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You say that like it’s a bad thing, Mr Soros

The EU could collapse in the same way the Soviet Union did, George Soros warns

Back in 1991/92, when the Soviet Union had just collapsed and the UKIP party had just formed to fight the “ever-closer-union” Maastricht Treaty, one of their posters was two pictures of the map of Europe, one captioned ‘Before’ and the other ‘After’. ‘Before’ showed Western Europe divided into many separate countries while the east was the single monolith of communism. ‘After’ showed Eastern Europe divided into many separate countries while the west was the single monolith of the EU.

In Britain, this comparison was used as an argument against the EU but Mr Soros evidently sees it differently. He

has issued a call for Europe to “please wake up” and recognize “the magnitude of the threat” it faces.

Otherwise

“the European Union will go the way of the Soviet Union in 1991.”

Mr Soros blames

“the lack of legal tools for disciplining member states”

Also attracting his ire is “the outdated party system that prevails in most European countries” (I do not recall this being a problem in the old Soviet bloc), and the fact that changing the treaties that define the EU is too difficult. He also thinks the EU should not have required migrants to register in the first EU country they reached, instead of moving them on over the continent, because that made local electorates more aware of their numbers.

However Mr Soros believes all will yet be well if the Eurocrats

“awaken the sleeping pro-European majority”

Good luck with that.

Remoaner MPs

They dislike the treaty but fear a clean Brexit,
They hope that – in more ways than one – they can fix it.
Too statist to say, even at their most livid,
“Take back control? Look at us, to whom you’ll give it!”,
Instead, as the fast-nearing date makes them manic,
Their failed Project Fear has become Project Panic.
Campaigning, they pledged they would honour the hour.
Elected, and climbing the greased pole of power,
They cling in death-grip to their fear-calming view,
We’re the wise – VoteLeave’s win showed the folly of you.”
In parliament’s past, you at many times find,
It avoids doing wrong by not being of one mind.
So if “House fulfils pledge” seems a doubtful prediction,
Let’s hope for “House deadlocked in fierce contradiction”.

“Have you considered masterly inactivity?”, replied Sir Humphrey Appleby when newly-appointed Prime Minister Jim Hacker asked what he should now do. Alas, so polarised is politics today that even – indeed, especially – Sir Humphrey would likely oppose inactivity in this case. We hope parliament will in fact do nothing supremely stupid during the next two months, but my most confident prediction is that whatever they do or don’t do will not appear masterly.

“A resumption of normal service”

The Telegraph has a scoop. This might not go down too well in the working class areas:

Exclusive: Philip Hammond tells business chiefs MPs will stop no-deal Brexit

Philip Hammond told business leaders that the “threat” of a no-deal Brexit could be taken “off the table” within days and potentially lead to Article 50 “rescinded”, a leaked recording of a conference call reveals.

The Chancellor set out how a backbench Bill could effectively be used to stop any prospect of no deal. He suggested that ministers may even back the plan when asked for an “assurance” by the head of Tesco that the Government would not oppose the motion.

He claimed next week’s Bill, which could force the Government to extend Article 50, was likely to win support and act as the “ultimate backstop” against a no-deal Brexit, as a “large majority in the Commons is opposed to no deal under any circumstances”.

A recording of the call, passed to The Daily Telegraph, recounts how the Chancellor, Greg Clark, the Business Secretary, and Stephen Barclay, the Brexit Secretary, spent nearly an hour talking to the leaders of 330 leading firms.

They included the heads of Siemens, Amazon, Scottish Power, Tesco and BP, all of whom warned against no deal.

The disclosure reveals the close nature of the relationship between the Treasury and some of Britain’s biggest businesses, and how they appear to be working in tandem to block a hard Brexit. It will also add to suspicions that Mr Hammond has been orchestrating attempts to soften Brexit.

Mr Hammond assured the business leaders that the Government would stop spending money on no-deal preparations “as soon as we know we are not going there” and give businesses “a resumption of normal service”.

So the Chancellor of the Exchequer sees himself as serving the heads of Siemens, Amazon, Scottish Power, BP and Tesco, among others. Perhaps I am reading too much into one ill-chosen word, but that is not a good look. If he had not used that word it would still not be a good look. The whole conversation, the whole meeting, reeks of the sort of black-tie cronyism that gives capitalism a bad name.

Was I gullible to believe in Tory cynicism?

Ever since Gove messed up the election of a leave leader, my confidence that the Tories would nevertheless deliver Brexit rested less on the belief that the parliamentary party contained more leavers than full-blown remoaners than on the conviction that it contained many who just wanted to win the next election. Cameron’s referendum to deal with the internal and external (UKIP) threat to Tory electoral prospects ended not as he intended, but it offered such MPs a very obvious path forward. Likewise, when May demonstrated her ability to reduce a poll-lead healthily exceeding 20% to a result just exceeding 2% (over Corbyn, of all people), my belief that the Tories would not risk another election under her leadership rested solidly on my faith in how many Tory MPs wanted first and foremost to win.

For now, it is all still to play for. Firstly, if there are as many letters written as rumoured, yet such as David Davis are still thinking about it, then Mogg’s “this week or next” remains on the table – and I quite see that the rule ensuring May a challenge-free year if she survives a vote is a very good reason for caution in the run-up to launching one. Secondly, when May’s incompetence made her dependent on the DUP for her majority, I thought it good for one reason; I now also think it good for another. Thirdly, if all else fails, reality could still prove wiser than parliament and deliver us a no-deal Brexit through their sheer inability to agree anything decisive in a timely fashion.

All that said, I am beginning to question my faith in the “focus on winning” cynicism of a sufficient majority of Tory MPs. It is one thing to think that enough Tory MPs to keep May as leader could betray their voters, their party, their principles and the most emphatic statements of their 2017 manifesto (and her leadership campaign), but it shakes me to the core to find myself wondering if they could choose the electoral death ride of May campaigning on this deal rather than follow a leaver. I’m glad that a majority of back-bench MPs seem to be interested in retaining the votes of the ‘swivel-eyed loons’ so derided by Cameron, Osborne, and now May, but just how many others would rather lose than be unfriended in SWI ?

Natalie once stated she would endure a Corbyn government rather than stay in the EU. I have always felt much sympathy for the wretched situation of Slavs who found themselves fighting for Stalin against Hitler as the only alternative to Hitler’s winning, and it is with similar feelings that I do see her point (if, that is, we could even rely on their being alternatives). However we should be able to do better than that.

The EU really doesn’t like tech – can we leave yet?

“In an almost direct clash of intentions, the GDPR has effectively banned the use of blockchain technology in Europe because of its immutable nature. The GDPR offers the power back to the individual to edit and delete data which falls into the hands of centralized authorities, but when there is no centralized authority, there is no need for data to be moved around. This is the crux of the GDPR’s clash with blockchain. So, what happens to Europe and the next technological wave?”

Darryn Pollock, columnist for Forbes.

The “blockchain” technology is a distributed ledger that allows information to be securely transferred without the need for third-party authentication, which could mean that many of the settlement and custody functions provided by banks – the sort of “plumbing” of finance we take for granted – could be done far faster, and at less cost. Although the crypto currencies that sit atop of this technology have their fair share of sceptics, the blockchain tech. is seen by banks as a potentially revolutionary one. While people complain that some London-based jobs could leave London if the UK has a clean Brexit and leaves the Customs Union (not to be confused with access to the European market as such), I would wager that blockchain will be far more important in affecting financial employment overall.

And yet the EU, with its usual plodding, bovine way, has enacted data protection rules (GDPR) that could blight this new technology, as well – as we have already seen – add layers of costs to organisations of all kinds. Coupled with the recent vote by MEPs to impose intrusive and costly controls on the internet, I’d hope that all those Millennials whom we are told are full of so much love for Brussels might wake up. This doesn’t of course mean that British politicians aren’t capable of enacting plenty of daft laws, but it’s usually a sight easier to lobby for change at a national level than try to persuade hundreds of millions of voters in 28 countries to change.

So as Tim Worstall likes to argue: can we leave yet?

The IEA’s prescription for Brexit

Some critics of Leavers from the EU like to claim that Leavers don’t spell out the details of what Leave would mean, although that always struck me as disingenuous. Even so, it is good that the Institute of Economic Affairs has issued a paper on what a pro-liberty, pro-free market Brexit will look like:

“We have looked at Brexit in the wrong way, and in so doing we have hampered our ability to get a good deal with the EU. We must execute an independent trade and regulatory policy in order to capture gains from this process, and also to ensure that we have a better framework for negotiations with the EU. This plan offers comprehensive approach which shouldn’t be considered a ‘Plan B’, but rather a ‘Plan A+’ for Brexit.”

So says Shanker Singham, the Director of the IEA’s International Trade and Competition Unit, and co-author of the new IEA paper.

There is a lot of detail to chew over, but this is pretty manageable and sensible from where I can see it. The proposals ought, surely, to be studied closely by government ministers and it would be indeed scandalous if they have not been before. And that, of course, is the worry: Theresa May has, perhaps only now, come to a realisation that a “Brexit in name only” fudge is electoral suicide and a no-go diplomatically.

As an aside, three separate people, all Remainers, told me over the weekend that they were so disgusted by the blank refusal of EU heads of state to even bother considering May’s Chequers plan that it has made them feel that, if a referendum were held again, they’d vote Leave. These views are those of Londoners who work closely with the City, and have been the sort giving the EU the benefit of the doubt in the past. They no longer do so. That’s important.

Moderation is often not the best policy

“It’s a crowded space, this search for the so called moderate centre ground. It is defined as going back to Brussels, saying we are sorry for ever thinking of leaving, and accepting the full swathe of laws, taxes, budgets and common policies that characterise the modern EU. What ever is either moderate or democratic about such an agenda? How is it democratic for more and more laws to be made behind closed doors, drafted by officials we cannot sack or make accountable, and approved by Ministers from 27 countries under pressure not to rock the boat? What is liberal about the austerity policies of the EU’s budget controls, requiring higher taxes, lower spending and lower deficits from countries mired in unemployment in the south and west of the EU? How is the EU’s policy of helping pay for Turkey’s heavily defended borders with the Middle East moderate? What is green about the fishing discard policy or the dash for diesel and the reliance on coal for power by Germany? Why does everything proposed by the EU get through without a whisper of criticism? When will they apologise for the huge damage the Exchange Rate Mechanism did to the livelihoods and businesses of many in the UK, or for the revenge the Euro crisis visited on Cyprus, Greece, Ireland and Spain?”

John Redwood.

A very good article, even if you might not agree with all of Mr Redwood’s politics. His observation that “moderate” Labour MPs (they still want to seize private property, tax us up to the neck and so on) are caught between understandable loathing of Mr Corbyn, and their own foolish Europhilia, is very well made.

As Mr Redwood said, there’s nothing “moderate” about defending a creaking customs union, unaccountable bureaucracy, etc. But then what really does this sort of “moderation” really mean? I’m reminded of Ayn Rand’s excellent essay, The Wreckage of the Consensus, where she pointed to the foolishness of imagining that wisdom is to be found in some sort of “middle” between some sort of polar opposites.

Take another case: We are sometimes told to take “a moderate amount of exercise” when, in fact, what we might want to do for better health is high intensity interval training, for instance, or heavy lifting with barbells, rather than messing around by jogging a short distance (and buggering up one’s knees and back, by the way). Sometimes the “moderate” course isn’t really a course at all, but a sort of cop-out.

Back to the subject of Mr Redwood’s post, it reminds me that the voice of genuine political liberalism, to use that fine old word, has been quiet for a very long time in the UK. There appears zero chance of it being encouraged by the current Liberal Democrat Party, which even before its demise, was scarcely connected to the great traditions of Cobden, Gladstone or, even in a more recent example, the late Jo Grimmond.

Samizdata quote of the day

“In relation to the Irish border, we need to be tougher and call the EU’s bluff. Currently a border already exists between the UK and Ireland – in currency, VAT, excise duties and security which do not present any problems at all. Using new technology as well as extending schemes such as the Authorised Economic Operator scheme means any post-Brexit customs checks can be done without a hard border. The EU insists on customs checks but in reality no UK or Irish Government would ever accept a hard border. Those making the case for the Chequers plan off the back of threats about the Irish border are simply playing into the EU’s hands.”

Ross Thomson, MP.

Samizdata quote of the day

“It is conceivable that Mrs May could, with Labour support, push such a half-baked Brexit though Parliament. But her party would be finished. For most of its advocates on the Government benches, Brexit is about global free trade or it is nothing. Leaving the single market is not enough; Britain must also regain the power to trade freely with the rest of the world. Anything less would not just be a monumental betrayal but would tear the Conservatives apart. The party split in 1846 after the Corn Laws were repealed; it would surely do so again if Mrs May sells out her Brexiteers.”

Allister Heath

Big regulation

War and Peace is 1,200 pages long. Bleak House spreads to 1,000. Dodd-Frank, the US’s sprawling overhaul of financial regulations after 2008, runs to 848 pages – earning itself the nickname `Dodd-Frankenstein’. And the EU’s bumper trade deal with Canada reaches a hearty 1,600 pages. Last week, surmounting all of these achievements, the EU introduced a truly spectacular piece of regulation. `Mifid 2′ is its name and it weighs in at a princely 7,000 pages. That’s 1.4 million paragraphs, or six Bible-lengths. It must surely be a contender for the longest piece of red tape ever.

Juliet Samuel (Daily Telegraph, registration required). Needless to say, people continue to drone on about “neo-liberalism” and “unfettered markets”. If only.

I can predict a standard retort: that if the UK wanted to be an enthusiastic EU member (no laughing at the back, kids) then it could influence the EU machine and reduce this regulation. But how has that worked out, really? True, I know of some politicians who have tried to slow this process down, but it continues regardless.

Sure, when the UK leaves, then UK-based firms that wish to do business with the EU will need to comply with EU regulations just as they must do so with the laws of the US, or Canada, Australia, or Planet Zog. But the process cuts two ways. If the UK parliament has any sense (big if, course) and keeps rules within bounds rather than “gold-plates” whatever is in force in other countries, then the UK will gain. Further, the very existence of countries with independent rule-making makes it harder for policymakers in transnational groupings such as the EU to create tax/regulatory cartels. (This is why countries such as Switzerland drive Brussels nuts.)

In time, the regulatory costs of doing business in the EU will cripple its financial markets, and that makes it rather harder to persuade yours truly that being outside this regulatory behemoth is so bad for business. Being outside a relatively free and flexible customs union, which is what the Single Market is, can sound risky, even daunting. Being outside an expensive, inflexible, bureaucratic nightmare is far less so. In fact, getting as far away as possible from such a structure is not just a smart gamble, but essential.

Terror at living outside the EU, ctd

Recent UK gross domestic forecast predictions, issued this week via the glum figure of UK finance minister Philip Hammond, have encouraged some of my friends who are EU Remainers to shout about how Brexit is damaging Britain, we are going to lose tens of thousands of jobs to the continent, or wherever, etc, etc. The rage is not dying, in fact. Some of the language (Brexit supporters are “retarded” being a recent one) is not becoming milder. We haven’t yet reached the acceptance phase after the initial shock and anger.

Apart from the devaluation of sterling after June last year, there hasn’t been all that much of a shift on the economics front. The underlying performance of the UK economy does not appear to have altered that much. Some American banks such as Goldman Sachs and JP Morgan talk of shifting some business to the continent to create subsidiaries in anticipation of any EU access shenanigans, as I would expect, but it hardly fits with a Biblical level of terror to justify some of the vehement language I see on forums such as Facebook.

Assume we must take seriously the risk of life outside the joyous embrace of the EU Single Market, this is worth considering, from Tory MP and former minister, Peter Lilley:

The Single Market is talked about as if it were some inner sanctum accessible to a privileged few. In fact, every country has access to the Single Market – with or without tariffs. The Single Market programme, which I implemented, involved harmonising product rules – sensible, since businesses can now make one product range for the European market, not 28. But that benefits American and Japanese exporters as much as German or British firms. Although often invoked as particularly benefiting UK service companies, in fact UK service exports to the EU have grown less rapidly since the Single Market reforms than any member state except Greece and Italy

He also responds to the point that apparently, by being outside the EU, the UK will now submit to EU rules without being able to influence them:

People assume Britain benefits from participating in setting these rules. But rules provide a framework within which all companies operate – not an advantage to any individual country. Britain set the rules of tennis but rarely wins Wimbledon! British exports to the EU have grown less rapidly since the Single Market than they did before 1993, less than our partners’ and much less than non-EU countries’ exports! Maybe that is partly because we suffer EU regulations on 100% of our companies (costing our economy billions of £s) whereas non-EU firms need only comply with EU regulations on activities carried out within the EU.

And on the “passporting” issue that comes up:

How important is the right to passport services to the EU? Passporting lets financial institutions operate throughout the EU via branches supervised by their home country regulator without seeking authorisation from local regulators. Having introduced the Single Market measures, I decided to make a speech extolling how they had removed barriers to trade, not least through passporting. Unfortunately, my officials could not find a single company doing business it previously could not do! Banks were almost invariably operating, not through branches, but via subsidiaries which still needed local authorisation and regulation. (Emphasis mine.)

And on the terror that outside the EU, the UK will be hurt, Mr Lilley looks at EU-regulated mutual funds and alternative investment funds regulation (private equity, real estate, private equity, etc):

Since then the UCITS, MiFID and AIFM directives have extended passporting rights to other financial service providers who do take advantage of it. However, most UCITS funds choose to operate via subsidiaries in Luxembourg and Dublin without causing an exodus of jobs from London. Also the AIFM directive provides for recognition of equivalent standards of regulation by non-EU providers which is intended to be granted to Hong Kong and Singapore, so could scarcely be refused to the UK post Brexit.

In other words, you don’t have to be in the EU to manage investments sold within its borders. And yet if you take some of the Remainer arguments at face value, you would think that the UK is to be cast into a dark, lonely place.

A final thought. One of my Remainer co-jousters talks of the folly of the UK “going it alone”, as he claimed we had done after 1945. That, however, not only ignores our membership of NATO but also the UK’s web of trade with not just the continent of Europe, but also the old Commonwealth nations and places such as Argentina, and of course the US. The UK was hardly living under a rock during the period before EEC membership began in 1973, and further, that membership involved slapping tariffs on many of those countries. As Mr Lilley says, it has taken ages for the EU to hammer out free trade deals with nations such as India, China, etc, and to improve on what we have with the US. (I have even seen some of my Remainer friends dismiss this range of countries as “minor”, or “colonial outposts”). So let me get this straight: the US, Canada, Australia, New Zealand, India, South Africa, parts of Latin America, the Pacific-Rim, etc, are “minor”, but the European Union is a powerhouse. Great, got it.

Have a good weekend everyone.

 

Samizdata quote of the day

“The EU’s finances run the way they do because no one has a sense of ownership of the funds. It is always “someone else’s money” that is being abused.”

Lee Rotherham