2-weeks post-BREXIT. Where are we?

univest2-weeks post-BREXIT. Where are we?

The EU Referendum has raised a number of issues that show why this referendum was needed. During recent years politics has become too elite and detached from the people it is there to serve. A good shakeout is necessary, as is happening in the USA. BREXIT has triggered this process in Europe, and especially the EU. So where are we post-BREXIT?

Scare Story: The UK will suffer unprecedented political turmoil

This is true, but more in the EU than the UK. The reaction at the quickly convened emergency meeting of the European Parliament on the Monday following BREXIT resembled more a Third World bun fight than a rational First World debate. The exchange of insults and rebuke was extraordinary.

The UK political turmoil has shown that David Cameron lacks the qualities of a true leader. Having consented to a referendum on the basis of a reformed EU, which he did not achieve, a strategically capable leader would have returned from Brussels to announce his frustration with Brussels, and then overseen the referendum debate without expressing his own view, or that of the Government, ready to implement the decision of the people (democracy) thus providing the political leadership and continuity post-BREXIT that is currently so lacking. We have a political vacuum until we have a new leader – not good for confidence around the world.

This political vacuum has fuelled an anti-democratic minority to challenge the outcome of the EU Referendum result. It is interesting to note that these whingers obviously have the view that a democracy can only be democratic when the vote result concurs with their view. And these whingers include people like Richard Branson who, reportedly, saw some 30% wiped off his Virgin empire. The people have spoken and, with a larger turnout than your average General Election, the clear majority voted for BREXIT. In a democracy every citizen has the obligation to make themselves aware of the issue requiring a vote of the people, and to cast their vote accordingly. In this digital age there is no excuse for lack of information. The result is clear, so to the whingers – move on; we will flourish.

The positive result of this turmoil as we approach political summer recess is that the UK Civil Service has time to consider the optimal exit terms for negotiation with the EU, and a period of reflection by the EU machine. As I refine this blog I found an article in yesterday’s London Evening Standard written by Frank-Walter Steinmeier, the German Foreign Minister, in which he acknowledges that the EU elite have been indifferent to the voices of the people, causing great unrest. His solution – even faster political and economic integration. Will they ever listen?

Scare Story: The UK markets will collapse with pensions and quality of life in decline, and London will lose its status as the Global Financial Centre

Since the casino players, looking purely to make money from the volatility surrounding the referendum vote, have gone to sleep (when will the G7 address this global destabilising problem) the UK stock markets have stabilised, and indeed risen some 15% – a vote of confidence by investors, and good for pension funds. Adjustments will occur as the UK realigns itself; albeit the attack on commercial property funds is bizarre. Furthermore all talk of the capital markets moving within the EU has evaporated – the underlying covert motive by both the USA and Germany having been neutralised.

Our EU partners have not been so fortunate in that the BREXIT vote has caused much instability within the EU forcing markets down by as much as 15%. Although they have recovered some of these losses there is little evidence of full recovery any time soon. Italy is on the brink of a banking crisis, and there is much discontent within the EU. We have the USA regulators stating that both Deutsche Bank and Banco de Santander fail their stress tests and thus must increase capital if they wish to continue to trade US dollars. And of course VW are looking at considerably more substantial fines around the world. There is also reported a vote of no confidence for the EU to settle Euro transactions.

The doomsayers claim that the 10% fall in sterling against the US dollar is a major disaster for the UK. On the contrary sterling has been over-valued for some time damaging the ability of the UK to sell its goods overseas. As I write this blog sterling has recovered to 1.29. It would be better for the UK economy if this rate fell below 1.26 for a few months before the US Presidential elections will likely deflate the US dollar, pushing the value of sterling up again. I would remind the whingers that when Germany pushed for the introduction of the Euro the result for Germany was an effective significant devaluation of the Deutschemark which was much needed by the German economy to trade themselves out of the grossly underestimated cost of reunification – but at a real cost to all other Eurozone members.

Scare Story: The UK will require years to negotiate new trade deals with the Single Market and the World

There are a number of countries, including the USA and Germany, who want to be first to sign trade deals with the UK. There is much confusion being hoisted by the whingers about the single market. The UK does not need to be part of the single market for the same reasons that are frustrating the trade deal between the EU and the USA (who already trade more with the EU than does the UK). What we need is tariff-free trade deals with each of the member states who wish to engage with us. If Germany can do this then why not all other member states? The EU is fragmenting, and will need significant reform if it is to survive – including trade relationships. Regardless of the political rhetoric Germany will not risk the loss of its significant exports to the UK, and France will follow.

Scare Story: UK citizens will lose the right to freely travel, work and live in the EU countries

Today UK citizens need a passport to travel into the EU member States, and to return from them. Travelling freely within the EU countries is defined by the Schengen Agreement between member States and thus does not change anything for UK citizens. Moving to an EU member State may change, but looking at the number of EU citizens living in the UK reciprocity is the likely outcome.

Scare Story: The UK is too small and insignificant to go it alone

The UK coughed on the 23rd June, and the whole world sneezed, and is still sneezing. The UK has always punched well above its weight, and always will. London is the most important global financial centre in the world, and thanks to BREXIT, will retain this status. The EU loses one of its two permanent seats at the UN Security Council, and loses the global diplomatic reach enjoyed by the UK. As the fifth largest economy in the world the UK will find its feet over the coming months, and then flourish. The EU may not be so lucky.

 

A few days ago I listened to an interesting discussion regarding the total breakdown of the former USSR. The original discussions with Gorbachev revolved around the satellite states adjoining the eastern borders of Western Europe. However, as the Berlin Wall fell practically all members of the USSR declared their own freedom from Moscow. The view was that Moscow thought it could impose a homogeneous citizen unity across the USSR without any regard for the diverse nature and cultures of each nation state. Thus laws and regulations formulated in Moscow intended to create a homogeneous USSR caused resentment and unrest in these States – the response being typical Roman-type repression by Moscow, and ultimately downfall. Even the Romans knew better when they built their empire. What could the EU learn from this? Brussels relentlessly moves towards a United States of Europe without the consent of the people. Whether they use brute force, or financial pain they attempt to impose their will over each member State. The majority of people in the UK have said ‘NO’, and I fully expect others to follow.

A few weeks before the referendum vote I listened to an interesting debate by university students regarding the EU Referendum. They did not have guest speakers, rather relying on four students on each side of the debate to put their respective cases. The debate was surprisingly articulate. The audience was an estimated 100 students who, after the debate, overwhelmingly voted for BREXIT. This tallies with the young vote of some 25% of 18 – 24 year-olds. The triangle of knowledge for 16 – 24 year-olds (post-university) consists of students who have both the intellect and knowledge to analyse issues, students who have the knowledge but not enough intellect to fully appreciate the issues, and the remainder who prefer to go to the pub and watch football. The proportion of students who have both the intellect and knowledge average around 23%. Thus most of the 25% who voted for BREXIT are likely to have understood why. The other two sectors are likely to take the safe option to stay with what they know, or not vote. Therefore, I do not accept that the older (wiser) voters in any way let the young down. This is why the social engineering of the Blair/Brown Government sending 50% of the young to university was ridiculous, a waste of money, and did nothing for those who leave lesser universities with a degree and considerable debt but with no prospect of the suitable job that was implied was available for them.

I have also heard from the young that they wanted to remain in the EU to take advantage of the Erasmus program to study in Europe not realising that this program has little to do with the EU, but formulated as an exchange program between the universities, and includes universities in the USA. There is no possibility that this will end as a result of BREXIT, not least because of the significant number of European students who want to take advantage of the far superior red brick and CAT universities in the UK.

Just as a footnote, I chose to assess the views of the more canny Scottish voters regarding the post-BREXIT opportunist actions of Nicola Sturgeon, First Minister in Scotland, as I did before the Scottish Independence Referendum. The result then was a resounding vote to stay in the UK. A vote today between the UK and the EU would yield the same result. So Nicola, don’t waste your time as the people do not want your pathway, and I cannot imagine the EU entertaining yet another country joining on a net beneficiary basis in any event. The EU Referendum was on behalf of the whole of the UK, and the people spoke. Let it be. There is a bright tomorrow for the UK, so let us focus on the future together.

BREXIT – In this week of tribute to the Bard

Shakespeare lives here

In tribute to the greatest Bard

Compose some lines, it will be hard,

But once again, we are faced

With treachery, to be embraced

EU reform was his spoken mandate

Failed; now he moves to collaborate

Heed well the falseness of his word

The fear to force you into herd.

 

Those who claim to fight our case

Have failed, but want that we remain in place

What do they have us to believe?

That they knowest best; are we naïve?

EU citizens with their feet do vote

The UK is the place they bloat

We would like to welcome those

Who satisfy our needs and goals.

 

Rule Britannia, let not you fall,

Remember all you do enjoy

May this fair land we love so well

In dignity and freedom dwell

Be remembered those who gave their future

To make this nation free to prosper

Let not your spirit be subdued

By fear of raging platitude.

 

Let’s not to foreigner’s bow

Their voices hollow, not in favour thou

They would not heed to what they say

So why would we bend to their way?

We are made of sterner stuff

With resolve and fortitude, we rebuff

We are strong; not slave to obey

So bid them well, be on your way.

 

Compare ye not with a lesser realm

Who have not our powers to overwhelm

Our omnipotence they do not share

Nor standing and heritage to declare

When we do call, our voice will be heard

They dare not our call to be spurred

They will not treat us with disdain

Lest Europe will despair again.

 

Our past doth show our stealth and pride

Thus let not our omnipotence be denied

And think of England’s pleasant land

Is not for those of foreign land

Who wish to smite our honours past

And crush our national interest

Shout it loud, Britons awake

Lest those abroad your life will take.

 

So harken all you Brits, be true

To what it is you need to do

To save this land, its history share

With those you are yet to bear

Let not your offspring be denied

The hopes and dreams for which men died

Or be defined by those abroad

Whose plan for us is truly flawed.

 

Remember to the words we sang

When faced with that beleaguered land

Vera Lynn, our spirits raised

Again we showed; our courage blazed

‘There’ll always be an England

And England shall be free

If England means as much to you

As England means to me.’

 

And in the words of the great Bard himself:

This royal throne of kings, this sceptred isle,
this earth of majesty, this seat of Mars,
this other Eden, demi-paradise,
This fortress built by Nature for herself
Against infection and the hand of war,
This happy breed of men, this little world,
This precious stone set in the silver sea,
Which serves it in the office of a wall
Or as a moat defensive to a house,
Against the envy of less happier lands,
This blessed plot, this earth, this realm, this England.

Shakespeare’s Richard II

BREXIT – Could The Right Thing To Do mean Uncertainty?

univestBREXIT – Could The Right Thing To Do mean Uncertainty?

I had hoped to move on from Brexit for a couple of weeks but my ears are ringing with the flagrantly misleading messages from the ‘Remain’ faction of the Government, especially self-serving junior ministers protecting their personal future career by towing the party line.

Over the recent past we have continually heard the pathos statement on every political issue ‘The Right Thing To Do’, and it is still in use today. In the Brexit campaign the repeated messages from the ‘Remain’ politicians are ‘Could’ and ‘Uncertainty’. Philosophers over the centuries have argued that in mankind there is no such thing as ‘Right’ or ‘Wrong’; only ‘Acceptable’ and ‘Unacceptable’. And the interpretation of both are subject to regular change. Even such hard statements such as ‘It is wrong to kill your fellow man’ has numerous exceptions – what are armies for? In certain branches of mathematics 2 + 2 = 4 would be the wrong answer.

The word ‘Could’ has to be the weakest example of the words available such as ‘Likely’, ‘Will’ or even ‘Inevitable’. And in life the only certainties are that night will follow day, and of course, taxes.

So why are these words so prolific in the Brexit debate? As none of them has any defined substance, and thus can be used without any political accountability, one can only assume they are expressions intended to induce fear, and even terrorism amongst the population, without recourse. Is this referendum considered so irrelevant by the ‘Remain’ faction of the Government that they can trivialise the issues in this way? Sounds like their message to the population is ‘We know better than you what is good for you and your offspring, but you will not understand the arguments, so just do as we say’. I can only hope that the population get this message loud and clear, the hackles flair, and the backbone that won the Battle of Britain prevails. After all Cameron’s so-called deal could be compared with the Chamberlain letter of pacification from Hitler – before Winston Churchill came to the rescue.

As we are discussing political rhetoric, perhaps a revisit to the wisdom of Aristotle may help.

LOGOS: We are faced with the option to leave the political body known as the EU. We must weigh the arguments for and against, and make our decision by means of a referendum of the people to be held on 23rd June. We, your Government, acknowledge and accept that the EU is in need of significant reform as we do not agree with its current course. We have debated with the autocrats in Brussels seeking commitment to these necessary reforms to protect the British people and their way of life – but we have failed in all respects to date, even though the autocrats in Brussels are aware that this could result in the UK leaving the EU.

ETHOS: We, the Government, are fully aware of our failings to date, but we still believe that we should continue to argue our case from within the EU in the hope that we may, some day, convince the autocrats that we do not wish to become part of an undemocratic United States of Europe. In the mean time we have achieved some exemptions from further integration, albeit open to challenge.

PATHOS: We, your Government, reluctantly accept that our resolve during the Bloomberg discussion leading to this referendum has failed to materialise, in spite of best efforts on our part. We further accept that our stance is a real gamble that we can effect major reform before the EU slowly, but surely, erode our exemptions. But we, your Government, truly believe (well at least half of us) that the right thing to do, in the interests of the UK people, is to remain, as an exit could mean an uncertain future.

Which way would you vote?

 

BREXIT will not isolate the UK in Europe

univestBREXIT will not isolate the UK in Europe

I have received a number of comments suggesting that BREXIT will isolate the UK in Europe. As I have absolutely no interest in isolating the UK from Europe I would like to address these comments.

If you look back to the various blogs about the EU I generated in 2013 it should be clear that I consider that the UK should be at the very heart of Europe. If we look back at the two configurations suggested by Winston Churchill we essentially see one option where the UK would act as broker between the then OEEC (Organisation for European Economic Co-operation) and, primarily, the USA – a role we still perform in part today. The other option was to create a United States of Europe where the UK was the dominant player at the very heart of Europe. Never, in his wildest dreams, would he consider a role as a marginalised player in the autocratic EU of today.

So where is the confusion? Fundamentally BREXIT is about leaving the political system that is the EU – not Europe. Furthermore, BREXIT would lead the way for others member states, who cannot wield the power of the UK, but of similar mind, to follow. Other EU members who do not favour or qualify to join the German-Franco dominated Eurozone, could also combine with the UK to seek a new arrangement. This is where the UK, after the experience of BREXIT, would be ideally placed to take the lead role. A new grouping, under UK leadership, would be based on free trade with the Eurozone core (not the nonsense contributory scaremonger version), and on mutual interests elsewhere in the world – not least the Commonwealth countries. The new form of cooperation would be between independent sovereign European Nations and absolutely free of compulsion towards economic convergence or political integration.

Thereafter survival of the remaining EU ultimately depends on the fiscal union of those who use it. Fiscal union, defacto, demands political union. So the EU can only survive for as long as the remaining rich countries are prepared to transfer a proportion of their wealth to the poorer ones, and those poorer ones are prepared to endure the stark conditions of austerity the rich countries impose on them for receiving it. But the imposition of political union on the 19 nations that use it, (let alone the other 9 who do not, and may join the UK) no longer looks like a realistic option. As with the failure of the Schengen agreement on open borders, common sense suggests that we must have a fully integrated United States of Europe model for the Eurozone to survive. The reality is that there is little appetite to integrate 28 nations with disparate economies, different backgrounds, culture and languages under an undemocratic autocracy. Therefore, we need to find another way.

What I have always insisted is that the UK must have an alternate plan for Europe post-BREXIT that provides for the unity of the countries of Europe, but without the political integration. It would even be possible to keep the Eurozone for those member States that feel it beneficial (remembering that fiscal union means political union), albeit with a democratic oversight.

I am still firmly of the opinion that BREXIT will be the beginning of the end of the EU in its current form. The EU blind determination to continue its drive for ever closer union is in fact driving it rapidly towards the rocks of disintegration. If the EU were to recognise the impending disaster in time to materially change course before the June referendum, then it might be in the UK’s interests to stay in and participate in the process of reconstruction. But this is the only positive argument that can be made for staying in. As we saw with the Cameron negotiations the EU hierarchy seem so obstinately oblivious of the impending danger, that the case for us to leave is compelling. Remaining in without major reform would consign Britain to being a second-tier state in a United States of Europe controlled by the German-Franco-led Eurozone – which is totally unacceptable.

I was lucky enough over the past weekend to gain access to a paper ‘The Referendum – a step towards a Democratic, Prosperous and Safe Europe’ jointly written by Walter Reid, formerly Professor of Accounting and Financial Control at the London Business School, and Chairman MDA Training Ltd, and D.R. Myddelton, Emeritus Professor of Finance and Accounting at Cranfield School of Management. Rather than me summarise a lengthy paper I will provide an extract that speaks volumes of a proper English approach to the referendum:

Quote:

The paper proposes the establishment of a European Multi Currency Union [EMCU] to operate alongside the Eurozone.  Unless the Eurozone and the Brussels Commission come to realise that some such change is essential to hold the EU together – which seems unlikely – it will be necessary for it to be set up by a new Treaty outside the EU by member-states wishing to be free of the current Mission.  A parallel structure between the EU and the EMCU will enable Europe to present a common position in areas such as defence and internal security and any other areas where it is in the mutual interests of both parties to work together.

Britain has an important role to play in helping to set up this new democratic Europe.  It could provide a way for both Britain and our fellow-member-states who also want to escape the oppressive actions of the Eurozone to protect their national interests and build together a democratic and prosperous Europe.

To help achieve this crucial aim, David Cameron should adopt an approach that would mitigate further acrimonious and divisive argument between the Remain and the Leave groups – which could split his party and indeed the country. This would involve agreeing that his recent negotiations achieved much less than the ‘fundamental and far reaching change’ he sought in his Bloomburg speech and that the concessions gained are being challenged.  Further, they are causing serious divisions across Europe as other countries seek similar exemptions.

End Quote

The last paragraph indicates a needed change in position by David Cameron which would also stop all of the adverse speculation in the markets, which in itself is unnecessarily damaging the UK. I would hope that this paper becomes readily available in the public domain.

German Domination of Europe – When will they learn that there is a better way

German Domination of Europe – When will they learn that there is a better way

The poignant D Day events of last Friday reminded me that this year is also the centenary since the start of the First World War, or the Great War as it is more commonly known. Although I have many good friends in Germany, and hold absolutely no prejudice against the German people of today, it occurred to me that, for 100 years, the elite of Germany have attempted to mould Europe in their own image, initially through two catastrophic world wars, and currently through self-serving political and economic influence within the European Union.

It cannot be disputed that the engine-room behind the introduction of the Euro was Germany, and in spite of the so-called stringent rules of entry into the Euro, Germany allowed such rules to be significantly relaxed to allow countries to participate where compliance with the entry rules would result in such countries otherwise unlikely to qualify for entry for years to come. It is no secret that Germany has significantly prospered under the Euro – at the expense of the other member nations. These nations now seek financial support, and the German Government have a hard time selling these bailouts to the already over-taxed German people, albeit a problem created by Germany in its self-serving quest for the domination of Europe.

Sometimes I reflect that Germany, having left Europe devastated in 1945, forgets that much of their subsequent prosperity was built on their substantial participation in the Marshall Plan (whereas the United Kingdom, as victor, did not qualify for any such support and has been required the swallow the cost of the wars, and rebuild using its own resources). As with the so-called super-model of Japanese prosperity in the 1980’s I do not subscribe to the German economic model of today, and certainly would strongly oppose this model being at the centre of the European Union. The current German economic model has a fundamental incestuous instability at its core, just like the proverbial pack of cards, and just as with Japan before its economy collapsed.

And this week the German elite are flexing their self-serving muscle again by instruction Angela Merkel to support a tame federalist like Jean-Claude Juncker as European Commission president, a move that is counter to the fundamental reforms needed by all donor nations – except Germany.

I have just noticed a news headline  ‘German chancellor Angela Merkel has cautioned David Cameron not to use threats of a UK exit from the EU in his campaign to block a federalist candidate from taking the helm of the European Commission.

Without these reforms my view is that the UK should not threaten to leave the EU, but make it very clear to Germany through the promised referendum that the people of the UK do not see their future dominated by the German vision of Europe. Maybe then the UK will have to pick up the pieces of an imploded Europe for the third time.

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.

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? – 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.

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