Sunday, 24 June 2012

The Great Social Dream ...

The "ever closer union" dream of the European Union was one of the aspects of the Brussels centric EU that has always stuck in the British throat. OK, I do think the English in particular, are far too insular in their world views and I do think that, by and large, the idea of an 'open' Europe as a single 'trade zone' and group is a good one. But a single 'political' union? I don't think that can ever be made to work effectively. If the strains within the "United Kingdom" between England, Wales, Scotland and the Province of Ulster are tearing apart the people of the four nations who share so much common history and even a common language until the nationalists started trying to impose the 19th Century re-invented "Welsh" and Highlands "Gaelic" on everyone else, the idea of a federation of some 29 very different national states to form a "United States of Europe," is a pipe dream, and always was.

The idea was borne out of the socialist dream of an 'international workers collective' running the world. It is also the underpinning ideal behind the "Globalisation" of commerce and industry. It is, and always was, unworkable.

Globalisation of commerce and industry, so much vaunted by the political classes and the captains of industry and commerce, has led us to the present economic crisis. In the meantime, the Global Capital reserves have found new homes in the Middle East (low tax and no 'socialist' ambitions) and in some of the Far Eastern countries. Much of Britain's remaining industry is now owned and managed by foreign owners. Even some of the names most closely associated with "Britishness" are no longer in "British" hands. Jaguar Motors is now a part of India's Tata Corporation, P&O Ferries is owned by a Dubai based Emir, Cunard is owned by the Danish company Maersk and Vauxhall Motors has long been a part of the US Owned General Motors.

Even such "Trade Mark" High Street stores as Sainsbury's now have a large portion of their controlling shareholding outside of the UK. Of course, none of this matters, as long as the "foreign" owner doesn't decide to increase profitablity by closing the UK arm of the company. OK, that is unlikely with a supermarket chain, but what prevents the owners of Jaguar, Vauxhall or Rolls Royce Cars from shutting down the plants in the UK and transfering manufacturing of these marques to factories elsewhere?

Nothing. That should be one of the lessons learned by the proponents of "sanctions" against countries like South Africa. Ford Motor Company had a strong market share there until they "disinvested" almost overnight. Now their market share is way down the lists. British Leyland cut its throat there in similar fashion a few years earlier. The same pattern emerges in certain Middle Eastern countries, western ideologues demand "disinvestment" and force their home based companies to withdraw - only to have less politically driven traders fill the void and shut them out. The idea that trade and "Globalisation" can be a tool for positive change is a chimera.

This is, I believe, why the European dream of a "federal" Europe was attractive. Individually the nations that make up "Europe" are losing influence in almost every sphere of the world stage. In 1900 the population of Europe was technically leading the world and made up 21% of the world population. No longer, and we are now down to around 6% of the world population. Those whocould see this coming tried to find a way of ensuring Europe's importance on the world stage. Unfortunately I think they've been defeated by several things, first by the "socialist" nature of the agenda that has been in place from the beginning, secondly, by the greed of the money men who saw the chance to make a quick buck by selling the assets to the developing world (and to preserve their own wealth in the face of increasingly rapacious burdens imposed by socialist governments on wealth production) and thirdly by the fact that the populous of Europe are not as dumb as the political classes think.

Instead of being honest from the beginning, they tried to slip the political agenda under the radar - but the people caught on. The introduction of a single currency was a miscalculation. It can only work where, as in the USA, there is a single central budget setting. It can't work where each "member' is setting their own spending agenda and borrowing money to fund it independently. It is now exposed as unworkable in its present form. The big question is - what now?

It seems we have two options. I don't really think anyone in Europe really wants to go back to the system of barriers to trade, to employment and to the movement of people around Europe. That, I believe, is beneficial to us all. Likewise, do we really want to go back to the concept of needing to change our money at each border? Probably not, and I seem to remember many of the same voices now eager to destroy the €uro, arguing that it would reduce the cost of free trade across the EU. My recent visit to Denmark reminded me, at least, of what that was like. So, it seems our leaders must either bite the bullet and attempt to persuade the rest of us that the only way forward is to form a "United States of Europe" or give it up entirely and revert to what it was originally - a Trading bloc with special arrangements for its members and individual currencies.

There is no doubt that the single currency has been enormously beneficial for some of us and disastrous for others. Not all economies were the same and some actually needed a weak currency to compete. How can this be addressed? Probably only by having two, maybe three "currency areas" to allow a "weak" €uro, a "free" €uro and a "firm" €uro. As I've noted before, German economists are terrified of allowing anything which might produce "hyper inflation" and with very good reason. Countries like Greece, Italy, Spain and Portugal may well need a dose of it to allow them to become competitive again. Personally, having experienced, if not hyper inflation, certainly "high" inflation, I'm with the folk trying to keep the €uro stable.

The socialist dream of a single socialist Europe as a political entity may be dead, but now we need to ensure that the best parts of that dream are not lost with the worst bits.

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