Crash Bang Wallace
Libertarian political blog from Mark Wallace; political opinion, breaking news and exclusivesReasons for a referendum
Posted on December 05, 2011One thing was always clear about the Government’s EU “referendum lock” – the EU’s defenders were always going to claim it didn’t actually justify a referendum. Whether they did it outright in the wording, or later in a tortured limbo around what that wording meant, is irrelevant.
So it has come to pass now that the first proposed treaty changes since the lock was passed into law have hoved into view. Nick Clegg has rushed straight out, his face painted blue with a delightful ring of yellow stars scattered across his cheeks, chin and forehead, to announce that proposals for fiscal union among the Eurozone countries are not eligible for a referendum as they don’t constitute a transfer of sovereignty from Britain to Brussels.
Underlying this is the argument being pushed by the Conservative leadership that, as Tim Montgomerie reported it, an EU referendum would “plunge Britain’s economy into chaos”.
But it is this latter argument which undermines the former.
As we can now see from the crisis hanging over us – a crisis that has emerged as a direct result of the Euro’s disastrous creation and the ongoing, eternal grind of ever closer union – losing sovereignty is not just about Brussels being able to directly overrule Britain. It is also about whether we are losing the ability to build a successful, sustainable economy on our own terms.
EU integration has made Britain more economically vulnerable to crises on the Continent, a problem which is compounded by the fact that it has also made such crises far more likely. At the same time as our exposure to EU risk has increased, the Single Market’s aggressive protectionism has forbidden us from diversifying by trading freely and fully with other economies around the world – particularly with the BRICs.
In effect, they have tied a weight to our feet, dragging us down into the ocean depths, and bound our hands, stopping us trying to swim upwards.
The decision by a core group of EU countries to integrate through a single currency has diluted our sovereignty by reducing the effectiveness of the measures the British Government might take to boost our economy. As we are currently seeing, you don’t have to be in the Euro to be screwed by its failure.
Can they seriously claim that fiscal union in the Eurozone – a step which is likely to bring down even worse disaster on all our heads – won’t have a similar effect?
We are tied to the Eurozone through our EU membership – as a result, their fate does affect our fate. That’s why we have a veto on these proposals for fiscal union. And that’s why the British people should get a referendum on whether that veto is used.
Only cutting the right head off the Eurozone Hydra will kill this crisis
Posted on November 08, 2011Appropriately, the key to understanding the EU’s continued failure to solve the Eurozone crisis lies in Greek mythology. The second of the Twelve Labours of Hercules was the slaying of the Learnean Hydra – a many-headed beast that had the nasty and inconvenient habit of growing two new heads every time you cut one off.
This meant that many who tried to slay the Hydra ended up exerting themselves only to make it even more ferocious and threatening. Hercules eventually triumphed because he discovered that one of its heads was mortal – only by cutting off that one could the Hydra be destroyed.
So it is with the Eurozone crisis. Politicians, observers and – most sinfully – the markets are so desperate for all the effort going into each “solution” to be worthwhile that they convince themselves that just cutting off one more head will solve the Euro’s problems.
Time after time, though, they have chosen the wrong head.
First, simply announcing no Eurozone country would go bust or could go bust was meant to do the trick. It didn’t.
Then bailing out Greece from its short term liquidity crisis would solve all of the problems. It didn’t.
After which, Greece’s austerity package being voted through their Parliament would provide a panacea. It didn’t
Then bailing Greece out again was going to put the crisis to bed once and for all. It didn’t.
Then the “bazooka” deal would unite Europe in defeating the fiscal threat. It didn’t.
Last week, only George Papandreou ditching his referendum proposal and resigning would bring the nightmare to an end. It didn’t.
Now, they have seized desperately on the idea that Berlusconi’s resignation will calm the markets and stop the carnage.
It won’t, and it won’t for a very simple reason: Berlusconi is not the problem.
Of course, he isn’t the solution, either – he’s a clownish figure who lacks the authority or the desire to solve Italy’s problems – but any idea that he is the only thing that stands between Italy and fiscal stability is a fantasy as deranged as his self-perception of being God’s gift to women.
The sad thing is that there is such desire to believe that cutting off each of these Hydra’s heads will end the crisis that the markets briefly buoy when each one approaches, only to fall back further when reality intrudes again.
With each false hope and every false promise, the credibility of the next “solution” is reduced, the panic becomes deeper and the cost of borrowing rises. For a stark illustration of this problem, just look at the trouble the EFSF is having raising money from the international markets. As Liberal Conspiracy point out, it is now paying 4 times as much to borrow as it was in June. It isn’t just Greece and Italy that international lenders such as China view as too risky to lend to - it’s the supposed solution mechanism for the crisis.
The underlying problem – the true mortal head of this economic Hydra – is that membership of the Euro has straightjacketed these economies from defaulting or devaluing to address their sovereign debt problems. But political leaders find this so unpalatable in their world of “ever closer union” that they turn a blind eye to it, and keep lopping off other heads, increasingly bewildered at the sprouting of more and more in their place.
Let me make a prediction (which is a risky business, but hey). If Berlusconi does resign, the markets will briefly rise only to dip swiftly once it becomes clear that weeks of political wrangling or even a General Election will be necessary to even form a new Italian Government, still less implement a viable austerity plan. This will radically increase the cost of Italy’s borrowing even further, leading perhaps to a crisis in other Eurozone banks and further bailouts in Benelux and France and almost certainly to an attempt at direct budget control by the European Commission.
Even Hercules was not strong enough to keep chopping off the wrong heads indefinitely. To find the right head and dispatch this Hydra before being eaten the Eurozone countries need to get on to the real issue quickly, and escape their state of denial.
It’s time to get emotional about markets
Posted on October 17, 2011Free marketeers have long faced a puzzling mystery. Despite priding ourselves on logic, amassing vast amounts of well argued evidence and indeed having the bulk of human history to call on in support of our case, we still struggle to win the political battle outright.
Indeed, it continues to be fashionable to be opposed to markets, to reject and deny the virtues and benefits of competition. The Occupy the London Stock Exchange protesters may be a motley bunch, and are apparently a bit too keen on Starbuck’s to maintain their “solidarity”, but for millions of people they have the dash and the perceived moral high ground, while the city workers walking past them to their desks emphatically do not.
Why is this?
Put simply, it’s because of the tension between the heart and the head. Armed with logic, statistics and evidence the Right thought for too long that it didn’t need emotive arguments. The closest analogy I can think of is the American war effort in Vietnam – their kit was so good, their helicopters so costly and their body armour so high tech that they thought the fact that the Vietcong had a stronger sense of morale and ideology than the conscript GIs wouldn’t matter. As history showed, they were wrong.
Humans are emotional beasts as well as thinking creatures. It’s not enough to know the science of making paints and pigments, or the mathematics of constructing a picture, you need to have the passion, imagination and vision as well in order to create a masterpiece that will stir the soul of the beholder.
Perhaps it’s because we were animals before we evolved to become civilised thinkers that emotion without logic succeeds in gathering popular support more often than logic without emotion. In a battle between the protesters on the steps of St Paul’s tugging at the heart strings in favour of the big state (despite the woeful historical record of the anti-market statism they support) and Excel-wielding wonks displaying the evidence in defence of a market economy, the former pose a serious threat in terms of public opinion.
Advocates of the market should continue to compile and deploy evidence, of course. It’s right and inherent to our views that we build our case on solid, thought-through foundations. But we need to speak from the heart and get a bit emotional about markets, too.
And there is an emotional case to be made.
It is the market that sets us free to do as we wish – to buy a book; to treat our loved ones to flowers or meandering adventures in the countryside; to aspire to and secure more for ourselves, our families or our neighbours.
It is the market that allows people to do the silly things that make us gloriously and touchingly human – for a close friend of mine to buy a Big Issue from every seller that she sees, leaving her struggling home with a handbag full of never-to-be-read, identical copies of the same magazine; to get that ill-advised and sadly mispelled teenage tattoo; to buy those green wellies with frogs’ eyes on the toes.
It is the market that gives its own critics the education, the technology and the freedom to seek to destroy it – the tents gaffa taped outside St Paul’s cathedral; the phones tweeting outrage against the mechanism that developed them; the Starbuck’s hosting a 50-yard queue of anti-capitalist protesters keen to warm their hands on a coffee in the October air.
It is the market that developed and provides the materials and the means for all of our great art to be created – from the straining fingers of the Sistine Chapel to the chaotic vases of Grayson Perry.
Most importantly of all, it is the market which acts as a ladder for uncounted people to climb inexorably upwards, out of the brutality, the muck, the misery and the disease that has for so long dogged human beings’ existence.
Poverty is deadly – sometimes swiftly, when an earthquake strikes a village built of mud bricks, but normally slowly, from the first breaths of smoke from an unventilated fire to the last struggle for a threadbare blanket to keep out the cold of winter. People say that wealth isn’t everything, but it is often a prerequisite to stay alive long enough to embellish just living with the things that matter, like family, personal achievement and happiness.
The steps of this ladder don’t wear out, and it is so high that we haven’t got within sight of the top yet. Billions of people are still far too far down it – but we should be clear and unashamed that it is the best way to raise them up, to allow them to pursue the glorious and the petty things that make life so beautiful.