Last night I attended a meeting of the End of the World Club, and by the end – of the meeting, not the world – the conversation had turned uncharacteristically optimistic. Oh, there were the usual prophecies of doom, and it is hoped that the next meeting will be someone talking about what it was like living through the Zimbabwe hyper-inflation. But the second of the two speakers last night was Rory Broomfield, speaking about the Better Off Out campaign, as in: Britain would be better off out of the European Union. That is an argument where at least some headway is now being made. How big the chances are that Britain might either leave or be kicked out of the European Union some time in the next few years, I do not know, but those chances have surely been improving. I can remember when the fantasy that “Europe” was going to cohere into one splendidly perfect union and lead the world was really quite plausible, if you were the sort already inclined to believe such things. EUrope, in those days, was a boat that Britain needed not to miss. Now, EUrope is more like a swamp into which Britain would be unwise to go on immersing itself, and should instead be concentrating on climbing or being spat out of.
Mention was made of shipping containers, i.e. of the story told in this fascinating book. Compared to the arrangements it replaced, containerisation has damn near abolished the cost of transporting stuff by sea, which means that the economic significance of mere geographical proximity has now been, if not abolished, at least radically diminished. Regional trading blocks like EUrope now look like relics from that bygone age when it would take a week to unload a ship, and when Scotch whiskey could not be profitably exported from Scotland because half of it would be stolen by dock labourers.
Containerisation also exaggerates how much business Britain does with Europe, because much of this supposed trade with EUrope is just containers being driven in lorries to and from Rotterdam, and shipped to and from the world. The huge new container port now nearing completion in the Thames Estuary is presumably about to put a demoralising (for a EUrophile) dent in these pseudo-EUropean trade numbers.
Mention was also made of a recently published map (scroll down to Number 29 of these maps). This map shows the economic centre of gravity of the world, at various times in history. A thousand years ago, this notional spot was somewhere near China. And the point strongly made by this map is that this centre of economic gravity is now moving, faster than it has moved ever before in history, from northern Europe (it was in the north Atlantic in 1950), right back to where it came from, leaving Europe behind.
Broomfield talked about how you convince people of such notions. For younger audiences, he said, just moaning on about how terrible EUrope is doesn’t do it. You have to be positive. But the trick, said Broomfield, is to be positive about the world. The important thing is that Britain, and you young guys, should not held back by EUrope from making your way in that big world.
The actual End of the World is not nigh any time soon, but the world is changing.
If you doubted that the €uropocalyse was at hand…
French President Francois Hollande has declared an end to the eurozone debt crisis, which has gripped the region for the past four years.
… well everything is going to be okay after all then! Thank goodness for that!
David Cameron’s position is that he is trying to persuade the Golf Club to play tennis, but that if they refuse, he will continue to play golf.
– Michael Forsyth, on Daily Politics today, describing the posture of the Prime Minister with regard to the European Union.
Crisis for that last amorphous blight of nethermost confusion which blasphemes and bubbles at the centre of all infinity as trust hits record low, the Guardian reports.
Public confidence in the boundless daemon-sultan Azathoth, whose name no lips dare speak aloud, and who gnaws hungrily in inconceivable, unlighted chambers beyond time amidst the muffled, maddening beating of vile drums and the thin, monotonous whine of accursed flutes; to which detestable pounding and piping dance slowly, awkwardly, and absurdly the gigantic ultimate gods, the blind, voiceless, tenebrous, mindless Other Gods whose soul and messenger is the crawling chaos Nyarlathotep has fallen to historically low levels in the six biggest EU countries, raising fundamental questions about its democratic legitimacy more than three years into the primordial idiot god’s worst ever crisis, new data shows.
The blind idiot god encircled by his flopping horde of mindless and amorphous dancers, and lulled by the thin monotonous piping of a demonic flute held in nameless paws “could do much better if its institutions coordinated better”, according to a press release issued today.
Voting to leave Brussels will cause your wife to have bigger breasts and increase your chances of owning a BMW M3.
– Boris Johnson, leader of the Conservative Party during the EU referendum of 2017 (as imagined by David Charter in Au Revoir, Europe: What if Britain left the EU?)
Cyprus has a ‘bailout‘ deal blessed by the EU. Certain bondholders face being wiped out.
Now I seem to recall when Ireland got its bailout blessed by the EU, it was expressly forbidden to wipe out bondholders, I am right?
Now if I also recall, many of those bondholders were German, whereas many of the bondholders in Cyprus are Russian.
I am reminded of a certain song…
This article from John Phelan, at The Commentator, is worth reading:
Functioning banks certainly are a key part of a modern financial system but why should the same be said of the toxic zombies who are blundering round the current financial landscape?
And how did these rotten banks get so big in the first place? It’s because governments and central banks prop them up. Bad banks rarely go out of business, they just lumber on, soaking up and destroying more wealth. Goldman Sachs and JP Morgan were bailed out five times in the 20 years before 2008.
The second lesson is that there really is no such thing as private property. In extremis the government considers itself entitled to any amount of your property it desires even if, as in the Cypriot case, it means revoking its own commitments to protect bank deposits.
But then this is the logical outcome of taxation. If you think that a shortage of government revenue can be solved by the government simply helping itself to someone else’s revenue you really can’t have a philosophical problem with this. If you believe in the 50p tax rate this is where you end up.
The last paragraph is particularly telling. It is good, in a grim sort of way, that people have been alarmed at the idea of governments grabbing savings. But what on earth do people think governments do already? Consider the central banks’ “quantitative easing” policies. Printing money benefits those who get the new money first against those who do not; savers lose out when a government “reflates” an economy. In the UK, for example, inflation – understated by government statistics – is in the low but significant single digits and over a relatively short period, will devastate savings due to the impact of compounding. The proposals from leftist politicians for a so-called “wealth tax” in the UK is merely another form of property rights confiscation, but then again, income taxes are a form of confiscation in that they confiscate the products of work. Confiscation is what governments with a monopoly on the use of physical force do. It is one of their defining characteristics.
Meanwhile, Detlev Schlichter has an interesting new item up about the Cypriot disaster. What is notable about it is that he does not adopt a lazily predictable “bash the eurozone” stance here.
In particular, Schlichter kicks against the assumption that what was proposed – taking a slice of deposits – is somehow uniquely evil:
I am a free market guy. I am in favor of laissez faire so I always like to see placards that read “Hands off”. One could see such placards at demonstrations in Cyprus yesterday: “Hands off Cyprus”. That is great. But be careful what you wish for. A proper hands-off policy means letting the chips fall where they may. That would certainly mean no bailout and thus total collapse of the Cypriot banking system and the Cypriot economy. Don’t forget that Cyprus and its banks and its depositors are still being bailed out with other people’s money here.
That is also what some of my libertarian friends don’t seem to get when they speak, as some of them did yesterday, of another incident of the ‘the state stealing from its citizens’ or of confiscating their property. As much sympathy as I usually have with these views, in this instance they are simply mistaken. If this were expropriation it would mean that the act of abstaining from this expropriation – of the expropriator simply doing nothing – would mean that the ‘victim’ keeps his property. But if the EU did nothing in this situation – “hands off”, laissez faire – it would mean that most depositors, including those under €100,000, got wiped out completely. The choice is not between keeping everything and paying a ‘levy’, but between paying a ‘levy’ and losing almost everything.
In December last year, I had some delicious seafood in one of a chain of restaurants in Cyprus. The chain was actually South African owned, and the style of cooking was actually Cape Malay. The restaurant didn’t mention either of these things in its advertising, signage, or on its menue. There was a vague suggestion that it was Cajun. (Being very vague about where they come from is a skill South African businesses picked up in the apartheid era, and they haven’t lost it). When I got my bill and paid by credit card, I was intrigued to see that the merchant bank was not a local Cypriot bank, but was a South African bank. I was slightly mystified by this at the time (other than that it is no secret that, well, interesting capital flows go through Cyprus), and wondered if the restaurant and the bank shared ownership for reasons similar to the reasons why the mafia also finds it convenient to own lots of restaurants.
Possibly, though, the situation is simpler. The Cypriot banks were and are bust. A South African company doing business in Cyprus does not trust the Cypriot financial system and is avoiding it as much as possible by bringing its own bank. Perhaps my payment for seafood was going directly to somewhere else in the euro area rather than to a Cypriot registered institution. Possibly it was going further afield. Some of the species of seafood on the menu were not native to the Mediterranean, so there were certainly foreign payments to be made, and that part would at least be legitimate to some extent. (To be fair, seafood may be one of the world’s most globalised industries, and this is true of almost any seafood restaurant anywhere). Someone, though, may have suspected what was coming.
“More regulation” is the cry in every gagging throat, following the revelation that numerous cheap meat dishes in several supermarkets that were labelled as beef or lamb actually contained horsemeat.
Regulation caused the problem in the first place.
From today’s Times (subscriber only):
The Government knew last summer that a sudden ban on cheap British beef and lamb meant it was “inevitable” that unlawful meat would be imported from Europe.
Unintended consequences, again. It would make a horse laugh.
Jim Paice, the former Agriculture Minister, warned the committee last summer that unlawful meat would be imported from Europe as manufacturers sought cheap sources to make up for banned British supplies.
The warning came after the FSA [Food Standards Agency] suddenly told meat processors to halt the production of “desinewed” beef and lamb, which was used in tens of millions of ready meals, burgers and kebabs each year, after orders from European Commission inspectors.
The committee demanded in July last year that the Government set out its plans to prevent illegal imports, stating: “The Agriculture Minister’s evidence suggested that it was inevitable that wrongly labelled or unlawful meat products would be importing into the UK to replace UK produced desinewed meat.”
Emphasis added. Do not, however, expect this aspect to be emphasised in the Radio 4 Food Programme. I could be proved wrong; there is a podcast here which I am not in the mood to listen to, but so far the BBC’s coverage has been a relentless flow of, if you will forgive yet another revolting processed meat metaphor, pink slime.
An independent Ireland – an interesting idea, so when are they leaving the E.U. then?
Surely rule from Brussels is no more “independence” than rule from London.
– Paul Marks
Here is a classic piece of nonsense to start this week in chilly Britain:
The UK tax authority said the amount of tax that big companies may have underpaid by using artificial intercompany transactions to inappropriately reduce taxable profits has risen 48 percent last year. The figure comes as public anger grows over tax avoidance by big businesses and British MPs investigate possible remedies.
- (From a report from Reuters.)
I read this report carefully and nowhere does it say that the firms concerned have broken laws, engaged in fraud, or used violence or engaged in criminal acts. They are taking full advantage of the laws of the jurisdictions with which they have contact, as their shareholders would expect them to do in maximising shareholder returns. If politicians really wanted to reduce what they see as such dodgy tax avoidance, perhaps they should enact taxes that are simple, low, and flat. This is not rocket science, as the 2020 Tax Commission report issued last year showed.
The recent naming and shaming of Starbucks, for example, of simply making use of legal arrangements, was particularly odious. No wonder people are thinking that we are living in a world like something from the pages of Atlas Shrugged.
Tim Worstall writes about this sort of issue a lot, usually in the process of skewering that socialist “accountant” from Wandsworth, Richard Murphy. Tim is always entertaining and instructive at the same time.