It contended that ‘all men are created equal’ with ‘certain unalienable rights, that among these are life, liberty, and the pursuit of happiness’, and that ‘to secure these rights governments are instituted among men, deriving their just powers from the consent of the governed’.

In spite of a ravaging war to overturn the Declaration of Independence, (the Revolution War involving both the British and the French), a new Constitution was adopted in 1789. It remains the basis of the United States federal government, and later included a Bill of Rights. With George Washington as the nation’s first president and Alexander Hamilton his chief financial advisor, a strong national government was created. In the First Party System, two national political parties grew up to support, or oppose presidential policies. This was achieved in just 15 years during a ravaging war, and this was all managed without telephones, internet, air travel, motorised transport systems, etc.

Peace and prosperity cannot be achieved merely by the creation of a political and economic framework if the people themselves play no active part in shaping society or in living together in harmony, i.e. without the consent of the governed. In the current EU system little or nothing of significance has been determined by the people and thus they rightly feel disillusioned and disenfranchised. It is a certainty that if the UK were to vote today on staying in the EU the vote would be a resounding ‘NO’. I am informed by my connections in Germany that the vote of the German people is fractured, and could go either way. The Mediterranean states would almost all vote ‘NO’ in spite of reliance on Germany for finance. So when do the politicians stop playing their fiddles whilst Rome is burning, and start to address the real issues, not least that the current framework does not, and will not work. Then sit back and ask the people what they need from a united Europe for themselves, their children and grandchildren. If the people elect for a United States of Europe, something similar as outlined in this series of essays, or as envisaged by Churchill, then fix a date and do it. If the people know and agree the plan, and the target date, they will respond.

And when the politicians start to address this plan they need to look at it from an outward perspective, i.e. how the world will see it, in order to guide thinking to maximise the value drivers available. For example who in the world knows where Brussels, Strasbourg, Frankfurt or even Berlin are, or that they even exist? The most known cities in Europe are Paris, Rome, London, Madrid and even Vienna. How many people do you know that, having visited Washington, the capital city of the USA, came back very disappointed with that city – even the White House is actually much smaller than pictures would have you believe. But Europe has stature with its historic cities so any plan must consider how these cities can be used as value-added drivers to the outside world. For example most people in the world know where London is, and that it is one of the most influential capital cities of the world. This is the strength of the UK, a maritime nation having built longstanding reputation and networks throughout the world, and thus a major value driver. Of course this assumes that we expand Churchill’s vision to include the UK – not a given in my thinking.

One important aspect of the plan for a united Europe was to prevent conflict in the form of another major war. With the ever growing disparity of European nation states, especially within the Eurozone crises, it is not inconceivable that conflict can occur in the form of civil insurrection, or even civil war, (history shows that civil insurrection starts with the disadvantaged versus the rich, and I do not sense that ‘love thy neighbour’ is much in evidence at this time). Was this caused by the banking crisis or, as more likely the case, the shambolic mismanagement of entry into the Euro. At the end of 1996 the European member states supposedly faced a tough test to determine which of them fulfilled the strict convergence criteria laid down for participation in the Euro. Very few passed the test as defined by the strict rules, so the rules were thrown out of the window to allow all who wanted involvement to adopt the Euro – and now we know the reality of allowing totally disparate economies to attempt to converge. What makes any European politician think that they can adopt a single currency without central control of fiscal policy and management of all states involved, and the safety nets in place such as described in my essays ‘EU/Eurozone – Start Again or Plod On’ – ‘A Social State’ and ‘Taxation’.

A major crisis would create a good framework to focus minds on an integrated approach. When Churchill gave his speech in Zurich the conditions in Europe would have been ideal to create the United States of Europe – an opportunity lost. Perhaps if the Eurozone implodes the situation will present the opportunity for a ‘clean sheet’ approach, and a rapid implementation.

Should the UK join a United States of Europe? There are two ways of looking at this. Integrating Europe without the UK would probably be a much easier task, not least because of its unique position in the world. It has protectorates, protected states, mandated territories, the British Commonwealth, etc. to consider involving some 1.6 billion people. What would happen to them in our United States of Europe? In this case the UK could act as independent broker (as envisaged by Churchill) to the creation of the United States of Europe ensuring that its Constitution and political systems are not unduly influenced by national interests of stronger nation states, and is outward looking to ensure that there are no difficulties integrating further countries in the future. The initial United States of America was just 13 states, but the Constitution was structured to be inviting for other states to participate – 50 states plus a federal district to date, and counting.

The alternative is that, as so many of the pillars of a United States of Europe exist, at least in part, within the UK system, finding solutions at the outset for the peripheral issue of integrating the UK will create a comprehensive framework that would accommodate any future entry of additional members, including Russia. I see the inclusion of Russia, at some point in the future, to be the completion of a United States of Europe that can compete with any other nation in the world. However, and unfortunately, the UK has too many of the value drivers needed in a United States of Europe – difficult for the other nation states of Europe to swallow. Looking at it from the rest of the world’s viewpoint London would be the logical capital. London is the largest financial centre in the world by far thus it would also be the home of the European Central Bank and the banking regulators. We could, but not necessarily, add the Supreme Court, and even the European Parliament, – and what about a monarchy head of state?

Another solution that would have a significantly better chance of success would be the integration of just a few fully committed nation states capable of convergence in order to create and refine the structure – and then invite other members as per the USA. However I cannot emphasise how important it would be to have an outward looking, and simple Constitution friendly to all. If it looks like, e.g. an expanded Germany and/or France then I see further membership as limited.

On balance, and in spite of the fact it would leave the UK disadvantaged in some respects, especially if Europe became a fully-fledged 27 member United States of Europe, instinct suggests that the UK should not participate, and certainly not in the EU as it stands today as it is a very expensive club with little or no return on investment. I do not see a massive migration of companies from the UK into Europe for a number of practical and economic reasons. Businesses always find a way to deal with other nations, in spite of politicians.

If we discount the nation states who benefit substantially from membership what proportion of the people (not the politicians) of the other member states would today think that the EU was anything other than a faceless, expensive enterprise causing unrest throughout Europe and continually imposing unnecessary and expensive interference in their lives? What about countries like Switzerland, who traditionally have been very much aligned with Germany, but sitting on the sidelines, and not now considering entry at any time in the near future.

The UK is ideally and uniquely positioned to act as nation broker, as was the case in the removal of the Berlin Wall and reunification of the Eastern states of Europe with the West. The UK would be a natural broker to act between the USA and Europe, and between Europe and Russia and the Black Sea and Caspian states.

Any European integration plan needs a people’s champion who will stay with the plan until achieved. As the natural process is for politicians to come and go, and they are certainly not neutral in their approach, this people’s champion is unlikely to be a politician. This champion could be an individual, a small group (the Group of Five structured the USA system), or even the UK as an independent broker. This champion must have an integration plan endorsed with the full consent of the people of the countries being integrated, not just their representative politicians – the people need to be directly engaged with the process.

The failure of politicians to agree a sound plan for Europe devoid of national and personal self-interests, and to engage with the people, is an affront to democracy for such an important project, and has led to the hotchpotch of a European disintegration that we see today. Now nation states want to revisit treaties, and the people of the UK might have the chance, at last, to make their voice heard. The German government states ‘no’ to revisiting treaties and, by the way, has put everything on hold for 2 months because of German elections – what about the people out there who are hungry and need medicine?

Politicians come and go, but the process of European integration cannot change every time there is a change of political guard. Europe needs a plan, ambitious and exciting, for full implementation within 2 years, fully endorsed by the people’s vote, and it needs a people’s champion to oversee the implementation. In the hour of need cometh the ‘man’, but where is he/she for this project?

I am unexpectedly fortunate to be able to conclude this series of essays in much the way they started; with an episode of Top Gear, the UK motoring programme. Last week Jeremy Clarkson, a presenter of Top Gear had the notion to determine how much automotive manufacture took place in the UK, and asked each manufacturer to contribute a selection of what they produce to a parade in The Mall in London one Sunday morning. The TV pictures of the quantity, quality, and variety of automotive products made in the UK was truly staggering and presented a message to the people of the UK more about the state of UK manufacturing in those picture than any politician could ever explain. To these pictures Clarkson added that:

  • A new car rolls off UK production lines every 20 seconds
  • Honda produces 5 of their car models in Swindon
  • The Toyota plant in Derbyshire exports cars to Japan
  • Nissan make more cars per year in just one plant than the total car production of Italy
  • Of the 11 F1 racing teams 8 are based in the UK
  • Cars such as Rolls Royce, Bentley, Aston Martin, Range Rover are the cars of choice by the rich throughout the world
  • Aston Martin has been voted the coolest brand in the world for 5 of the last 7 years

This was such a powerful 15 minutes of inspired broadcasting that the BBC repeated it again, and again as the message spread and the people connected with this better than any political message, and the resulting well-being of the people was noticeable. Contrast this with the political diatribe that comes out of the EU and it is not unreasonable to expect that the people of the UK will vote ‘NO’ to membership of the current EU disintegration.

Links

George Papandreou: Imagine a European Democracy without Borders http://www.ted.com/talks/george_papandreou_imagine_a_european_democracy_without_borders.html

Epilogue

Thank you for participating in this series of essays, and I hope that you found the debate interesting. It is very difficult within the reasonable scope of a blog to include or expand all of the arguments and debate, and thus what to include, and what to leave out. For example, with my understanding of market economies, I could have written more than the accumulated word count of all 11 essays. The key for me was to find some of the fundamental triggers of a reasonable United States of Europe that at least cause people to question what is happening in their name, and at the expense of the people. Having managed a number of very difficult, multi-faceted problems during my career, not least with disenfranchised people, and time being of the essence to find workable and accepted solutions, I have developed methods to include even the most pessimistic of people, and in timeframes considered unachievable.

The most important part of any solution was the need to explain to all of the people involved (globally in some cases) where we were, and where we needed to be. These people needed to be persuaded to engage in the process knowing some would not understand and/or believe, especially when, for two such problems, the technology we needed did not exist when we started, but we had a fixed and unmoveable delivery date. In such cases it was important that they knew that I would take full responsibility for the outcome – all I wanted from them was commitment and belief. I had one IT manager, very capable but a staunch Trekkie (as in Star Trek) who, when attending a strategy presentation, would write and speak the words ‘Star Date: (whatever the date)’ and then ‘About to go where no man has been before’ as per the start of an episode of Star Trek. This action enabled him to move beyond his anxiety, and he always delivered, albeit sometimes not quite knowing how. All I did was to instil confidence and commitment into people – what I term ‘removing constraint’ – shared my vision, and took responsibility for the result, but vesting the success in them. Such people never failed to deliver, and the sense of well-being of all at delivery was uplifting. People can be mobilised to achieve great things so long as they are properly engaged, motivated, and committed.

EU/Eurozone – Start Again or Plod On? – Market Economy

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EU/Eurozone – Start Again or Plod On?

Market Economy

Is the so-called European Union worthy of all the time, trouble and cost, all fully funded by the people of Europe? Firstly let me clarify the value-added components of a market economy worthy of the time trouble and cost of our United States of Europe. I refer to a secure, self-sufficient, free market economy consisting of a secure and sustainable supply of raw materials and energy, a relatively cheap labour force, innovative skills (excellent education), technology transfer skills, manufacturing, marketing, and with stable and effective financing (banking).

An economic definition of a Free Market Economy is a system in which decisions regarding resource allocation, production, and consumption, and price levels and competition, are made by the collective actions of individuals or organizations seeking their own advantage, i.e. profit. In all market economies, however, freedom of the markets is limited and governments intervene occasionally to encourage or dampen demand or to promote competition to thwart the emergence of monopolies. Also called free economy, or free market (ref: BusinessDictionary definition). But this can occur at the nation state level, or as a collective of nation states such as NAFTA.

The free market viewpoint defines ‘economic freedom’ or ‘economic liberty’ or ‘right to economic liberty’ as the freedom to produce, trade and consume any goods and services acquired without the use of force, fraud or theft. This is already embodied in the rule of law, property rights and freedom of contract, and characterized by external and internal openness of the markets, the protection of property rights and freedom of economic initiative.

However in this world of globalisation recent history has shown that uncontrolled greed by the few can have devastating impacts on the many. The most obvious of these is the banking crisis where a few greedy investment bankers, interested only in their personal wealth, saw the opportunity to use their banks as casinos. When they were winning everyone was happy, ignorant of the fact that it could not last. The effects of this have caused widespread hardship, putting excessive stress on all of the welfare initiatives inherent in a democratic system.

We also see this excess in the boardrooms of major corporates who award themselves excessive bonuses, pensions, and salary increases whilst the workers, who actually create the wealth, have to suffer wage increases below inflation, i.e. they get poorer.

Clearly entrepreneurs and wealth creation are at the heart of any free market economy and must be encouraged and rewarded. Furthermore it is arrogant of politicians in general to think that they can outsmart the clever people whose sole intent is to make money regardless of consequence, and avoid or even evade taxes where possible. However united political systems throughout the global economy can take steps to close many of the gates to ensure that such excessive freedom is not available. For example investment banking is a global business so governments throughout the world need to legislate in tandem that banks cannot act as casinos, and must contain their activities to creating economic value and global liquidity. We need the creativity of investment banks, but we do not need their casino activities.

Likewise we now see moves by various governments to give stakeholders, the owners of the company, more powers to curb the excesses of the executives. However this is not the part of a market economy that I wish to address in this essay.

I want to refer to our template of the USA and examine the parameters that fuelled their economy, especially throughout the 20th century. If we refer back to the opening paragraph of this essay we will see a definition of a secure and self-sufficient, free market economy. If we examine the components of this definition there is one which can be considered as deficient within the EU as it is today, i.e. a secure and sustainable supply of raw materials and energy. My use of the word ‘sustainable’ in this context relates to volume rather than the Kyoto concept of ‘renewable’, especially for natural minerals. This component was fundamental to the industrial development of the USA and, indeed I am aware of expansionist plans of the USA to restock when they are close to exhausting their own supplies. For example we see how fast the USA has embraced fracking for both oil & gas exploration and development resulting in the material reduction in energy costs in the USA. This enables the USA to resume as a competitive manufacturer and supplier, thus reducing imports. This is a win-win-win for the US economy and its people. It is very refreshing to see that David Cameron has fully embraced this technology as a counter to the usual doomsayers who would have people starve rather than benefit from this technology.

So where does the EU find secure supplies of raw materials? The logical choice is to look east to our neighbours in the outposts of Eastern Europe. Russia has already demonstrated that it does not understand how to engage in secure supply, thus can only be considered a secondary source for the time being. It is possible to engage with countries such as Ukraine, Azerbaijan, and Kazakhstan albeit with caution bearing in mind their continued alliance with Russia.

We cannot assume that the plundering the natural resources of third world countries as with Bougainville Island can continue. For those who do not know this story Bougainville is a small island state near to the Solomon Islands in the Pacific south of the Philippines. Before the war it was placed under administration of Australia under mandate of the League of Nations, but was invaded by the Japanese during the war. After the war Australia did not officially resume its role of administrator but, as soon as Rio Tinto found that Bougainville had enormous reserves of copper ore and gold in the 1990’s Australia went into business with Rio Tinto and passed statutes giving the mining rights to Australia who then gave Rio Tinto the exploration and development agreements without any regard to the people of Bougainville. The process of extraction polluted large tracts of the island until the people of Bougainville forcibly removed the Rio Tinto personnel (who were supported by Australian police and the Philippine army) from the island, with many dead. There is much on the internet about this tragedy for those interested. Rio Tinto and Australia are still looking at reparations of some USD 8 billion to the people of Bougainville.

Parts of Africa are also rich sources of minerals, but the Chinese have secured much of these for their own industrial requirements, as is the case with Brazil.

Thus the EU will primarily have to compete in the open market – not the strongest base on which to build a United States of Europe, especially with competing countries as large as China and India, both willing to secure as many resources as they can find to fuel their own needs.

It is worth returning to the situation in Brazil, one of the so-called BRICS, as an example of not understanding the economics of owning raw materials. Currently in Brazil they mine their raw materials and export them to countries such as China at Rial:USD exchange rates that do not optimise value to Brazil. They then have to import finished goods made with these raw materials thus consuming more than their receipts from the raw materials to satisfy their own internal market demand for goods. This is a sad reflection of a country with outdated fiscal and social policies, woeful internal transport systems, and that cannot attract large-scale manufacturing industry because cost of production could not be competitive at current exchange rates. Contrast this with the USA who would use their capitalist economy to convert these vast reserves of raw materials into goods for both internal consumption and export thus reducing the need to import, and receiving export income. Think of the employment difference between Brazil and the USA – Brazil only engages nominal labour in mining the materials, whereas the USA would also engage the manufacturing design and process people, distribution, etc. The market economy of the United States of Europe needs to resemble the USA model to satisfy the definition that I have proposed. Indeed if Brazil were a direct neighbour of the EU they would be a ‘must’ to be a member as the EU could provide all of the market support to Brazil that it lacks in exchange for its raw materials – this would be a fantastic outcome for our United States of Europe. It does not matter that Brazil is a developing economy as the capabilities within the other member states could rapidly transform Brazil into a vibrant economy having all of the infrastructure necessary for a 21st century country.

Therefore I would suggest that we consider the current 28 member states as phase I of European integration, or even phase I and phase II if we adopt a more pragmatic plan of integration. I see phase II (or III) as the inclusion of Ukraine: (coal, iron ore (5% of world reserves), manganese, nickel and uranium, mercury ore (2nd largest reserves in the world) and sulphur (largest reserves in the world)), Azerbaijan: (rich variety of minerals, oil & gas), and Turkey: (many types of minerals, and close links to the Kurds in northern Iraq and their large oil & gas reserves). Before anyone asks, Turkey would have to commit to continue as a fully secular democracy as part of membership, but having worked with Turkey since the late 1970’s I do not see this as a problem, and as is evidenced with the current unrest in Turkey. Just as we have seen in Egypt the majority of people in Turkey value a free secular society, and will fight to keep it.

Ultimately I see the integration of Russia with its vast mineral wealth (our local equivalent of Brazil) thus placing the United States of Europe as a significant self-sufficient market able to compete with any other economy in the world. As improbable as this seems today, if Europe can achieve a United States of Europe similar to what is proposed in these essays, then a more pragmatic regime in the Kremlin will see the advantages of being within, rather than the vast costs to create their own economic system – especially if Europe can substantially reduce its need of oil & gas supplies from Russia.

The value of a market economy, as per my definition in the opening paragraph, to our United States of Europe is the lack of dependency (and thus exposure) to any other country for the supply of materials strategic to the economy of the nation. This is also applicable to agriculture, but in this regard I do not anticipate any problems with capacity to feed the people of the United States of Europe today or in the foreseeable future. For example we have not yet begun to properly and fully exploit the vast black gold agricultural regions around the river Danube throughout the former Yugoslavia and Romania, and which could potentially produce a significant amount of the produce required. They call the soil in that region ‘black gold’ for a reason, and most of this region is organic soil.

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.

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

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EU/Eurozone – Start Again or Plod On?

Taxation

Taxation is the instrument of State that provides the income to service the functions of government. It can also be used to incentivise investment, to change behaviour, and to redistribute wealth.

Within the EU today each nation state has its own tax regime plus a tax to fund the various organs of government of the EU – notionally VAT.

The disparity of tax regimes and the effectiveness of collection throughout the EU is almost a north/south divide. The Mediterranean nation states have proven poor at tax collection much through corruption and black economies, and thus their current dilemma. The more Northern nation states have reasonably good collection and little or no corruption.

Years of attractive stimulus for businesses by providing complex tax incentives are now coming home to roost. The desperate need by governments for new sources of tax revenues has unleashed wrath on major corporations who are certainly exploiting the available tax incentives albeit, by and large, they are not contravening statute. However politicians are suggesting that these businesses have a moral duty to pay more tax, thus whipping up the flames of anger among the electorate, and working with other governments to do the same in order to close the door on these businesses relocating – a coup. It will be interesting to see how these corporates respond to this approach as they have a right to think it a breach of faith. Not that I support their position as I have seen smaller, developing states essentially raped by corporates forcing their terms onto inexperienced struggling governments just trying to bring some wealth creation to their country. Furthermore I have already mentioned in a previous essay that corporates have a moral duty to the welfare of their staff and immediate environment – something that has substantially diminished as a result of globalisation, but needs to be reintroduced.

I think it justified within a discussion about the EU to include the converse of taxation in the form of nation state subsidies from the EU government. The most contentious of these is the Common Agricultural Policy (CAP) a mechanism created to normalise competition in farming output whilst markets adjusted, but which has not yet gone away. Indeed the CAP still accounts for some 50% of the EU budget. The French appear to use the substantive revenues they receive under CAP to put off the fateful day of much needed social reform in France. It is easier for the French government to plead with the EU Commission to keep this subsidy than it is to break the stranglehold grip over social policy of the trade unions in France. This has been a thorn in the side of EU integration for too many years. A unified tax system throughout Europe, applied equally to all, could address this problem without any reasonable objections from any trade union movement.

If we refer back to our corporate structure described in ‘EU/Eurozone – Start Again of Plod On – A New Government’ it is easy to see that tax revenues yield the income streams that provides for the State to function. A nation state, just as with a corporate, has a Balance Sheet showing all State assets and Liabilities, an income statement showing all tax receipts and the costs government and the social state, and a cash flow statement showing tax receipts versus expenditure on a timeline indicating when the government coffers will be short of funds to meet its commitments (and thus the need to visit with the Central Bank to cover any shortfall), and when it will be in surplus. The theory is that good government will result in balanced books, something Margaret Thatcher was forever reminding her colleagues in the House of Parliament when they wanted yet more money for some social crusade, and something Tony Blair just ignored in favour of expensive social engineering intended to buy popularity and the votes of the people. Thus the infamous note left by Labour MP, Liam Bryne, former Chief Secretary to the Treasury at the time of the general election in 2010 which stated ‘Dear Chief Secretary, I’m afraid that there is no money. Kind Regards and Good Luck’ – a very different situation to the one Labour inherited when they came to power.

What about the rest of Europe? We know that Germany has probably the most austere tax regime, albeit that the Scandinavian countries make take exception to this statement. The most lax at tax collection is probably Greece where, by all accounts, tax officials are readily corrupted, and the ruling elite are part of the problem. As far back as ancient Greece Aristotle knew that no freedom is limitless. The negative aspect of too much freedom of economy was an issue already recognised by the ancient Greeks, and proves to be one of major reasons for the current huge crisis in Greece today. As in ancient Greece it is still typical that very rich people think that is very natural not to pay taxes, and not even to have a conscience about it.

Clearly entrepreneurs and wealth creation are at the heart of any free market economy and must be encouraged and rewarded. Furthermore it is arrogant of politicians in general to think that they can outsmart the clever greedy people. However a united political system in the form of a simple and unified tax structure applied throughout our United States of Europe could close many of the gates to ensure that excessive freedom is not available.

In our United States of Europe the whole tax system would have to be overhauled in the name of equality for all. Thus what might a centralised tax system look like so that it is seen to be balanced between rich and poor states?

Within a framework of subsidiarity the central government would need funds, and each member state would also need centrally allocated funds to operate State policies. Furthermore each member state could raise taxes specific to the requirements of each state, with the consent of the people of the member state. There are a multitude of cultures within Europe having different requirements in the name of well-being and quality of life. These should not be stifled by an overbearing central government, and thus allow the state assemblies to respond to such requirements through a democratic process of state taxation.

Thus we would need State taxation in the form of corporation tax, income tax, investment income tax, duties, levies, etc. The rate of taxation on these sources would need to be the same for everyone, and collection would be controlled by a central government revenue agency. For example all employed people would have income tax and national insurance (for healthcare and pensions) deducted monthly at source thus providing central government with a constant stream of income, easy to collect, and overcoming the existing difficulties presented to citizens in some nation states who are paid their salary gross of deductions and then have to find funds to pay their taxes at the end of the tax year. Income tax thresholds, i.e. the minimum salary to attract any income tax, should be set at a liveable level (thus optimising the tax collection body to a cost effective level), and national insurance contribution up to this level should only include a pension provision – healthcare should be free for the poorest.

VAT could be transformed into a tax to allow for redistribution of wealth to poorer sectors. For example VAT, being a capitalist tax and applied to purchase power (consumption), should have its bounds set such that the essentials of life should not attract VAT. This means that most food, anything to do with rearing children, books, newspapers, etc would be exempt from VAT. Indeed VAT could be seen as a luxury tax and thus only paid by people who had enough disposable funds to afford the items. This means that poorer people would pay little VAT as a percentage of their disposable income, and richer people would pay substantially more. These funds could be used to improve the environment of the poorer people, and help poorer member states to raise the standards of living for its citizen by providing necessary infrastructure to encourage wealth creation.

The essential requirement of the system of taxation within our United States of Europe is that it is seen as unified and fair to all people thus preventing unnecessary competition between member states, and to prevent artificial migration of people. For example, the extreme application of subsidiarity in Switzerland has provided a bizarre situation where people will move just a few streets in the same city for the sole purpose of achieving lower taxation in a different municipal system, but still work in, and enjoy the benefits of the higher tax municipality within that same city. This level of subsidiarity could be compared with tribalism and thus is very undesirable, and should be avoided.

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 Like It ‘thumbs up’ below, and/or become a follower so that you receive notice of further essays in this series.

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 – A Social State

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EU/Eurozone – Start Again or Plod On – A Social State

As part of economic liberty there is a need to ensure for a minimum of material security for the people. When someone without resources is hungry, sick, or freezing, freedom is not their first priority. Thus the need for a constitutional principle of a Social State in our modern and relevant democratic United States of Europe. Although I am not advocating a welfare state, as such, I am concerned that the nation states, either by themselves, or through international organisations, are continually unwilling, or unable to regulate the gap between the excessively rich, and the poor. Everyone should have the right to care and assistance in the case of inability of self-care, i.e. the care and means which are indispensable for the maintenance of human dignity. This is the extreme of the social state and there should be no need for debate regarding such provisions, albeit there are nation states within the EU that have no such provisions.

However the dimensions of a social state are far wider, e.g. in which the government undertakes the chief responsibility for providing for the social and economic security of its population, usually through unemployment insurance, old-age pensions, and other social-security measures. Provisions also include healthcare and education. But how do our nation states within the EU fair against some of the pillars of social justice?

It is not possible to analyse the existing structures of all the nation states in a blog, but our news reports show that there is widespread disparity, so I would like to examine what would be needed in our United States of Europe for the dominant issues, being healthcare and pensions.

Healthcare

The current EU/Eurozone member states have a variety of healthcare systems ranging from the UK NHS which provides healthcare free at source to everyone, to systems that are partially funded, or require health insurance in one form or another. Whilst the UK NHS is praised throughout the world recent years have demonstrated that such an all-inclusive welfare provision can become an excessive burden to the State finances. This is blamed primarily on an increasingly aged population. However the truth may be elsewhere as drug companies seek to ever increase their revenues in the name of more advanced research, and medical advances provide ever more complex treatment possibilities to keep people alive who would otherwise die from their ailment.

There have been some well recorded cases of people looking for assisted suicide without recourse to their assistance. I am of the firm belief that the people of Europe should have the right of self-determination regarding the termination of their life when all hope is lost in self-sufficiency. I am confident that I would not want my dignity and self-respect as a human being removed by some sanctimonious idea that I have no right to determine my own end. Thus a counterbalance should be included to enable people the right of assisted suicide without the need, time, energy and cost of high court consent. Any law can be abused but the rights of the majority should take precedence in this situation in order to preserve the rights of individuals. The resulting economic advantage both in State pension and healthcare cost is likely to be significant, and better spent on people who do want to live.

However this is only a small part of the problem. The health of a nation is a fundamental part of the nation’s GDP. Therefore the choice is realistic National Insurance contributions by all people and companies that adequately cover the provision of healthcare, or limit the type of healthcare that is free at the point of delivery.

My belief is that healthcare for children from conception to end of school age, and for people beyond State pension age should be free at the point of delivery in order to ensure reasonable health, and equality for all. But what happens throughout working age?

The health of the workforce of a nation is fundamental to maximise GDP per capita. So does the State ensure that medical treatment is available free at the point of delivery to maximise the contribution of the workforce, or does the state rely on the sensibility of people to save for sickness eventualities? Does the State take part payment for potential sickness through taxation and seek any excess over agreed limits should treatment exceed such limits from the person requiring treatment?

The next consideration is whether or not providing healthcare to all free at the point of delivery encourages abuse of the system and thus increase the burden of cost to the State? The lifestyle of many people today could be considered as self-abuse, so should such people be penalised as a means to encourage a change in behaviour?

My thought go back to a discussion with the then Health Minister in China in 2004 when I was trying to convince him that providing necessary free drugs to workers with AIDS, and thus keeping them productive, was beneficial to the economy. At that time the GDP per capita was around $3,600. The drugs needed would cost around $600 per year. Average wages were just $265 per month, or $3,180 p.a. thus putting the drugs out of reach of the worker. Assuming that the worker had a wife and one child of school age the inability of the father to earn would push all 3 members of the family into poverty (no social welfare), and the child would likely have no schooling. This would have a current negative impact on GDP per capita, and a detrimental impact on the future for the child, a potential future GDP generator. My argument was that, by the Government providing the drugs the GDP per capita of the worker reduced to $3,000, but at least it was positive, and it would improve the future GDP per capita of the child if healthy and having had an education.

Many drugs are not cheap, and are out of reach of many workers in Europe. Therefore the economic benefit of healthcare free at point of delivery for all is compelling. The focus of government is to ensure that the delivery of healthcare is managed in a cost effective way, and that any social behaviour issues are robustly addressed. One positive is the economies of scale of a United States of Europe negotiating with the pharmaceutical companies on the price of drugs.

Pension Provisions

In a modern democracy there has to be an assumption that everyone contributes to society whether working, mothers who stay at home to rear the next generation, carers, jobless who work with charities or teach soccer at the local youth club, etc. Under our baseline premise of a Social State principle the disadvantaged and the unfortunate losers will qualify for financial assistance in any event. Today, in the UK, people of pensionable age might not qualify for a state pension but they will receive a similar sum of money through various welfare support packages. It is unquestionable that the UK welfare system is overly complicated, and thus difficult to ensure that the correct level of support is given, where needed.

My view is that every able-bodied person (disabled will require a different structure) should have a basis state pension when they reach pensionable age (say 65 years old) – enough to subside. If people chose to continue to work past this age they would still receive their State pension (see ‘EU/Eurozone – Start Again or Plod On – Intro’ in this series). People who enjoy gainful employment for a number of years (say 30 years, which allows women to take time out to have children) should receive an incremental state pension to reflect a recognised contribution, having had deductions from their salary to cover this additional payment. This additional pension will allow a better lifestyle, and is geared around the concept that if you do not work in gainful employment then the state will only support you to a minimum level. Anyone who makes additional pension provision for themselves will still receive whatever State pension they have earned. The State pension would be exempt from taxation, nor be included in income for tax purposes. Tax would, however, be payable on income, including investment income, above the standard tax-free income thresholds to capture tax revenues from wealthier pensioners.

By instituting both of these provisions into every member state of our United States of Europe we would greatly satisfy a fundamental pillar of democracy, being ‘equality for all’, and prevent unnecessary economic and health migration across member states.

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 Like It ‘thumbs up’ below, and/or become a follower so that you receive notice of further essays in this series.

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? – Common Judiciary

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EU/Eurozone – Start Again or Plod On?

Common Judiciary

The Judiciary of a nation state is the organ of government that should provide oversight of the legislative and executive (government), and is a comprehensive and integrated structure able to delivery stable legal security according to the laws of the State.

In this blog we will quickly propose an outline legal framework for a common democratic legal system for our United States of Europe that will provide a secure legal structure for all people.

The judicial structure is the system of courts that interprets and applies the law in the name of the nation state. The judiciary should have the power to change laws through the process of judicial review. Courts with judicial review power may annul the laws and rules of the state when it finds them incompatible with a higher norm, such as primary legislation, the provisions of the constitution, or international law. Judges constitute a critical force for interpretation and implementation of a constitution, thus de facto in common law countries creating the body of constitutional law. Thus the judiciary needs to be fully independent of the legislative and executive, and the judges be conferred on merit, not election.

The judiciary usually consists, at its head, a court of final appeal called the ‘Supreme Court’ or ‘Constitutional Court’, together with various levels of lower courts.

Under the doctrine of the separation of powers, the judiciary does not make law, which is the responsibility of the legislative, or enforce law, which is the responsibility of the executive, but rather interprets law and applies it to the facts of each case.

This organ of the state is responsible to provide equal justice for all under law, including human rights and fundamental freedoms.

The judiciary also provides the mechanism for the resolution of civil disputes, and a criminal justice system.

So much for a democratic judicial system definition but the complexity of the various legal structures currently used throughout the EU nation states is mind-boggling. We have Common Law, structures based on Napoleonic Code, Civil Law, Basic law, etc. In the USA there is Federal Law as the legal foundation, and then there is State Law superimposed upon it. The overall legal platform is based on English Common Law which was adopted from the English Legal System. However the USA has subsequently over-complicated this system in their overly litigious society, and we should avoid this. As an example an identical contract drafted under US Law (50 pages), English Law (5 pages), and Swiss Law (3 pages). Any consideration of a legal system needs to learn lessons of the past and to keep it simple and relevant.

For business to effectively operate throughout our United States of Europe there must be a common legal platform. The complexity of the current EU multi-legal systems adds a cost burden to business which ultimately reflects in the price of product or service to the consumer – the people of Europe. But what system to adopt?

My argument for the above structure starts with a global perspective. Our United States of Europe will most certainly want to engage in business with the wider world. If we look at trade in oil & gas, commodities, manufactured trade, international securities, all of these have standard legal packages throughout the world which also provide trusted international arbitration. These legal structures have all been derived and evolved out of English Law, are drafted in the English language, and jurisdiction will be either/and/or English Law and US Law. These systems were devised to create a common and safe platform for international trade, are widely used, and banks prefer these tried and tested structures for their involvement in transactions.

Thus I propose that the legal structure as regards business, commerce, and finance be English Law. As the foundation of the English legal system is Common Law then our Legal System for the United States of Europe would be based on Common law, also known as case law or precedent, and is law developed by judges through decisions of courts and similar tribunals. One third of the world’s population (approximately 2.3 billion people) live in common law jurisdictions or in systems mixed with civil law, and thus this proposed system would be compatible with many major trading partners in the world, including the USA and India.

However I would not propose total adoption of the English Legal system as I would see our new model as a golden opportunity to significantly revise some of the historic anomalies in the process of English Law, not least the removal of the barrister/solicitor structure which adds significant cost to the process of law. Another example would be the abolition of much of our Family Division law and replace it with something more akin to the structure in the German legal system, and the German inquisitorial process (Civil Law) in the lower courts would also be more relevant and cost effective, and thus ensure that remedy in law is available to all. Common law courts tend to use an adversarial system, in which two sides present their cases to a neutral judge. In contrast civil law systems use an inquisitorial system process, where an examining magistrate serves two roles by developing the evidence and arguments for one and the other side during the investigation phase, and which could be heard as litigant in person without fear of being overawed by an opposing lawyer.

I have actually experienced the confusion of examination under an unfamiliar legal system in a language unknown to me as a witness in a case in the Austrian Courts where protocol dictates that the case should be heard in Austrian-German. The proceedings were conducted under civil law and thus the judge was the primary examiner. After about one hour (of a 5 hour examination of my evidence) the Judge, who obviously was fluent in English, was becoming increasingly frustrated with the translator of my testimony which was frequently being corrected by the lawyers to both the claimant and the defendant. Having determined that all of the key people spoke English the judge dismissed the translator, and the hearing was continued in English. This judge was clear in his objective to get to the truth of the matter, and was not about to allow out-dated protocols to compromise his objective.

In Switzerland it is now common to hear cases in English, and which was initiated by cases involving international trade.

A key requirement of any modern democratic system is the rights afforded under habeas corpus. A writ of habeas corpus is a writ (legal action) that requires a person under arrest to be brought before a judge or into court. The principle of habeas corpus ensures that a prisoner can be released from unlawful detention—that is, detention lacking sufficient cause or evidence. The remedy can be sought by the prisoner or by another person coming to the prisoner’s aid. This right originated in the English legal system, and is now available in many nations. It has historically been an important legal instrument safeguarding individual freedom against arbitrary state action. The jurist Albert Venn Dicey wrote that the British Habeas Corpus Acts “declare no principle and define no rights, but they are for practical purposes worth a hundred constitutional articles guaranteeing individual liberty”. There are nation states within the EU, and new members under this model who do not use habeas corpus, and thus my reference to its fundamental role in the United States of Europe.

Habeas corpus essentially means that you are innocent until you are proven guilty. There are some exceptions to this, e.g. consumer banking law where a customer who has a dispute with a financial institution can, in equity, reverse this situation in that the bank will be assumed in the wrong unless the bank can prove itself in the right. An ordinary consumer cannot be expected to contest a bank having vast resources with which to frustrate a consumer claim. It could be argued that this removal of habeas corpus should be applied to all service sector corporates, especially energy and mobile phone providers. In this age of automaton account management mistakes are common putting the consumer under much stress and distress dealing with intransigent corporate customer services who believe that their computers are always right. It would be more equitable if the corporate was required to prove that the data in their computers is legitimate.

Thus my proposal for the judiciary of the United States of Europe would be:

  • An independent constitutional judiciary based on merit, not election
  • A European Supreme Court where the judges comprise the senior judge of each of the nation states. The President of the Supreme Court would be determined by election by the Supreme Court judges on a 2 year re-election
  • A legal system based on  English Common Law with appropriate elements of Civil Law
  • Modernised court processes including removal of barrister/solicitor protocol, and introduction of the inquisitorial system in the lower courts
  • Member states to have their own courts subordinated to the Supreme Court
  • Member states to have own assemblies able to enact State law, by-laws, and ordinances consistent with constitutional law
  • Intrinsic rights to all under habeas corpus, albeit with the specific exclusion of terrorists
  • Service sector corporates to have no right to habeas corpus in consumer disputes

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? – 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.