Friday, 22 December 2017

Highs And Lows

Merry Christmas to all visitors to this blog.  It's time to take a short break from blogging so that I can properly concentrate on stuffing my face with nut roast, chocolate and whisky.  I hope everyone has similarly indulgent activities lined up for the festive season.


It's been a very odd year of highs and lows, ups and downs.  It seems that Brexit giveth then taketh awayeth righteth awayeth. Uh oh, that's me slurring my words already so let's get cracking with a quick review of all the highs and lows/ups and downs of 2017 before my fingers can only slap the keyboard like a forlorn seal.

One high point of the year was Theresa May losing her overall majority after calling a senseless General Election.  Boy, that was a delicious high.  Jeremy Corbyn, of course, immediately spoiled it by directing his party machine at the hardest Brexit possible.  The Labour Party had been granted an embarrassingly huge opportunity to take down the government and they missed it. They proceeded to miss it about 25 times in a row.  Boy, that was a depressing low and it keeps on getting lower by the day.

Gina Miller is a something of a hero.  She withstood death threats and persistent racist slurs to ensure that Parliament was given final say over whether Theresa May could begin the Article 50 process of withdrawal from the EU.  Her victory at the Supreme Court was a highlight of the year.  What did Parliament do?  They behaved like the supine, spineless, cowardly careerists we know them to be and voted for Brexit in a blink of an eye.  They let the government proceed despite there being no analysis of the effect of withdrawal from the EU, no plan or vision for the UK's future relationship with the EU, no preparation for the upcoming negotiations, and overwhelming opinion among MPs that withdrawal would lead to a poor outcome. Yes, that was a low.  To this day, I still don't think they understand the consequences of that pivotal vote.  That was the moment the UK lost control of the process and its own future.

Parliament did finally gets its act together, even if they are merely rearranging the deckchairs on the Titanic.  They managed to force David Davis to publish his much-trumpeted Brexit impact assessments.  That was a high. Then the analyses were released.  Oh dear, that was a low.  I read  two of the sectoral non-analyses that were most closely aligned to my profession.  They were merely a collation of public domain statistics and well-known facts about EU regulation.  I learned nothing, except that the Labour Party missed another embarrassingly large target. Why hasn't Davis been forced to resign?  Well, that's because Jeremy Corbyn doesn't want to upset the Brexit process.
 
The government are committed to maintaining the Common Travel Area with Ireland. This is the only good news whatsoever to come out of Brexit.  Of course, that simple high was undermined by the tabloids screaming at the Irish for daring to have their own geopolitical interests and acting as though Ireland was still part of the British Empire. The other day I watched an old episode of The Two Ronnies.  I only lasted about 10 minutes because I didn't remember there being so many jokes about the Irish being stupid.  It wouldn't have annoyed me so much if it hadn't felt so contemporary.

Can anyone remember when Nicola Sturgeon gave formal notice to the Prime Minister that there should be a Scottish independence referendum?  That was a high. It felt like something was happening at last.  Then nothing happened whatsoever so we end the year on a low.  The SNP need to regain momentum on their promise of a referendum and they need to do that quite quickly.  We all need to start the next year on a fresh high.  Independence is the only way out of this madness.

On a purely personal note, this blog is much bigger than it was 12 months ago.  That is a high. It is, of course, still a tiny niche blog but I can't believe so many people choose to read the long-winded meanderings posted here.   A huge thank you to everyone who visited or posted a comment or just stopped by for the pop video with semi appropriate song title.  The only high that remains is to achieve the final goal that will allow me to stop writing this stupid blog. On the count of 4 we all need to yell, "Oi, Sturgeon, get a move on." Yup, let's get on with it.
 
Over and out,

Terry











Tuesday, 19 December 2017

A Change Is Not As Good As A Rest

My Mum always says that a change is as good as a rest.  She's right on almost everything but on this one she's flat out wrong. The only thing that is as good as a rest is a rest.  I've done the experiment and I've crunched the numbers and I can hereby report with scientific clarity that the only thing that is as good as a rest is another rest.  Having said that, change is sometimes good.   As it's nearly Christmas, I wanted to write a positive post about change.  This is a politics blog so I thought I'd describe some of the things that I think are positive about daily life here in Switzerland to see if anyone would like to import them to a future iScotland.  I'm not talking about really big, top-down economic decisions like interest rates or fiscal policy but more the kind of bottom-up policy choices that have a direct effect on life quality and can actually change the mood and timbre of a society.   I'm just going to go through a few things that seemed a bit weird when I first moved to Zurich but now seem as normal as a giant bar of Toblerone.  What do you all think?  Would any of these improve life in iScotland?
A typical breakfast in Zurich.
I pay less rent today than I did eight years ago when I moved in to my flat.  There are very strict rules imposed on landlords here in Zurich that limit their power to increase the rent.  The monthly rent on all flats is tied to the interest rate set by the Swiss Central Bank.  If the interest rates remain persistent for a fixed time above the rate on the date I moved in, the landlord is allowed to increase the rent according to a formula.  Similarly, the tenant wins if the rates go down and stay that way.  Interest rates have plummeted since 2009 so at the moment I'm very much a winner.  If I moved out of the flat the landlord would be able to strike a new monthly rent (with some caveats to that) but I'm certainly not going to leave for as long as it effectively gets cheaper month by month.  My landlord might be cursing my inertia but there's not much they can do about it because renters have persistent rights of residence: they can only kick me out if I stop paying the rent or the building is demolished.   The world of renting is actually a world of strict rules.   For example, everything in the flat from windows to wall paint has a value and a lifetime, meaning that when I move out the landlord can only claim damages out of my deposit by applying a mathematical formula.  Paint has a lifetime of 8 years so the walls that were freshly painted in 2009 now have zero value and I can't be held financially responsible for fixing up the tiny scrapes and marks that built up over the years.  There are strict rules about moving out on certain days, notice periods for improvements, responsibilities for internal and external pipes and so on.  These rules strike a balance between landlord and tenant.  My view is that they generally favour the rights of the tenant by providing stability and a legal set of standards and responsibilities.  Sometimes rules turn out to be a good idea.


Pretty much everyone in Zurich rents their flat.  As I already pointed out, renting comes with all sorts of legal protections that make it a generally good experience.  It has to be pointed out, though, that ownership is beyond most people's pockets. I'm in the amazingly lucky position that I probably could go out and buy a place but I've so far opted not to do that.  Why, then, am I not a property magnate?  Well, property ownership comes with a significant tax burden.  I would have to pay tax on the theoretical income I would earn if  I rented out the property, even if I chose to live in it myself.  Also, if I chose to sell the flat within 10 years of purchasing it I would be hit with a tax bill that would wipe out any profit I might have made.  Ownership just isn't the no-brainer that it is in the UK.  I believe that changes society for the better because it means that most Swiss people are not obsessed with house prices, they're not saddled with stressful debt, they don't spent public holidays at the DIY store (more of that later), and they have more spare time and money to do other activities (more of that later, too).

The first two German words everyone masters: "Sonntag" and "Geschlossen"
In Switzerland, if your last lightbulb blows on Saturday night you'll be sitting in the dark until Monday morning.  That's right, everything is shut on Sunday.  I'll be honest, this took a bit of getting used to but now I think it is a great idea.  Scotland was actually a trailblazer on Sunday shopping but I now think it was a terrible move.  It's a really great idea to save up one day for something special, something free from commercial stress.  On Sundays what you see is Swiss people going out for leisurely strolls in the woods,  families out roller-skating on the national roller-skating paths, cyclists huffing and puffing up and down hills, people on their balconies reading a book or playing a board game, and pensioners going for a boat trip on the lake.  I quite often go for a cycle into the weird and wonderful countryside and I'll tell you now that without doing that I wouldn't have known about the strange ceremony where they dress the cows up all pretty with flowers and bring them down to the lower winter pastures.  The DIY centre is most definitely not open for business and, anyway, bathroom grouting is the landlord's responsibility.

You should see what they do to the chickens!
Those Swiss are obsessed with recycling.  As a consequence, I'm now obsessed with recycling. The binmen will only take rubbish away if it is in a special sack that costs about £1.50.  That is a lot of money for a solitary bin bag but we need to remember that it does include the price of collecting and managing the rubbish it contains.  On the other hand, recycling is free so it pays to recycle rather than chuck it straight in the bin.  There are collection points for textiles, batteries, aluminium, cardboard, paint, paper, and even water filters.  Every year the council sends everyone a little magazine with the collection calendar, a map of all the collection points and information about how to protect the environment. There's even a special cargo tram that travels around the city to collect larger items of rubbish so as long as you can get it to a tram stop, you can recycle it without needing a car (more of that later).

Mobile recycling centre.
I recently read an economic report that tried to explain Germany's unexpectedly low GDP per capita.  I wish I could find the link but a summary might be that Germany has a lot of shared wealth that doesn't show up in direct measurements.   German wealth isn't just the sum of individual wealth because huge amounts of national wealth are tied up in shared resources like trains and trams and roads and theatres and opera houses.  You can be relatively poor in Germany but lead the life of a rich person in another country because you have access to all sorts of facilities and resources that would either be expensive or just not exist elsewhere.  Personally, I don't mind paying tax if I can see the benefits all around me.  Here in Zurich, I do see the benefits on a daily basis.  The tram network didn't just magically appear, the workers painting and cleaning public spaces don't do it for free, and the opera house renovation wasn't an automatic transformation.  There is nothing sadder than a dilapidated public space or a bus timetable pinned to the bus stop that is 3 years out of date or a swirling mess of discarded crisp bags blowing around George Square. Public spaces and resources are what bind us all together.  Without them, society is just people sitting at home watching enormous TVs.

George Square will never match Odeonsplatz, Munich but does it have to look quite so unloved?
I really don't like cars.  They clog up the roads, spew out all manner of pollutants, and knock people down all the time. Why not build an ever-expanding network of trams and electric buses and trains?  Travelling on public transport around Switzerland and Germany and Austria is a pleasure rather than a chore.  I never have to wait long and it's generally punctual and clean.  Cars, on the other hand, are expensive to own due to targeted taxes. We don't need to wait for autonomous cars to solve our traffic problems because we already have the solution in the form of buses and trains and trams.  Let's have more of them.

One of the saddest sights in the developed world.
One thing I've noticed in the German-speaking world is that they take the countryside very seriously indeed.  That includes everything from litter to clean rivers to strict planning restrictions.  One of the saddest sights in Scotland is to see litter by the roadside or an ostentatious house planted where there ought to be an unspoiled view.  I have no idea how to change social attitudes but it is the case that drink driving used to be just about acceptable and now it is a massive taboo.

The equivalent of council tax here is called Community TaxThis is a progressive taxation levied on income.  Let's compare that with the weird UK system of levying a fixed charge on the inhabitants of a property rather than the owner.  Which sounds fairer? My community is Zurich City so I probably live in one of the largest communities in the country.  At the other end of the spectrum, some communities are just a hamlet and a few chickens.  All of that means that a village in the back of beyond has more autonomy than the Scottish Parliament, which has been hilariously described as "the most powerful devolved parliament in the world".  In addition to progressive taxation, I also pay wealth tax.  If I own a lot of assets or  hold a lot of cash I need to pay tax on them.  I'd hardly describe Switzerland as a hotbed of radical socialism but in many ways its tax system is far more egalitarian than in the UK.   One last thing is that the UK typically has 3 or 4 income tax bands.  That might have made sense in the days of ledgers and quills but we have computers now.  Swiss federal tax, for example, has about 12 tax bands so getting a moderate pay rise doesn't suddenly lift you from 20% to 40% tax.

Long-term unemployment is a genuine tragedy in any country.   Short-term unemployment, however, is pretty much a necessity in a dynamic economy because companies that can no longer compete should be replaced with newer ones better equipped for the changing times.  Before anyone yells at me, I've worked for enough failed companies in my time to know that it pays to keep your curriculum vitae up to date.  Given that short-term unemployment is a constant factor in a dynamic economy it ought not be something to fear.  In the UK, sadly, it is something to fear because family income levels fall off a cliff after transitioning from paid work to unemployment benefit.  That's a shame because governments ought to be encouraging workers to take risks in new fields and businesses.  The benefits system actually encourages a sclerotic economy by punishing anyone who dares to take a risk on anything that doesn't maximise income stability.  In many other countries, however, short-term unemployment is an annoyance rather than a fear because unemployment income levels are pegged to employed salary rather than to a fixed rate.  If I lose my job I will qualify for 18 months of employment insurance that will pay 70% of my current salary.  I can't remember the exact details but I think that is capped at 100,000CHF (around £70k).  For most people, life will go along as normal.  Perhaps there will be fewer holidays and meals out but the basic necessities will be covered.  After 18 months, though, the credit will run out and anyone still unemployed will be pushed on to the Social Help Programme.  That is when the social safety net of long-term unemployment kicks in.  The council will allot me a place to live and provide for me in a way that meets the constitutional requirement of being able to participate in society.   I honestly don't want to end up there because although I won't go hungry or homeless, I will lose autonomy over my own financial decisions.  I have to say that I sometimes think the long-term unemployed are a little bit neglected.  By that I mean that the state no longer really makes real demands on them to look for a job or provides much help to achieve that goal.  It feels a bit like they've given up on them and will now make sure they don't cause a nuisance (more of that later).  Despite that, it's still better than a food bank.

Drive-thru "entertainment" chalets.  Not sure if there is a Macdonalds at the end of the road.
Switzerland is a very pragmatic place.  Some might even say that it takes utilitarian decisions.  Let me explain.  Drugs policy here is really quite liberal but in some ways it mirrors the long-term  unemployment strategy.  If you're a heroin addict you can go to a treatment centre where they will give you actual heroin under the condition that you must take it there and then.  The idea here is to stop the associated criminality rather than the addiction.  There's no need for drug addicts to break into houses to fund their habit and there are no opportunities for dealers to build a business because the state has undercut them. The same sort of thinking lies behind Zurich's approach to prostitution.  They took the view that they can't stop it happening but they can limit the associated criminality by effectively acting as bordello managers.  There is even a drive-thru facility run by the council. This would never happen in the UK because dogmatism would trump pragmatism.  There's an argument that the state shouldn't act as drug dealer but the counter argument is that people who aren't addicts shouldn't have their lives blighted by it.  After all, it's not as though the dangers of drugs are a state secret. There's also an argument that it would be better if sex workers had better opportunities but then again there is also an argument that they shouldn't be beaten up at work or have their money stolen off them or trafficked.  I tend to favour the pragmatic approach.  Certainly, if you wander around Zurich city centre in the summer you'll smell the sweet and smoky aroma of, erm, pragmatism.

I unwittingly ate my sandwiches at the Zurich heroin amnesty park when inter-railing in the late 80s.  
Switzerland is a land of small, local government.  It's not just that they take pride in being organised but that they also work at scales that allow them to be organised.  Local decisions are made by local people who understand local needs. If something breaks, the chain of responsibility involved to get it fixed is mercifully short.  There is also competition between all of the communities and cantons.  They all need to organise themselves so that they maintain population and income and to do that they need to find the right balance of services and taxation.  It makes for a kind of mini market place in decision making.  Policy changes that work out for the best can be replicated by neighbouring communities and cantons, while failed experiments (like the late 80s drugs amnesty park opposite  Zurich main station) can be quietly abandoned.  It's important to note that the federal government controls the border, the army and the currency but not really much else.  Someone tell that to Gordon Brown.

Switzerland is not a paradise. It has plenty of pros but also plenty of cons.  I'm lucky to live in a community with a red-green coalition but life might be quite different in some of the more conservative rural areas where they prefer their own cows to strangers from the next village. They won't tell you to get back to your own village but once you've gone they will definitely mutter something about how the people of Unterschoeneggli are not as upstanding as the villagers of Oberschoeneggli.

Would any of these ideas make iScotland a better place?  Would they make sense in Scotland at all? What kind of bottom-up policy changes would make Scotland function better?

Yours Aye,

Terry



Tuesday, 12 December 2017

Hopping Mad

I know its nearly Christmas and everything but I'm not yet in the kind of seasonal mood that involves goodwill to all mankind.  What's going on?  Well, there's been another angry rash of articles about how the EU has "failed" to intervene in Catalonia.  If it's a blog or a tweet I sometimes chip in but, to be perfectly honest, there's a braying mob of clicking Yessers out there who make rational debate on this topic all but impossible. Today's incompetent ramblings, however, can be found in a popular newspaper with a Scots independence slant.  When I see ill-informed articles in a newspaper I reckon they deserve a thorough Fisking because they carry more authority and have greater readership than blogs.   I don't really know if I'm the kind of person who has the ability to give a published newspaper article a thorough Fisking but nobody else is stepping up to the plate so this might be the best you're going to get. It obviously pays to read the linked article first before the rest of this post so go right ahead and do that.  Battle will commence in the next paragraph.  See you there for more words on the topic.

Welcome back. George Kerevan's article argues that the EU is a right-wing business group more interested in promoting German banks and German businesses than in democracy and  human rights.  It argues that this description holds true through brief case studies of policy decisions, which he believes illustrate some kind of "in the air" but as of yet undocumented doctrine at the EU.  It then concludes that iScotland should steer well clear of all this and should instead join EFTA because the addition of Catalonia and iScotland would raise EFTA to 10% of the GDP of the Eurozone, thereby allowing it to negotiate its own future. 

I'm going to go to through the case studies proposed by George Kerevan because they form the core of his argument.  If the case studies prove false then it logically follows there is no prima facie evidence for the statement that the EU is a right-wing business conspiracy more interested in promoting German banks and German businesses than in democracy and  human rights. I'll finish off with the conclusions because they are quite hilarious and we need a treat to cheer us all up.

New EU doctrine #1: “If you don’t pursue the economic policy we want, you will be deposed”.

 

This is the kind of Lexit nonsense that I thought had largely been debunked and forgotten but here it is, alive and well.  George Kerevan is, of course, referring to the Greek financial crisis and the oft-made claim that the European Commission and the European Central Bank together conspired to install governments around the EU with austerity agendas.  That conspiracy, in Kerevan's view, began with a threat to cut off Greek financial support during the Greek sovereign debt crisis.  The accusation here is very clear: institutions of the EU intervened in the Greek democratic process to ensure the outcome was favourable to German banks.  It went on to do the same in Italy with Mario Monti and continues its conspiracy to support austerity politicians all over the EU by propping up Rajoy in Spain. That is quite a journey of logical leaping but where to begin?

Let's begin with the Greek sovereign debt crisis.  Due to historic mismanagement and deception the Greek government had escalated their debt burden to such a degree that it could no longer affordably borrow money to pay for its ongoing deficit.  To compound its problems, it was unable to deflate its way out of trouble because the value of the Euro was outside its direct control.  Hundreds of billions of Euros were loaned to Greece under the direction of the IMF, the ECB and the European Commission.  These loans came with conditions because literally all inter-governmental emergency loans come with conditions.  We shouldn't be surprised by that because the loans were effectively underwritten by taxpayers in other countries and they'll have been wanting their money back at some stage.  The crisis escalated until Greece repeatedly threatened to default on its debts, while the Troika responded by threatening to cut off the regular loan payments that kept Greece afloat.  An economic crisis quickly became a political crisis.

We can look back at the crisis and ask ourselves if there was a conspiracy to intervene in Greek democratic affairs.  That conspiracy would have involved the European Commission, the ECB and the IMF.  It's hard to argue for a conspiracy because it was the Greek government that ran up the debts, it was the Greek government that wanted to stay in the Euro, it was the Greek government that accepted the bailout loans, and it was the Greek population that voted in a referendum to stay in the Euro.  There is a clear sequence of events beginning with Greece wanting to remain in the Euro.  In order to stay in the Euro, Greece needed money to offset its ability to devalue.  In order to get the money, it had to access emergency funds.  In order to  access those emergency funds, it had to agree to conditions designed around eventual repayment. In order to repay any portion of its debt, Greece needed to spend less or earn more.  There was no credible plan to earn more so Greece had to spend less. In order to spend less, Greece needed to spend less.  The end.  Austerity was a natural consequence of Greece's expressed desire to remain in the Euro. We can argue about the ability to earn more over spending less but the problem was made by Greece and the solution chosen by Greece through a succession of elected governments.

The Greek crisis was a bit like Brexit in that it was a problem with no solution.  The Greek population could not remain in the Euro and have happy years of Keynesian economic policy because those choices were incompatible.  Greece chose to remain in the Euro.  It chose that in a sequence of democratic events over the duration of the crisis.  It's true that Lucas Papademos was not an elected MP when he served as Prime Minister but he was chosen and ratified by a coalition of democratically elected parties.  There was nothing undemocratic in that.  After all, the only barrier to being Prime Minister in the UK is gaining the confidence of Parliament. There is no stipulation that the PM must also be an MP, even though that is usually the case.  We don't have to go back too far to remember David Sainsbury's appointment as Minister for Science, despite having never stood for election.  It was statistically unusual but constitutionally fine.

Greece could have chosen to end the crisis at any time of its own choosing by leaving the Euro.  It would have entered a bigger crisis  but it would have been free of the meddling ECB and the European Commission with all their monetary conditions and expectations of repayment.  That was not the choice that Greece made at the ballot-box.  

In retrospect we can argue about the way the crisis was handled.  The Troika chose austerity as its solution but could it have chosen other routes?  What could it have done?  I've never seen a convincing answer from anyone on the Left and certainly not from anyone supporting Lexit.  One   alternative is that the Troika could have gifted Greece money by removing the expectations of repayment and giving up all monetary conditions.  Turning the money supply on rather than off might have stimulated the economy.  It's hard to argue that because it was a reduction in earnings that precipitated the crisis in the first place.  Besides, those loans ultimately came from European taxpayers who  might not have been all that happy at gifting hundreds of billions of Euros to a country that deceived its way to the top of the debt mountain.  Like it or not, even loans to the developing world come with strings attached.  Another alternative would have been to devalue the Euro.  Which countries other than those with sovereign debt crises of their very own would have voted for that?  Which countries with the ability to underwrite the loans would have agreed?  Finally, the original debt could have been reduced.  That actually did happen to a significant degree but the debt reduction could only go so far without precariously undermining the trading status of banks around the EU. 

The idea that the ECB and the European Commission conspire to depose governments with Keynesian policies is absurd.  It's the kind of tinfoil-hattery you'd expect to hear from David Icke or Paul Joseph Watson yet George Keveran published it in a national broadsheet newspaper.  Until recently, he was an MP.  The mind boggles but, hey, maybe it means an idiot like me could wangle a column at a national newspaper.



New EU doctrine #2: “We will turn a blind eye to human rights abuses if it suits us, especially in Spain”

 

George Kerevan believes that the EU could and should intervene in Spanish constitutional affairs.  He  believes that the EU is ignoring its commitment to human rights and the right of peoples to self-determination.  He bases his argument on two separate strands: the European Convention of Human Rights (ECHR) and the Helsinki Accords.  Let's start with the ECHR.  As we all know, the ECHR is not an institution of the EU. It is true that EU membership is conditional on first being a signatory to the ECHR, through membership of the Council of Europe, but it is important to note that these are separate institutions.  If there is a human rights problem in Europe and you want something done about it then don't waste your time and your rail fare going to Brussels for a chat with Jean Claude Juncker.  No, you really want to go to Strasbourg to visit the European Court of Human Rights, an institution of the Council of Europe.  Kerevan knows this so he slyly introduces the idea that the EU has absorbed the ECHR into its legal structures.  If it has absorbed the ECHR into its legal structures then it must be able to do something, right? Wrong.  This seems to be an oblique reference to the Charter of Fundamental Rights of the European Union.  If this sounds familiar then it's because we've dealt with this before in the context of a Craig Murray blog post making exactly the same point. The Charter refers only to the implementation of EU law and to the actions of EU institutions. Spanish policing is obviously a matter for Spanish law rather than European law so the Charter does not apply. Despite the long-winded EU nomenclature this stuff is actually quite simple.  What are we left with?  Well, we're not left with anything connected to the EU.  What we're left with is the application of the ECHR, the ECtHR and the Council of Europe.  George Kerevan ought to be agitating for iScotland to leave the Council of Europe because that is the real source of his gripe.

What is this Helsinki Accord that George Kevan speaks of? Well, it's another one of those international declarations on self-determination.  If this sounds familiar then it's because we've dealt with this topic on the blog as well.  It needs to be said, however, that we didn't actually look at the Helsinki Accord, mainly because it doesn't add all that much to the debate.  It doesn't add much because it is not legally binding and doesn't answer to an international court. In short, it is a statement of intent (big shout out to the David Davis crew) rather than a legal text.  It also has nothing to do with the EU.  It does contain the signatures of many EU states but, despite Kerevan's insistence, not all of them:  Latvia, Lithuania, Estonia, Croatia and Slovenia are all notably absent from the list.  It's also worth noting that states no longer in existence such as USSR and GDR are also signatories.  I'm labouring the point (and repeating myself) but this has nothing to do with the EU.  The EU doesn't force applicants to sign up and it makes no attempt to take ownership of signature the way it does with the WTO.  We cannot look to Brussels for its enforcement.

Even if the Helsinki Accord had Jean Claude Juncker's personal signature on it would it apply to Catalonia?  Not really,  no.  If you followed the post on self-determination you might have seen a pattern emerge in that a declaration makes a bold statement like "all peoples have the right..." only to backtrack later with a caveat or condition that narrows its scope.   The UN Declaration on Friendly Relations, for example,  plays this game.  It contains the text "all peoples have the right..." but ends by narrowing the application domain to situations where governments deny representation on the basis of colour, creed or race. The Helsinki Accord employs a similar tactic.  This time, it doesn't just use "all peoples" but also the word "always". If that sounds like music to your ears then you need to read the small print on the inviolability of frontiers (Principle III) and the territorial integrity of states (Principle IV).  In the spirit of all declarations on self-determination it reins itself back in with caveats that limit its application domain to a narrow field that doesn't include Catalonia.  We should probably end this bit by wondering about the intention of the authors.  What was worrying them?  Well, the absence of Lithuania and Slovenia and the inclusion of the GDR might form a clue. The Helsinki Accord is really about the right of the people of a state to be free from external influence in choosing its own form of government. The Soviet Union as an imperial power was very much on everyone's mind  back in 1975.

It goes without saying but I'll say it anyway:  the EU cannot and should not intervene in the constitutional affairs of member nations. 

 New EU doctrine #3: “We declare the right to expel groups of EU citizens unilaterally from the union, though nothing in the treaties supports this”.


I have to admit I struggled with this one because its logic is so skewed that it forms a danger to public health.  George Kerevan is referring to the ability of fledgling nations to join the EU after they secede from an existing member state.  He thinks that continued membership should be automatic and that it is dreadfully unfair that it isn't.  I'm afraid I can't fully follow his argument but he refers to the process of membership application for  post-secession states as "economic blackmail".  If  anyone can make the logical leap please help me out.

Central to Kerevan's argument is that the EU would be a fairer system (with fewer opportunities for economic blackmail) if it was more like the US.  The US constitution does indeed allow member states to divide without new entities being expelled but I don't see why that matters.  Different countries have different rules for different historical reasons with different intent.  Switzerland only allows Cantonal boundary changes if all Cantons agree to the change at referendum. Does that make it profoundly undemocratic just because it's different from the US?   I don't think it does.  EU membership comes with specific legal obligations and depends on everyone believing that those obligations can and will be upheld.  There's an extra caveat to that:  the obligations must be upheld without direct governance from the EU.  That is quite different from the US because the states that make up the US are not sovereign states pursuing their own domestic and foreign policy. An applicant to the EU must make it clear that it has in place the governmental practices and statutes that will enable it to uphold its legal obligations. As a consequence, membership could never be automatic to a post-secession state because it would have to demonstrate compliance and that takes time.

It's difficult to look at Catalonia and imagine it would automatically comply with the EU's conditions. It might, for example, be locked in a lengthy boundary dispute with Spain.  That would immediately rule out membership for Catalonia, just as it does for Macedonia (a dispute with Greece over the name Macedonia) and Spain (it gave up its claim over Gibraltar when it joined the EU and will now resume that claim after Brexit).  Moreover, Catalonia is not yet a member of the UN and therefore is not a recognised sovereign nation.  Spain could agitate against UN membership and use its allies to delay, prevaricate and frustrate.  Catalonia has no currency of its own. How does it intend to pay its share of the EU's running costs?   How does Catalonia intend to implement Directive 2012/28/EU and protect copyrighted works with historically complex ownership trails.  I could go an and on but I won't.

The EU is governed by law and process so we shouldn't be surprised that there are laws and processes for membership.  Law and process is the unique feature of the EU that allows it to achieve political consensus free from political bullying. George Keveran is surprised by that and sees it is a moral failing.  I'm lost for words.

Have Mercy On My Soul, Its Conclusion Time


The article concludes that iScotland should steer well clear of the EU. It should steer well clear of a conspiratorial, austerity-obsessed, human rights-abusing EU that acts only in the interests of German banks and businesses.  If any of that was true I might think about giving the EU a wide berth, too, but what would I do?  Would I encourage a pact with Catalonia to join EFTA and turn it into an economic powerhouse with, that's right, a whopping 10% of the GDP of the Eurozone?  In case anyone hasn't noticed the UK has 17% of the GDP of the Eurozone and it's struggling to negotiate with the EU. In case anyone else hasn't noticed 3 of the 4 existing EFTA nations are in the EEA and might not want new members tearing up their historic international relationships. In case anyone else hasn't noticed the 4th existing EFTA nation has a precarious sequence of bi-laterals that it only just rescued from its very own version of Brexit.  In case anyone else hasn't noticed, George Kerevan's policy goals might  not be aligned with EFTA with or without new members.

If any of this was true I might think about giving the EU a wide berth but it turns out that none of it was true.  Can I have a column in a national newspaper, please?

Over and out,

Terry

Saturday, 9 December 2017

The Art of Driving (on the right)

Imagine that the UK decided to drive on the right hand side of the road.  It might take the view that it will save some money by not having to buy specially designed vehicles with smaller production runs. This obviously is never going to happen because driving on the left hand side of the road is a traditionally British habit and what does Johnny Foreigner know about driving cars and Empire 2.0 will see us gleefully exporting our peculiar habits to the savages that inhabit the rest of the world. Despite all that, let's imagine that it did happen. If it helps get in the right (or left) brain frame we can limit this exercise to an independent Scotland or to Wales or any other country you like.  If you want to imagine Germany driving on the left that will work just as well.  The key point is to start thinking about the problems involved.


What sort of challenges are involved in realigning the direction of traffic?  I'm going to start writing some of these down.  You can play along at home with your own list.  I don't have a prize for the best or most comprehensive list or anything like that but I'd be fascinated to read them in the comments at the end. Right, what are those challenges?  Well, all the metal street signs will need to be reversed because traffic will be looking at the reverse of the sign rather than the front that actually contains the message intended for the driver.  Likewise, all the lettering painted on the road will need to be scraped off and replaced on the other side of the road.  Bus companies will need to move all the timetables across the road to the complementary bus stop.  In some instances, that will involve a completely new timetable due to the complexity of one-way streets and the way that they meet up with their two-way siblings.   Those timetables will need to be advertised well before the day they take effect by distributing paper handouts along the route and updating the company website with fresh downloads and information about the change.  It's going to be dangerous having all those cars designed for left hand driving but now driving on the right.  There will need to be an approved mechanism to have cars altered for the new road layout and a cut-off date for the conversion.  Some vintage cars might be exempt from this so there will need to be another approved mechanism for car categorisation and a registry of cars and owners with an opt-out.  Driving tests and all the associated literature will need to be changed so that learner drivers learn about left hand turns across oncoming traffic.   Driving instructors and test inspectors will probably need to go on a conversion course to make sure they understand what they are doing and certificates will need to be issued to the successful participants.  Insurance companies will need to plan for all of this because there is likely to be an increase in the number of bumps and dings and consequent claims. They might even urge drivers to take a conversion course with the lure of higher insurance rates for those who refuse to sign up. Oh dear, what a mess.

Can it get any worse?  Well, I'd guess the to-do list will keep growing day by day -  I don't even drive a car so my list will only scratch the surface.  The size of the list, however, is only part of the problem. The real problem is that everything has to happen at exactly the same time.  There's no point in moving 20 million driver seats from right to left if drivers will still have to drive on the left hand side because there's been a snag with the street signage. There's no point in rolling out the change street by street, either, because it creates a significant safety hazard at the intersection of left and right.  The piecemeal approach would just create a growing problem as the rollout continues with complete logjam forming at the intersection. The problem has to get much, much worse before it gets better to the degree that people might start wondering if the change is worth it.  No, this has to be completed in a single step.  A good time might be between 3am and 4am on Christmas morning when upstanding citizens are either asleep or fallen down drunk.  Would that even work?  Even if everything could be changed in a single hour it would require the complete shutdown of the road network.  How would ambulances and fire engines and police cars operate?  By helicopter?  Hmm, I don't think so.

I'm sure everyone has understood the analogy.   Regulatory alignment is a binary state:  the UK either aligns itself with the EU or it aligns itself with the US. The UK cannot unpick its alignment with the EU piece by piece, month by month, legislative act by legislative act without threatening its entire relationship with the EU and suffering the chaos that would follow.  A single divergence from the EU brings all the Brexit edition Jenga blocks crashing to the floor.  Brexiters, of course, refute this suggestion but they are entirely wrong.  We've been talking about this on this blog ad infinitum for the last 15 months but the events of the last week have finally brought it to public attention, even if the public have conveniently ignored the logic puzzle staring them in the face and mainstream media largely got it wrong.

Why is Brexit a binary puzzle?  It's a binary puzzle because it operates under tight constraints that aren't well understood by the headbangers that campaign for it.  For the rest of this post I want to look at just one conundrum that forces the UK to make a hard choice between left and right hand drive.  The particular legislative nugget I'm going to look at hangs on a US legislative act called the Trade  Promotion Authority.  A quick summary is that Congress holds the power to set import tariffs but is historically bad at negotiating trade agreements.  To solve this problem Congress agrees to temporarily pass the power of negotiation to the executive but retains a binary vote on the final deal.  It does this with conditions attached in the form of negotiating objectives for the executive.   This agreement is often referred to as the Trade Promotion Authority (TPA) or Fast Track Authority.

The current TPA was pushed through Congress during the Obama administration.  It was, to say the least, controversial and took multiple iterations to reach a majority vote.  Those iterations introduced key negotiating objectives across all sorts of trade areas but the one that interests us is the one that lays out objectives on sanitary and phytosanitary standards (SPS) for agricultural products. The US believes that hormone-injected beef and chemically-washed chicken are perfectly healthy and doesn't understand why other countries continue to ban their import.  Moreover, the US believes that banning their import is a protectionist barrier to trade.  It believes this so strongly that it opened a dispute at the WTO against the EU.  The EU, of course, defended its position with scientific evidence but ultimately lost the case. WTO disputes are typically resolved through consensus so a solution was found whereby the EU increased its tariff-free import quota of EU-standard beef.  That's not a terribly interesting story in itself but it might lead us to clues behind the collapse of TTIP, the abandoned US/EU trade deal.  A key negotiating objective for the US was to get the EU to agree that hormone-injected beef would be  part of the deal.  Obama could not have gone back to Congress with the news that he had ignored its wishes  because if he had done so the deal would have been rejected.  The EU would never have agreed to US SPS so there was no deal.   It follows that the UK is in exactly the same situation.

The Trade Promotion Authority requires any trade deal with the US to include the adoption of US SPS.  Given that the EU lost the scientific case for a hormone-injected beef ban there is no realistic way to opt out of this requirement in a way that will ensure the agreement of Congress. If Liam Fox wants to sign a UK/US FTA he will need to include chemically washed chicken and hormone-injected beef and refrigerated eggs in the package.   Except he can't do that. Michael Gove, in his role as Environment Secretary, has already said that he would not accept chemically washed chicken in the UK.  Now, I don't trust Michael Gove and he can be easily be replaced so this might not be that much of a barrier to Liam Fox realising his nightmare vision.  The real barrier is that Theresa May has just promised to uphold all EU law required to keep the NI/RoI border free of all border infrastructure.  She promised to do this for the whole of the UK in order to keep Arlene Foster on side.  That's right, Theresa May promised that the whole of the UK would be aligned with EU legislation on everything that might affect the UK's land border with the EU. She cannot do that and at the same time adopt US SPS.  It is logically impossible. By promising alignment with the the EU, the UK government has made a public statement that it rejects the conditions of a UK/US trade deal.

https://www.ft.com/content/2f8c8a8a-b711-11e7-8c12-5661783e5589
Does Liam Fox understand that his dream just ended?  He might but it's hard to say, to be honest.  I don't want to credit him with too much intelligence but he understood as early as October that a US/UK trade deal would require something that didn't focus on agriculture.  At the time the shrieking headlines about mutant chickens would have been ringing in his ears and that was likely the reason behind his pronouncement that he would prefer a UK/UK deal to focus on services.  In any other month it could have been threats to Geographic Indicators, which protect products like Scotch whisky, Scotch beef, Scotch lamb, Shetland lamb, Stornoway black pudding, Arbroath smokies, Scottish wild salmon and Shetland wool.  The problem Fox faces is that FTAs typically don't include services because regulating humans is several orders of magnitude harder than regulating bananas.  In actual fact, it requires the kind of legislative harmonisation we've seen in the EU and the EEA to make it happen.  Just as we saw with agriculture, the UK will be faced with an either/or choice in every area of legislation. In banking, for example, it can either align itself with the Dodd-Frank act or the Capital Requirements Directive and Regulation issued by the EU.  It cannot do both so which will it choose?  The momentum of the current direction of travel tells us the answer: the UK will become a regulatory annexe of the EU.  The UK has to choose EU over US because it doesn't know how to change direction without suffering profound legislative chaos.  As a consequence, the UK will choose the EU.  Even if the constraints of the problem weren't forcing that choice, the EU would make it happen anyway because they seem to be the only side with a track record of writing down what they want and then working out how to get it.

 If the UK becomes a regulatory annexe of the EU what will that look like? Well, the UK will remain a signatory to the ECHR and will continue to uphold human rights as it does now.  The UK will lose all democratic representation and all influence at the EU, yet will continue to follow its legislative programme. The only trade deals the UK will be able to sign will be with countries already in agreement with the EU. It will simply mop up any and all FTAs, whether they are a good deal for the UK or  not.  But, hey, there will be fewer foreigner workers in the UK so it will all be worth it, right?

Over and out,

PS Apologies for not posting for ages but I've just had too much to do at work in the past month or so. 

PPS It's almost impossible to keep up with Brexit these days.  It moves so fast yet when I look at it nothing has materially changed.   Hard times for amateur bloggers with a penchant for source documents.

PPPS Even before we get to the logical conundrum of Brexit, the current TPA expires in July, 2018, unless Trump requests and Congress approves a 3 year extension prior to the termination date.  It has come to my attention that Trump is more interested in cancelling FTAs than signing new ones but even if he changed his mind he isn't all that good at convincing Congress to agree with his proposals. Liam Fox, please take note.

PPPPS Even if the UK decided to drive on the right would that be the correct decision?  It might argue that it would reduce costs but it would really need to argue that the reduced costs at least compensate for the cost of the required change.  That's what I expected to see in the Brexit Impact Assessments (sarcasm alert)  It's astonishing (sarcasm alert) to learn that the current UK government employs no metrics at all in its decision making.  Instead, they use gut feeling.  The policy choice to leave the Customs Union was quite literally made on gut feeling and they've admitted to that in public, using the words "gut feeling".  What a mess.  All this gut feeling has given me indigestion.

PPPPPS If rUK is aligned towards the EU it makes iScotland in EU a more than credible prospect.  iScotland in EEA was always a credible proposition but EU membership might have been in conflict with maintaining trade links with rUK.  Theresa May just indicated she will remove the conflict.