Tag Archives: free trade

Civitas Meeting  – The trouble with Europe  19 May 2014

Robert Henderson

The sole speaker was Roger Bootle of the Daily Telegraph and Capital Economics

Bootle was  promoting his book The trouble with Europe.  The main thrusts of his argument  were

-          Europe is a declining political and economic power.

-          The growth rate within first the EEC and then the EU has been poor overall compared with economies outside the EU.

-          The EU has undermined European economic performance through promoting too generous welfare states.

-          That much of the regulation comes not from the EU but national governments within the EU.

-          That the EU has smothered competition between nation states and this has hindered innovation and enterprise.

-          That Europe’s period of  greatest world dominance was a time of intense competition between European powers.

-          That EU countries have suffered a loss of identity through mass immigration and those with empires had  a further blow to their national self-confidence through their loss.

-          That European elites have had their energies eaten up with trying to create uniformity within the EU to the detriment of such things as investment and productivity.

-          That the Euro is the biggest  economic disaster the EU has suffered,  dwarfing the Common Agricultural Policy.

-          The EU as it is presently constituted is obsolete.

Bootle laid down his terms for Britain  remaining within the EU: an end to ever closer union,   a guarantee of no second class status for the UK if she remains a member, a reduced EU budget, repatriation of powers to EU member states. National governments to be empowered to reject EU legislation and restrictions on the free movement of labour.

These conditions  are  so improbable that it is reasonable to conclude that Bootle in reality wants Britain out of the EU. If Britain does leave the EU, Bootle is in favour of what he called the WTONLY option if a good free trade agreement with the EU cannot be arranged. The WTONLY option is to simply leave the EU and then rely on World Trade Organisation rules to give Britain access to EU markets.

During questions it was heartening to see how many of the questioners were utterly hostile to the EU, despite the fact that many  of those there came under the heading of the great and the good, the sort of people who would normally be considered unvarnished  Europhiles.   Most promisingly, voices were raised against the wholesale takeover by foreigners of British business and the ill effects of multinationals.

I raised the question of how Britain should deal with the mechanics of leaving bearing in mind that the entire British political elite were Europhiles who would do everything to subvert the wishes of the British electorate by stitching Britain back into the EU through an agreement which included the four so-called EU freedoms, the free movement of goods, services, capital and labour within the EU. I suggested to Bootle that Article 50 was a poisoned chalice which would enable British politicians to do just that.  Rather surprisingly Bootle said that he did not think that the mechanics of leaving were important.  I was not able to question him further because of the number of people wanting to ask questions. However, I have addressed the subject and others in the email I sent to Bootle after the meeting. If I receive a reply I will add it to this blog post.

———————————————————————————

E mail sent to Roger Bootle 31 5 2014

Dear Mr Bootle,

A few points I  was unable to put to you at the Civitas meeting of  19 May.

1. How much do you think the status of the  Euro as  the second largest reserve currency has contributed to the survival of the Euro?  I enclose a note on this at the bottom of the email.

2. You advocate giving both sides of the story, of admitting that leaving the EU will not be without costs both material and moral.  The problem with that is twofold.

a) political knowledge and understanding amongst the electorate  as a whole  is  minute. Most will respond to the fear factor points not the reassuring points simply because they do not know enough to assess the situation rationally.

b) all the STAY IN camp will be peddling is the fear factor. Hence, the electorate will be hearing the fear factor language from both YES and NO camps but only the reassuring points from those who wish Britain to leave.

3. How the UK leaves the  EU is not a trivial matter as you suggested. The danger is that regardless of the wishes of the electorate ,  the British political elite will stitch us back firmly into the EU if they are given a free hand over the negotiation. This is so because we have a political class – especially the leading members of the class –  which is  overwhelmingly prepared to act as Quislings (Quislings in the service of the EU in particular and internationalism in general) to ensure that Britain does not escape the tentacles of the EU.

Of course such a betrayal could apply regardless of whether article 50 is activated or a simple repeal made  of the various Acts binding  us into the EU, but  Article 50 carries far more dangers for those who want us out of the EU than a simple repeal of the Acts  would do.  If Britain accepted the legality of Article 50  we  would have to put up with any amount of prevarication and dirty tricks for two years.  Worse,  the time to reach any  agreement between Britain and the EU under article 50 can be extended if both parties agree.

As those negotiating on behalf of Britain would inevitably be politicians who have sold their souls to the “European Project”, the odds are that they would use any obstruction and delay by the EU to justify making an agreement which would practically speaking nullify the vote to leave.  As sure as eggs are eggs, the agreement would  place  us  firmly back into the EU’s clutches  by signing Britain up to the four EU “freedoms” (freedom of movement of goods, services, capital and labour)  and all the rules regulating the single market.  If the break with the EU is done simply by repealing the various Acts which bind us in, our politicians will not be able to use the restrictions and difficulties raised by Article 50 as an excuse for selling the voters down the river with an agreement such as I have described.  Instead, they would have to take full responsibility for whatever they agree to.  Article 50 is a particularly toxic poisoned chalice.  Don’t drink from it.

It is essential that before any referendum takes place that all mainstream UK parties make it clear that whatever  agreement  is reached by those negotiating on behalf of Britain this should only be ratified if the British people vote for it in a second referendum.  Unless this happens the political class will give us something which binds us back into the EU.

5. It is a dangerous argument to claim that competition between governments is a good thing if you are relying on the historical example.  In your Telegraph article Europe’s politicians must embrace competition or face slide into obscurity (19 May) you write:

It is very striking that Europe’s golden age, when European countries bestrode the world and European influence was at its height, was an era of competition between nation states. Admittedly at times this competition went too far and spilled over into war …

The reality of European history is that it has been primarily a history of war as far as you care to go back. War not peace has been the norm. The period of European ascendency was no exception to this and because of technological developments became more and more efficiently brutal.    Use the European historical example and you are simply inviting the Europhiles to say “Told you so. Nation states can’t be trusted to behave”.

6. At present I also have a problem with  all political discussions  and especially those referring to the economy.   We are within striking distance of the production of general purpose robots which will be able to do not only most of the jobs humans now do but most of any new ones which arise.   The implications of this are so profound that they bid fair to render any political solutions or policies currently in play obsolete.  Politicians should be planning for such developments but they are simply ignoring them.  If you read  these two pieces you will see where I am coming from:

http://livinginamadhouse.wordpress.com/2011/07/01/robotics-and-the-real-sorry-karl-you-got-it-wrong-final-crisis-of-capitalism/

http://livinginamadhouse.wordpress.com/2013/06/23/technology-out-of-control/

Yours sincerely,

 

Robert Henderson

 

 

 

Mandela – The long walk to a myth

Robert Henderson

The shrieking sycophancy of the British media as they respond to Nelson Mandela’s death was as predictable as the sun rising in the East in these politically correct times.  To judge him from these panegyrics it would be thought that Mandela was an unblemished character suited only for a  secular version of sainthood. Amongst the vast cache of hysterical idiocy offered up I award the palm for incontinent emotional excess to Peter Oborne of the Telegraph for a piece entitled   “Few human beings can be compared to Jesus Christ. Nelson Mandela was one” (http://blogs.telegraph.co.uk/news/peteroborne/100249502/few-human-beings-can-be-compared-to-jesus-christ-nelson-mandela-was-one/)

The state of South Africa now

Back to reality.  Mandela was a man with a messy private life and a public life  which after his release from captivity in 1990 was accompanied by a great deal of hullabaloo but little improvement in the general conditions of life for most of the population.  The indignities of apartheid were removed but violent crime soared, corruption ballooned and the lot of the poor did  not substantially change.  That is not to pretend that apartheid was preferable to what exists now for the large majority of the population – the indignity of formal legal inferiority is a tremendous burden and its removal counts for much –   but rather to question whether the  present  general circumstances of South Africa are  substantially better than what existed before the end of apartheid.

The South Africa that Mandela leaves behind him is a mess. Violent crime is probably the worst problem and it is rising with the official South African figures showing murders  rising from 15,609 murders in 2011/12 to 16,259 in 2012/13 and  attempted murder rising from 14, 859 to 16, 363 (http://www.africacheck.org/reports/factsheet-south-africas-official-crime-statistics-for-201213/).

To put those figures in context, South Africa has a population of about 52 million, the UK a population of  over 60 million (https://www.google.co.uk/#q=south+african+popluation+), yet in most years the UK  has less than 1,000 homicides (including manslaughter).  (http://www.citizensreportuk.org/reports/murders-fatal-violence-uk.html).

Nor is the South African crime without ethnic or racial dimension even in official eyes, viz:

“The crimes above are not easy to reduce through policing alone.  This is because most (around 60% to 70%) of murders, attempted murders and rapes, occur between people who know each other and occur as a result of a mix of particular social and economic factors. These crimes are often referred to by the police as ‘inter-personal’ violent crimes.  Only between 15% and 20% of murders and attempted murders are the result of aggravated robbery while inter-group conflicts and vigilantism make up the rest.” – See more at: http://www.africacheck.org/reports/factsheet-south-africas-official-crime-statistics-for-201213/#sthash.RnKUEIEu.dpuf.

The position of whites

The situation of South African whites has worsened both in terms of impoverishment for many and  as the target for violent crime. The long serving BBC foreign correspondent John Timpson went as far in May 2013 to question whether whites in South Africa had a future in South Africa – “Do whites have a future in South Africa? http://www.bbc.co.uk/news/magazine-22554709. In the article Simpson described the white squatter camps which have sprung up and the creation of an army of perhaps 400,000 whites who have been severely impoverished.

Perhaps the most telling fact about the situation of whites in South Africa is the number (several thousand) of white farmers who have been murdered since the fall of Apartheid.  Simpson sums up thee situation of white farmers starkly: “In South Africa you are twice as likely to be murdered if you are a white farmer than if you are a police officer – and the police here have a particularly dangerous life. The killings of farmers are often particularly brutal.”  According to Simpson the number of white farmers in South Africa has dropped from 60,000 twenty years ago to 30,000 now.

The anti-white racism goes to the top of the ANC: “At a centenary gathering of the African National Congress last year, Zuma was filmed singing a so-called ‘struggle song’ called Kill The Boer (the old name for much of the white Afrikaner population).

As fellow senior ANC members clapped along, Zuma sang: ‘We are going to shoot them, they are going to run, Shoot the Boer, shoot them, they are going to run, Shoot the Boer, we are going to hit them, they are going to run, the Cabinet will shoot them, with the machine-gun, the Cabinet will shoot them, with the machine-gun . . .’

Alongside him was a notorious character called Julius ‘Juju’ Malema, a former leader of the ANC youth league, who is now Zuma’s bitter enemy and is reportedly planning to launch a new political party after Mandela’s death.

A bogeyman to white South Africans, Malema is popular among young blacks, and has also been an enthusiastic singer of Kill The Boer and another song called Bring Me My Machine-Gun.

Polls this week showed a huge surge in support among young black South Africans for his policies, which he says will ignore reconciliation, and fight for social justice in an ‘onslaught against [the] white male monopoly’.” (http://www.dailymail.co.uk/news/article-2351339/Mandelas-passing-looming-threat-race-war-South-Africas-whites-widow-mourns-latest-murdered-white-farmer-chilling-dispatch-nation-holding-breath.html)

Post Apartheid South Africa is also a seriously  corrupt society,  being ranked 72nd out of 177 countries in  the 2013 Corruption Perception Index (CPI), a worse ranking than the year before (http://www.thesouthafrican.com/business/sa-remains-in-bad-company-in-2013-corruption-rankings.htm). Worse, corruption goes right to the top with the current president Jacob Zuma  accused of using millions of pounds of public money on his own house and grounds  (http://www.theguardian.com/world/2013/nov/29/jacob-zuma-accused-corruption-south-africa).

Mandela’s private life

Mandela’s private life does not show him in a pretty light. His first wife Evelyn Rakeepile bore him four children of whom one died in infancy. Mandela was promiscuous during this marriage and had a number of affairs. When Mandela divorced her after 13 years of marriage he left her with three young children to raise and contributed little if anything to their upkeep in the  years before being imprisoned for life. (http://www.guardian.co.uk/news/2004/may/05/guardianobituaries.southafrica).

Rakeepile understandably railed against the adulation Mandela attracted: “How can a man who has committed adultery and left his wife and children be Christ? The whole world worships Nelson too much. He is only a man.”  (David James Smith 2010 Young Mandela p59 ). An unkind soul might say that Mandela displayed classic black male model behaviour, namely,  being sexually incontinent, deserting his wife and children and failing to provide for them.

Mandela and violence

There is also the question mark over Mandela’s commitment to non-violence after his release.  He certainly was not an advocate of non-violence before he was imprisoned, having formed the guerrilla group  “Sword of the Nation” (Umkhonto we Sizi) to carry out terrorist acts using bombs.

The claim that the explosions he supported before his imprisonment were all directed only against property with its implication that this was humane terrorism will not stand up. No substantial explosion directed at property can ever be guaranteed to be non-lethal, because  there is always a chance that it will kill someone who is there which the bomber does not know about or cause a fire which engulfs more than the immediate target of the explosion.

Then there is the behaviour of the ANC during his imprisonment and afterwards.  The ANC were seriously violent to not only those who were agents and supporters of apartheid, but also to their own members who were thought to have transgressed (and  also to any unaffiliated blacks who displeased them).  Mandela failed to unreservedly condemn these acts during or after his release from prison.

To that general failure can be added his failure to condemn the support for violence and wholehearted advocacy of the sadistic practice of “necklacing” – the placing of a tyre over the victims head and over their arms to pinion them before coating the type with petrol and setting the tyre alight – by his second wife Winnie  who famously declared at a rally “with our matches and necklaces, we’ll liberate this country!” (go in at 3 minutes http://www.youtube.com/watch?v=FP_r5ET5CFU&feature=youtu.be).

Apart from her devotion to necklacing, Winnie Mandela also had a nice line in intimidation and violence up to and including murder. She ran a bunch of thugs known as the Mandela Football team  and was convicted of  assault and kidnapping in 1991 after the death of ANC youth activist, Stompie Seipei Moeketsi.  The sentence was six years in prison initially but this was reduced to two years suspended on appeal.  Ghosts from her Mandela United Football Club past may be about to return to haunt her with an investigation into the deaths of two other youths now in progress (http://www.independent.co.uk/news/world/africa/bodies-exhumed-in-anc-murder-case-linked-to-winnie-mandela-8531758.html)

Winnie Mandela has a remarkable record of escaping punishment. In his evidence to the post-apartheid Truth and Reconciliation Commission a senior police officer said that although the police at the end of the apartheid era had compiled a list of 30 crimes they believed Winnie had committed – from high treason to murder – the attorney general had refused to prosecute her because she was regarded as “untouchable”.( http://www.telegraph.co.uk/news/worldnews/nelson-mandela/10502171/Nelson-Mandela-and-Winnie-portrait-of-a-marriage.html)

Even when Mandela was experiencing  the most constricting of his prison years, it is difficult to believe that he had no news of what the ANC was doing or how his second wife was behaving. But he never condemned the excesses of the ANC  or the barbarities of his then wife. It was not until 1992 (two years after Mandela’s release) that he separated from Winnie  Mandela  and 1996 before they were divorced.

Tellingly, Amnesty International refused to classify Mandela  as a prisoner of conscience stating that    Amnesty “could not give the name of ‘Prisoner of Conscience’ to anyone associated with violence, even though as in ‘conventional warfare’ a degree of restraint may be exercised.” (http://www.amnesty.org/en/library/info/POL10/001/1965/en)

After his release in 1990, in his first speech Mandela banged the violence drum: “Our resort to the armed struggle in 1960 with the formation of the military wing of the ANC, Umkhonto we Sizwe, was a purely defensive action against the violence of apartheid. The factors which necessitated the armed struggle still exist today. We have no option but to continue. We express the hope that a climate conducive to a negotiated settlement will be created soon so that there may no longer be the need for the armed struggle.” (http://www.anc.org.za/show.php?id=4520)

Mandela’s communist leanings

As for Mandela’s commitment to racial and ethnic inclusiveness,  this may have been simply a consequence of ideological capture. Back in the 1950s the ANC was divided between the Africanists who wanted only blacks to be involved and the communists who took a class based stand which included all South Africans – blacks, coloureds, whites, Indians and Malays.  The question of whether Mandela was a member of the South  African Communist Party ( SACP) is perhaps a matter for debate, although he most probably was.  What is not in dispute is his ideological infatuation with Marxism. Here is the South African writer Rial Malan commenting on Mandela’s depiction as a wholly good person committed to democracy:

“In the early Sixties, Special Branch detectives came upon a piece of evidence that made this a bit tricky in Mandela’s case – a handwritten essay titled, “How to be a Good Communist”, (https://archive.org/stream/HowToBeAGoodCommunist/Mandela#page/n5/mode/2up)  in which the leader of the ANC’s newly formed military wing opined that “South Africa will be a land of milk and honey under a Communist government.”[RH note: The essay also contains ‘In our own country, the struggles of the oppressed people are guided by the South African Communist Party and guided by its policies’]

We were told that Mandela was innocently toying with Marxist ideas, trying to understand their appeal, but this made no sense. Almost all his co-conspirators were Communists, wedded to a Sovietist doctrine that envisaged a two-phase ending to the South African struggle – a “democratic national revolution”, followed by a second revolution in which the Marxist-Leninist vanguard took power.

If Mandela wasn’t in on this plot, it would have been exceptionally stupid of him to participate in it, and Mandela was never stupid. Which leaves me believing the evidence recently presented by historians Stephen Ellis (of Amsterdam) and Irina Filatova and Apollon Borisovich Davidson (of Moscow): Mandela was secretly a member of the South African Communist Party’s innermost Central Committee.” (http://www.telegraph.co.uk/news/worldnews/nelson-mandela/10502173/Nelson-Mandela-he-was-never-simply-the-benign-old-man.html).

To this can be added Mandela’s first speech on leaving prison in 1990. This showed him still in Marxist fellow travelling mode:

“I salute the South African Communist Party for its sterling contribution to the struggle for democracy. You have survived 40 years of unrelenting persecution. The memory of great communists like Moses Kotane, Yusuf Dadoo, Bram Fischer and Moses Mabhida will be cherished for generations to come.” (http://www.anc.org.za/show.php?id=4520)

He also said this in the speech “I am a loyal and disciplined member of the African National Congress. I am therefore in full agreement with all of its objectives, strategies and tactics. ” Ibid.

That is a very Marxist turn of phrase.

In 1991 in a speech he made in Cuba we find him saying “Long live the Cuban Revolution. Long live comrade Fidel Castro … (https://archive.org/stream/HowToBeAGoodCommunist/Mandela#page/n1/mode/2up)

On a visit to the USA he made this incredible statement about Cuba “There is one thing that country stands out head and shoulders above the rest. That is in its love for human rights and liberty.” Ibid

He also seemed to have a fondness for dictators generally for visiting Libya a week later he praised Gaddafi for “His commitment to the fight for peace and human rights in the world.” ibid

At the least one can put comrade Mandela down as a very serious fellow traveller.

[The South African Communist Party have since claimed that Mandela was not merely a member when he was arrested in 1962 but a member of   its central committee http://www.sacp.org.za/main.php?ID=4151]

Mandela’s later career

A Machiavellian explanation of Mandela’s career from the late 1980s onwards is that those with power in South Africa had calculated that they could no longer maintain apartheid or indeed anything which was not at least formally representative democracy. Why they would have done so is far from clear. This was especially the case from 1989 onwards following  the rapid collapse of the Soviet Union, an event which ostensibly improved the apartheid state’s survival prospects because the Soviet’s were strong backers of the ANC which they saw as a vehicle to promote the power of the SACP because the Marxist sympathies of many in the ANC hierarchy.   Perhaps it was because behind the scenes the Americans were withdrawing tacit support, or because big business in South Africa  was threatening to leave, or perhaps it was simply that the  ruling elite had  become weary.

Once the decision was made by the apartheid era power brokers, both political and business,  they were faced with the best way  (from their point of view) of making the transition.  What better way than to have someone like Mandela,  who was already through the efforts of the Western media and politicians been raised to iconic status, to provide the rhetoric of inclusiveness, of forgiveness, of  a peaceful transition? Whether Mandela was willing to take the role because he was still an observant Marxist and was playing a long game or whether he had undergone a Damascene conversion during his years of captivity to the happy clappy multiculturalism of the white liberal is neither here nor there. What matters is his willingness and ability to play the role.

Mandela certainly played the part required of him, but he went much further than merely preaching reconciliation.  Take  his reported sudden conversion from a belief in nationalisation to the market economy:

“Mr Mandela once explained this conversion with his characteristic self-deprecation and humour. Referring to Davos business delegates, he said: “They had a dinner where they listened to me very politely, before explaining to me exactly what would happen if we carried out the plans we made in prison.

“I went to bed thinking while I had been out of the real world for 27 years, things had changed. Nobody told me I was stupid. But I could see that they thought I was not very clever. I woke up the next day and realised nationalisation would be the wrong policy for my country.” (http://www.telegraph.co.uk/news/worldnews/nelson-mandela/10499740/Nelson-Mandela-champion-of-economic-freedom.html)

This is a remarkably trivial way to make such a sudden ideological volte face if that was what it was.  More plausibly it was simply a glib explanation for having got into bed with the real power brokers in South Africa at that time, Big Business.

It should be remembered that Mandela had little time in office. He served only one presidential term and for the last two years of that he handed the reins of power to his deputy Thabo Mbeki. It is also questionable what real political power Mandela exercised even before handing over power. He was 76 when elected president and with the best will in the world a man of that age will most probably not have the energy or desire to impose his will in the face of serious opposition. To that can be added the fact that he had spent nearly three decades outside the normal cut and thrust of politics.  It is not unreasonable to imagine that a man who had been in prison for 27 years would  have become institutionalised and find decision making difficult.

Looked at coldly, the role Mandela played since he stood down as President has been purely that of a PR tool, but even before then he was performing the function.  What is truly remarkable is that this happened despite the fact that  as a public performer he had  little going for him, being at best an uninspiring speaker and often downright boring , as he delivered strangely punctuated sentences in a jerky manner. Nor did he often have anything of real importance or interest to say beyond general pleas for reconciliation. Amazingly, his communist sympathies and continued belief in violence, which should have marred the myth, simply did not register with the general public. The Western media had created a fabulous figure who could do no wrong and, like the emperor with no clothes, the crowds he drew, acting often enough in the manner of  teenagers screaming at pop groups, could either not see there were no clothes on this emperor or were constrained by fear of pointing out the unfortunate fact.

What is the future likely to bring? The odds must be on South Africa falling into the completely dysfunctional mess which is general  lot of black Africa, perhaps quite gradually because it is much more sophisticated than any other sub-Saharan African state.  There is no indication of the crime and poverty problems being solved and every indication that ethnic and racial conflict will worsen because of the lack of satisfaction of the hopes of  poor blacks.

Whites are still required to keep things running , but the failure of  ANC governments since the first elections after the end of apartheid to take any serious action to prevent the slaughter of white farmers together with the often bellicose anti-white statements by ANC leaders suggest that we may well see in the next ten or fifteen years the type of squeezing of the white population as happened in Zimbabwe. But whites are not the only minorities who may face an increasingly frosty future. The Coloureds, Indians and Malays are also likely targets. In addition there  is plenty of inter-tribal strife, for example  between Zulus and Pondos (http://www.csmonitor.com/1985/1227/osouth.html/(page)/2) or Xhosa and Sotho. (http://allafrica.com/stories/200109100307.html)

It is not a legacy to be for which to be remembered warmly.

Civitas meeting: Transforming the market: Towards a new political economy

Civitas meeting: Transforming the market: Towards a new political economy 13 November 2013

Speaker: Dr Patrick Diamond

Diamond’s talk was based on his recently published Civitas tract http://civitas.org.uk/press/EAdiamond.html

Diamond is firmly in the NuLabour camp, having been involved in various positions servicing the last Labour government,  including that of  head of Policy Planning in 10 Downing Street. He now holds several academic positions at London and Oxford universities. He is also a Labour councillor for the London Borough of Southwark.

What is his recipe for “transforming the market”?  This extract from his Civitas tract give the bare bones of it:

“The government is an enabler, directing strategic investment to growing sectors and firms, providing fertile conditions for entrepreneurship.

The government is a  regulator, managing the inherent volatility and instability of markets, while promoting competition in product and capital markets.

The government is an equaliser, ensuring the supply of public goods and human capital helps the least advantaged, while ensuring the basic distribution of household income accords with basic principles of fairness and social justice.

And the government is an innovator , promoting experimentation, technological adaptation, alongside the discovery of new markets, services and the advancement of knowledge.” pp49/50

This has the ring of someone reciting a catechism whose end is in its saying not in its doing.

Diamond’s  buzzwords for curing the ills of the British economy are decentralisation and localism. This dovetails with the Labour version of the Tories’ risible “Big Society” which I heard  John Cruddas  outline not so long ago (http://livinginamadhouse.wordpress.com/2013/10/20/one-nation-labour-work-family-and-place-a-taste-of-labours-next-election-propaganda/). Read this in conjunction with this report and you will have Labour’s economic and social programme  for the next general election.

There is a good deal of “back to the future” in his  programme. He wants to create a ‘super ministry” combining the Department of Business,  Innovation and skills (BIS),  the Department of Communities and Homes and some Treasury functions to “ decentralise and devolve economic power away from London.”  Older readers will be irresistibly reminded of the first Wilson government in the 1960s when work, and especially public sector work, was to be sent to the less prosperous parts of Britain. Thankfully Diamond  at least spared us any ancient embarrassing rhetoric such as “the white heat of technology” or “picking winners”, but that is what he thinking.

Diamond’s wish to see Britain’s economy “rebalanced” away from services and towards manufacturing also resonates with Wilson’s desire to shift more people into manufacturing. This he attempted  to do with arguably the most absurd tax ever introduced in Britain, the  Selective Employment Tax (SET).  This  was placed on service companies only, the idea being that this would make more people seek manufacturing jobs  because service employers would find it more expensive to employ people and the number of service jobs would fall. In turn the hope was that manufacturing wages would be lowered because of increased competition for such jobs. This last was an heroically optimistic scenario because of the power of the unions at the time.

SET failed for the wondrously obvious reason that it increased the costs of service employers without improving the circumstances of manufacturers, whose wages remained  much the same,  while demand for  their goods was at best not increased and at worst might have even fallen if unemployment in the service sector rose due to the increased cost imposed by  SET and reduced overall demand.   This meant manufacturers could not employ more people.  All  SET could do in the circumstances of the 1960s,  if it had any effect at all,  was reduce employment and/or raise retail prices.

So many things are to Diamond’s mind “too centralised” or  overly  concentrated in particular areas .  Apart from  general economic power and government,  he pointed to banks, infrastructure such as airports and even the Arts. Leaving aside whether localising affairs is desirable, there is an inherent problem with making things more local and decentralised. There needs to be not merely the bricks and mortar of regional banks and companies, councils with much more responsibility and so on, there needs to be a class of people who can handle such responsibilities at the local and regional level. None exists at present. Nor can such a class be created by conscious policy.  It is something that happens, if it happens at all, naturally.

At one time Britain did have a healthy political and managerial class who were willing and able to assume the burden of exercising local power. But that class grew naturally from the fact that the whole of society was of necessity  conducted at the local level because of poor communications. But from the advent of the railways onwards localism became less and less the natural state of affairs.  We have now reached a  point where the exercise of  political power and initiative  at the local level  is feeble because those with real political ambition do not see serving at the local level as important. It is all very well to lament this and say power and influence should be shifted back to the local level but how able and ambitious people can be persuaded to confine themselves to local government is another matter. Frankly, I doubt whether the clock can be turned back.

As part of his worship of the local Diamond is much taken with Germany with its regional banks, workers directives  and technical schools.  He wants Britain to copy them. In this he is making the profound but common error of believing that what works in one society will work in any other society. This was doubly  odd because he recognised in one part of his talk (and does so in his written tract) that the transfer of methods from one society to another was problematical, but still went on as though the problem did not exist when he got to the detail, such as it was, as to what should be done in Britain.

Germany is decentralised because that is the way it has always been. A latecomer to the nation state (1870), the German state has always been in practice a federation with some of the larger components such as Saxony and Bavaria having histories as substantial kingdoms in their own right.  The consequence is that regionalism comes naturally to Germany in a way that it never would do in Britain and especially England,  because England has been centralised in the sense that it has been a kingdom encompassing those with a broad common ethnicity for many centuries. In modern Germany the sixteen Lander form political entities which each  have both size and a separate history   to create and maintain  regional loyalty. In England there are no such hard core regional loyalties. Regional sub-divisions of England are no more than geographical expressions, the South West, the North West, the South East, Midlands and so on.  Even the North East – the  region of England often put forward as having the strongest regional identity – is far from being an area  with a separate identity around which all the inhabitants can coalesce.

Diamond’s scheme for remedying the ills of the British economy has many other weaknesses. He is sold on predistribution.  This is, almost inevitably these days, an ideological import from the USA.  It is the political equivalent of selling snake oil to the ill.  The idea is that silly old traditional methods of redressing inequality such as progressive tax regimes and benefit support (which actually work) are forsaken for ethereal aspirations that  encourage long-term investment,  providing good quality public services, particularly healthcare and investing in the skills of the young , workers on company boards, a minimum wage pegged to inflation and so on.  The problem is these will not work while mass immigration and relatively free trade exists both in terms of imports and the export of jobs through outsourcing.

The broad sweep of Diamond’s ends I would have sympathy with, the re-industrialisation of Britain, greater material equality, an end to the worship of markets, long term planning by companies and so on.  The problem is his means. They will not work because he is always trying to work within the context of both a market economy and globalisation. Take his strategy for manufacturing. To increase this, especially in terms of making it much broader as well as larger in GDP terms, some form of protection would have to be used, be that traditional controls such as quotas and tariffs or state control of vital industries together with fiscal measures to ensure the price of essential goods and services are within the reach of the poor.   We can be sure of that both because economic history has no example of a country industrialising except by protecting its domestic market and because simple logic tells you that it is impossible to compete across the economic board  with countries whose labour forces are earning a fraction of British wages, who have scant regard for health and safety and whose governments ensure that it is very difficult to enter their markets by economic regimes which are anything but laissez faire.

Diamond’s attempt to get round this problem is for Britain to concentrate on high-tech industries. There are two problems with this. The first is strategic whereby it is dangerous for any country to leave itself at the mercy of world events by being unable to produce a wide range of products either at all or in sufficient quantity to tide the country over in an emergency.

The second difficulty is the sheer impossibility of creating  sufficient jobs to employ enough of a  large population like that of the UK to compensate for the export of lower tech, lower skilled work. Even if it was in theory possible, it would be impossible to find enough people capable of  high tech work because the way IQ is distributed means that even in a country with a strong average IQ such as Britain will have huge numbers of people who have mediocre to poor IQs –for example, there are around 6 million people with IQS of 80 or less in the UK.  Thus two reasons for a broad-based economy come together: the impossibility of providing enough high tech, high skill jobs and the need to cater for the less able in society.

The audience questions and remarks

What was heartening was the anger which quite a few of the audience (it was a deliberately small gathering of around 25) expressed about the way British governments had failed to protect British companies and British economic interests generally. “Britain is becoming a servant economy” was probably the best of the comments summing up where Britain is headed if the current laissez faire policies continue to be followed.

These points were made by other members of the audience:

-          The takeover of  British companies by foreigners was made much easier with the abolition of the Mergers and Monopolies Commission  (which had a public interest test)  and its replacement with the Competition Commission (which has no public interest test but simply a test for the proportion of the market a takeover would involve).

-          Manufacturers comprise only 11% of GDP but 50% of British exports.

-          Manufacturing jobs are generally better paid than service sector jobs so their loss is more keenly felt both by the individual and in terms of GDP.

-          Foreign direct investment is often concerned with the acquiring of British assets rather than new investment.

-          Energy costs are killing manufacturing in the UK.

The owner of JLS Ltd, John Mills (who is currently the largest Labour Party donor and a one-time Camden Councillor),  advocated a deliberate 20%  devaluation of the pound . I have discussed this with him on another occasion and the problem with it is this: starting the devaluation is easy enough, but stopping it   at the level you want it is not. The danger is that the currency  will deflate way beyond the desired point because the brakes fail to halt the decline in its value.  It is also worth remembering that the value of the Pound against major currencies has dropped 20% or so since Lehman Bros failed in 2008.

I managed to make a few points. These were:

1. That it is impossible to rebuild manufacturing except behind protectionist barriers, official or unofficial, the proof of this statement being the fact that it has never been done.

2. Most immigrants are not engaged in highly  skilled work but low-skilled or unskilled jobs, which in itself gives the lie to the idea that immigrants are doing jobs which Britons could not or would not do. I further pointed out that many of these jobs involve dealing with the British public  – in shops, cafes, call centres and so on – and that many of those  so employed have completely inadequate English. To claim that a foreign worker who cannot speak fluent English is a better employee in such posts than a native English speaker is a self-evident nonsense.

3. That British unemployment, especially youth unemployment, cannot be cured while our borders are effectively open both because of the EU and the unwillingness of all the major parties to halt immigration from outside the European Economic Area.  (Diamond flatly refused to discuss the question of immigration, contenting himself with “We shall have to differ on immigration”).

4. Diamond stated in his talk that healthy economies relied on “efficient, effective and non-corrupt public sectors”. I broke the dreadful truth to him that Britain no longer has such a public sector. Privatisation (especially PFI) has greatly increased the opportunities for corruption in public service. Increase the opportunities and corruption increases. It is a very simple equation.

Diamond accepted that corruption had  worsened in central government public service but bizarrely claimed it had reduced in local government circles. The reality is that corruption has increased not decreased in local government because so much of local government work has been contracted out. Diamond attempted no justification for his claim merely asserted it. (It is a very strange thing but I have never been to a meeting dealing with the same general subject area as this one where anyone other than me  has raised the issue of corruption, this  despite the fact that there are regular examples of it in the mainstream media).

Privatisation has also reduced the efficiency of public services, because  where used it destroys the chain of command within the public service.  This occurs because where there is a private contractor involved the public service provider cannot instruct those employed by the private contractor but must work through the contractor’s management. This can lead to very complex arrangements.  I gave the example of major London hospitals where there are  routinely PFI contracts for the food, the laundry, the ward cleaning and the maintenance and cleaning of the multi-media installations (TV, phone, internet).

5. That giving more power,  including greatly increased borrowing powers,  to local councils is  a recipe for disaster because of the lamentable quality of the large majority of councillors. I urged anyone around the table who doubted this to go and view their local council in action, especially in the committees and subcommittees.

6. The laws which allow directors who do not meet their statutory responsibilities to be punished are rarely enforced. I gave as examples the provisions within the Company’s Act to remove the personal; limited liability of directors and to ban people from being directors.   I pointed out that these provisions  had not been used against any of the directors of RBS, HBOS, Lloyds or  Northern Rock, despite their extremely reckless behaviour.  Had the limited liability of directors such as Fred Goodwin been removed the directors could have been sued for every penny they had.  As for banning directors, I told the meeting that from my own experience with the Inland Revenue of  trying to get even the directors of tinpot concerns banned  was well nigh impossible and that to get a mainboard director of a Footsie 100 company banned was in practice impossible unless the director was convicted of a criminal offence against the company such as embezzlement.

What needs to be done

If Britain’s economy can be reshaped it can only be done with a judicious use of protectionist measures, the renationalisation of vital services such as the utilities  and an end to mass immigration.  Diamond will not even consider doing any of this.

There was one issue which I did not get a chance to raise  because of the constraints of the meeting.  Nor was the issue touched on by Diamond or any of the audience. It concerned technological changed.  Robotics and 3-D printing bid fair to turn our economic world upside down. I include below links to a couple of articles which deal with problems they will create. Just in case you are tempted to say Oh that’s just sci-fi, especially in the case of robotics, go online look at the latest robotic developments, for example, a humanoid robot which can walk over rough ground (http://www.telegraph.co.uk/technology/10360951/Meet-Atlas-Boston-Dynamics-unveils-robot-that-can-walk-on-rocks.html)

and a humanoid robot that has human eye movements very well imitated. (http://www.telegraph.co.uk/science/10413987/Meet-ZENO-R25-the-first-affordable-human-robot.html)

The implications of Robotics are explored in these essays:

http://livinginamadhouse.wordpress.com/2011/07/01/robotics-and-the-real-sorry-karl-you-got-it-wrong-final-crisis-of-capitalism/

http://livinginamadhouse.wordpress.com/2010/10/13/the-geepees-a-cautionary-tale/

Making plans on the basis that our economy and society will remain in broad terms similar to what it is now is a mug’s game.

Robert Henderson 29 11 2013

Royal Mail and ideology

Robert Henderson

The starting gun for the privatisation of the Royal Mail has been fired t(http://www.telegraph.co.uk/news/uknews/royal-mail/10303689/Royal-Mail-privatisation-Government-confirms-flotation-within-weeks.html).

As with the banks,  the taxpayer takes the losses  and private business gets the profits. To prepare Royal Mail for privatisation the taxpayer has taken sole responsibility for the Royal Mail’s pension fund . They have done this  because its liabilities are huge and no private investor or business would take Royal Mail  on with the pension fund attached.

The pension scheme is closed to new members, which means that over time the liabilities will decline as pensioners die. However, that will take a long time and the liabilities are huge and uncertain.

The pension fund had estimated liabilities £33bn in the 2012/13 accounts (http://www.official-documents.gov.uk/document/hc1314/hc01/0149/0149.pdf).  This figure had risen by nearly £3bn in a year:  “The total pension scheme liability increased, from the date of transfer on 1 April 2012, from £30.547 billion to £33.378 billion at 31 March 2013.”

The scheme is “an unfunded defined benefit scheme providing pension and lump sum benefits on retirement and  death to members and former members of the Royal Mail Pension Plan (RMPP), and their dependants, in respect of their service up to 31 March 2012. The scheme is closed and has only pensioner and deferred members. As this is a closed scheme, there are no employer or employee contributions, the on-going pension payments and other payments are funded from the consolidated fund”  (Ibid)

The key words here are “unfunded” and “funded from the consolidated fund.  That means it is like the  Old Age Pension, namely, funded out of taxation.

The Pension Fund was supposedly made shipshape and Bristol fashion by the government  pumping in £2.2 billion in 2012.  However, after the first year of operation after the taxpayer bailout the “Royal Mail Group is facing an extra £300m annual bill from its pensions, one year on from a multi-billion-pound deal that was supposed to have solved its pension issues once and for all ahead of a public listing.” (http://www.efinancialnews.com/story/2013-05-31/pensions-talks-return-to-haunt-royal-mail?ea9c8a2de0ee111045601ab04d673622)

What can be expected from a privatised postal service

The experience of every other large privatisation apart from BT is of rising prices and decreased service.  Even in the case of BT the comparative success of the privatisation – the landline connections for phones and broadband are still dependent on BT’s  control of the network – would probably not have occurred if the mobile phone revolution had not taken place and  introduced genuine competition into the telecoms market.

There are a number of reasons why a privatised Royal Mail will go the same way as the likes of British Rail and the utilities.  To begin with there is the VAT exemption which is bound to vanish. As   it is a public organisation Royal Mail  does not pay VAT on most of its products: a privatised Royal Mail will almost certainly pay VAT on all of its products. The present position with VAT  is this:

“Royal Mail products that remain exempt from VAT, in addition to free products

UK

1st and 2nd Class (stamps, online, franking, account*)

Special Delivery™ Next Day (stamps and franking)

Standard Parcels

Recorded Signed For™ (if purchased with a VAT exempt service)

Keepsafe™ (personal and business)

*1st and 2nd class account is a new product that was launched in April 2012. This is a Universal Service which does not qualify for volume related discounts. Royal Mail also offers a 1st and 2nd class service called Business Mail which is available on account. Volume related discounts are available on this service for larger postings and VAT is liable

International

Airmail

Surface Mail

International Signed For

All HM Forces Mail (BFPO)

Inbound Mail

Redirections within UK (personal and business) “

(http://www.royalmail.com/information-vat-and-postal-services)

All those exemptions will  be under threat with privatisation,  not least because  EU competition commissioner is likely to  be after them like a shot as the exemptions would be viewed as illegitimate state aid ( http://www.dailymail.co.uk/news/article-2305592/Price-class-stamp-soar-1-just-years-Royal-Mail-privatised-campaign-group-warns.html) . There will also be challenges by private postal companies and TNT Post UK has already said they will try to get the courts to rule that “ the exemption should be removed from all Royal Mail services apart from stamps and services directly connected to the obligation it has to provide a universal service six days a week”. (http://www.telegraph.co.uk/journalists/steve-hawkes/10309856/Legal-fight-threatens-Royal-Mail.html).  If successful that would put 20% VAT on bulk mail deliveries.  In time, it is reasonable to expect even more dramatic challenges to any VAT exemption.

Then there is the question of raising capital. The official line is this: “ To help protect the future of the universal postal service, we aim to end Royal Mail’s dependence on unpredictable funding from the taxpayer and allow them future access to private capital. We will do this by selling shares in Royal Mail. “ (https://www.gov.uk/government/policies/ensuring-the-future-of-the-universal-postal-service-and-post-office-network-services)

On the face of it this is a nonsense statement.  As a matter of simple fact the British government can raise money by way of borrowing far more cheaply than a private company, no matter how large, can do (http://www.theguardian.com/commentisfree/2013/may/21/royal-mail-public-sector-privatise).

The claim becomes less odd if the real reason why capital cannot be raised by Royal Mail is the EU competition commission’s resistance to  state aid. The commission  is especially keen on stamping on state aid  in relation to EU postal services, which it desperately wants to see in private hands or at least with a mixture of private and public providers competing on the same basis, as it seeks to have a uniform postal service throughout the EU ((http://ec.europa.eu/competition/sectors/postal_services/cases.html).  It is probable that a publicly owned  Royal Mail would not be allowed to raise cheap money through the offices of the government because the assistance  would not be available to other private postal competitors and, hence,  would be judged as unfair competition by the EU competition commissioner.

But not all state aid is bad in the EU commission’s eyes.  They  were willing to collude  with the  UK government to prepare Royal Mail for privatisation by allowing what amounts to massive state aid through the removal of the deficit laden Royal Mail pension fund from Royal Mail , viz:

“The European Commission approved UK plans to relieve the Royal Mail Group (RMG) from excessive pension costs relating to its past monopoly position and to provide RMG with restructuring aid consisting of a debt reduction of GBP 1089 million (around EUR 1311 million). The Commission concluded that RMG’s revised restructuring plan would ensure a sustainable future for the group in its twofold function of providing universal postal services and of granting access to its delivery network to other providers in the UK. Moreover, the plan negotiated with the Commission included appropriate measures to minimise distortions of competition induced by the aid (IP/12/260).” (Ibid)

The sale is also ostensibly  odd in that it comes at a time when  Royal Mail is making a solid profit  (£400 million in the past year). However, the strangeness of the decision vanishes when it is realised that  the Royal Mail has been deliberately fattened up for privatisation  by the massive price increase in the cost of postage stamps in 2012 (First class stamps rising from 46p to 60p and second class from 36p to 50p.  Parcel charges have also risen substantially http://www.bbc.co.uk/news/business-17859782. Incidentally, iIt is a moot point how much of the £400million profit arose from people buying huge numbers of stamps at the pre-rise prices, but nonetheless the increase in profitability is too large to be  ascribed to that one off event alone ).

The obligation to maintain the universal  postal service (UPS )  – the obligation to deliver  post anywhere in the UK at the same price six days a week –  is protected by the Postal Services Act 2011 (http://www.legislation.gov.uk/ukpga/2011/5/introduction) and the  EU Postal Services Directives (http://ec.europa.eu/internal_market/post/legislation/index_en.htm). However, once Royal Mail has private shareholders  this could change, especially if a majority private shareholder emerges. This could easily occur  if much more than 50% of shares are sold  to the private sector . The intention of  the government is for a  majority of shares  to be in private hands  with the rest held by the government. The  percentage to be retained by the government might be very small  and this is suggested strongly because ministers  has been very coy on the matter of the size of government’s holding .  It could be as low 10% for all we know.

If a majority shareholder does emerge,  they  will inevitably argue that they cannot compete with other private operators who are not bound by the UPS. Their complaint could well be upheld either by the UK or the EU competition authorities on the grounds of practicality, that is, the impossibility of running Royal Mail as a private business when it has the  UPS obligation which its competitors do not have to honour.  If the VAT exemption is lessened or even abandoned altogether, that would  add to the argument to dilute or even remove entirely the UPS obligation. It is worth  remembering that the so-called “golden share” held by the government in Jaguar cars was limply given up by the government  not that many years after being introduced (http://hansard.millbanksystems.com/commons/1989/dec/06/golden-shares).

The UPS is under attack already from retailers who rely on posting goods to customers. They are under no obligation to use Royal Mail. This means they can charge whatever they like for postage within the UK and there are claims that some online retailers are charging multiples of the postage cost  which Royal Mail would charge for deliveries to out of the way addresses. (http://www.bbc.co.uk/news/uk-scotland-24069354).  This will be happening because  the contracts the retailers  have agreed with postal providers other than Royal Mail will stipulate that this must be done.  If Royal Mail had retained its monopoly of small parcel deliveries (or even had the size of parcels in its monopoly increased) this would not be able to happen with anything like the same frequency.

The privatisation of Royal Mail also threatens the Post Office network, which is now an entirely separate organisation, Post Office Ltd.  Governments have been cynically undermining the Post Office for decades with a gradual removal government services which bulked out the postal services. The threat is not immediate because “We have committed £1.34 billion of funding for the network from financial year 2011 to 2012 to financial year 2014 to 2015. This will enable the Post Office to maintain and modernise its network to help safeguard its future.” (https://www.gov.uk/government/policies/ensuring-the-future-of-the-universal-postal-service-and-post-office-network-services). However,   looking ten years or so ahead it is probable that the cry will go up from politicians that the Post Office is a white state-owned elephant because there is every chance that a privatised Royal Mail will refuse to continue the contracts with the Post Office which currently exist on the grounds of cost and convenience.  

Why the privatisation is happening

Royal Mail would be perfectly viable as a public service if the old monopoly of letter post and small parcel post was maintained. It is true that email and other forms of digital messaging have reduced considerably the number of letters sent. But this drop has been offset by the considerable increase in parcel post arising from e-commerce, an increase which is likely to continue for quite some time.    Indeed, with the monopoly restored and modern sorting machinery being introduced, Royal Mail would almost certainly be able to make enough for necessary  future investment  whilst keeping postal rates moderate.   A cheap postal system would be a considerable boost to the economy generally.  The Post Office network could also be underpinned by the use of the offices as collection points for goods ordered through the Internet.

If that is so why is privatisation being driven through so ruthlessly  for transparently false reasons? The answer is ideology. The globalist, laissez faire ideology has infected to a lesser or greater degree all of Britain’s major political parties.  That  ideology dovetails with the supranational mentality engendered by the EU , commitment to  which is at the British political elite’s political core. It is doubtful if any senior British politician  not firmly committed to either laissez faire  globalism or the EU; most are committed to both. That is the simple truth.

Technology out of control

Robert Henderson

I have previously examined  how robotics has the potential to make unviable both consumer based  economic systems based on the market and free trade between countries and the vast potential they have for creating economic and social  upheaval  in any industrialised society (http://livinginamadhouse.wordpress.com/2011/07/01/robotics-and-the-real-sorry-karl-you-got-it-wrong-final-crisis-of-capitalism/).  A short recap of these difficulties will set the scene for the less obvious threat posed by other emerging technologies.

When general purpose robots are available they will not only be able to do the jobs humans do now but any new jobs arising from the technology. This is a wholly new situation because all previous technological advance has created new jobs which can only be done by humans.

In such circumstances there will be a choice for any  society: ban robots in the society  and  goods produced by robots in foreign countries or suffer  a catastrophic and unmendable unemployment and the subsequent catastrophic loss of demand.

Alternatively, a society could be organised predominantly on a command economy basis with  the robots producing most of the goods and providing  most of the services with  human beings acting purely as consumers apart from those needed to do whatever jobs robots cannot do or  it is deemed dangerous for them to do. There could also be a peripheral human economy consisting of those producing art or artisan goods for a niche market.

General purpose robots are the most obvious and comprehensive threat to the  economic arrangements of the advanced world, but there are other emerging  technological advances which either already exist as practical tools for general use or will do so in the not too distant future.

3D Printers

A favourite SciFi  invention is the universal replicator, a machine which produces whatever a person wants. We are not there yet but the first significant steps have been made with the 3D printer.

3D printing has the potential to undermine any society based on mass production for high volume  consumption.  If everything can be reduced to an electronic blueprint, in principle anyone can  produce anything. This is  because  3D printers will not only print from ready-made programs. Any object can be scanned and then the scanned information in digital form may be used to print the object.  All that will be required is the requisite printing equipment with the physical materials to create the object required.

This will raise a number of problems for private business, both in terms of what they will be producing and supplying and because of the intellectual property implications.  Imagine a world in which, say, the individual human can produce 75% of the manufactured goods they require simply by printing them.   That is not so far-fetched as it might seem. Consider your own life. What would you think it obviously  impractical for a 3D printer to produce?  Almost certainly a house, quite probably a car.  Perhaps anything large and complicated.

Large is not an insuperable problem even for the present  because  parts  of any object could  be produced with a 3D Printer and then assembled, quite probably by a robot.  A Dutch company DUS Architects are already testing out the proposition that a house could be printed out (http://www.telegraph.co.uk/travel/ultratravel/the-next-big-thing/10110195/The-worlds-first-3D-printed-house.html)

Complexity would not be an absolute  barrier  because a printer could print from the centre to the perimeter or an object.  Using that technique  a complete car could be printed out.  A house would be a stretch because of the problems of foundations,  but it might be possible to print a house in its entirety on foundations created by  humans or robots.  In principle anything could be produced whole provided it was not larger than the capacity of the printer used to print it.

3D printing  has the potential to create immense economic difficulties.  If it was used widely traditional manufacturers would at best find the demand for most of their goods either vanishing altogether or dropping very sharply.  Wholesalers would be rendered unnecessary in great swathes of industry because they only thing they would have to deliver would be a computer programme to the individual 3D printer. Retailers might still have a life as showrooms for the printed product, but it would be a much reduced service because people would probably be more and more content just to view a model on the Web or one printed out by a friend. Perhaps a holographic representation of the article to be printed  would be provided before printing.

Price would also be a consideration. There is good reason to believe that items printed would be cheaper than those made in factories because there would be no overheads beyond the machine’s purchase, its maintenance, the materials used for printing and the energy used. A parallel with 2D printing can be made. It is much cheaper to print text or images on your home printer than give the work to a commercial printer.  There is also the possibility that the materials for creating 3D printed artefacts could be reused, just like  plasticene, over and over again. If  an item was not liked or a  print went wrong there would be only the cost of the energy used to print to be borne.

But 3D printing could go way  beyond the manufactured goods we have now. If anything can be reduced to a computer programme and the correct ingredients by way of the ink substitute created to put into the 3D printer why could not anything physical not be created including food?  Organic material has already been used in 3D printing as we shall see. It might even  be possible in the more distant future to manipulate atoms to create whatever elements are required, just as the  sun causes different elements  to form.

The macro economic effects   of widespread 3D printing would be catastrophic because there would be, as with general purpose robots,  a huge loss of demand  due to a widespread  loss of employment as  industrial, wholesale and retail activity was severely reduced.  A company which makes and  supplies  computer programmes rather than making and supplying physical things is going to need a  tiny workforce  compared to a manufacturer with their  factory or the wholesaler or retailer with their warehouse.

In the beginning when 3D printers are  very expensive less than user-friendly,  there would  be businesses which would set up 3D printing shops  just as there are 2D print shops now.  But the likelihood is that as time goes on and 3D printers become cheap and user-friendly ,  businesses  doing the 3D printing for customers will become defunct or at least very much reduced. In any event such businesses  will  indubitably require far fewer staff than traditional manufactures.

What is it to be human?

3D printers represent an existential  threat as well as an economic one. The reproduction of human parts has already taken its first tentative steps using  3D printers – http://www.telegraph.co.uk/science/9849212/New-3D-printing-technique-could-speed-up-progress-towards-creation-of-artificial-organs.html)

If it is possible to print a kidney why not a complete human being ?  Assume there is a situation where a complete body could be replicated. Think further and imagine that not only the physical construct of the body can  be replicated but also the  mental element of a person. This might be done by simply replicating a brain with the replication process exactly copying the brain in all its facets, including the brain’s  operational state,  at a point in time so that the resultant artefact would be an exact copy of the original just as a copied computer file is an exact copy of data at a point in time.  Even more removed from the original person would  be a means of reducing  the entire mental construct of a person to a digital representation which could be stored as a computer file and then downloaded into other machines, artificially created bodies  or even other human beings.

That might seem something which is way into the future, but consider the speed with which technology is already advancing, how we have moved from physically huge computers fifty years ago to tiny devices with many times the power of the most advanced  computer made in the 1960s. The temptation to offer a modern version of “It’ll never replace the horse” is strong but equally doomed to ridiculous failure.

Think on two questions:  (1) if  individual humans can be replicated  what is it to be human?   (2) Once everything  can be  reduced to digital data or indeed data in any form, where does reality begin and end? I would suggest only in the concept of things rather than the physical reality of them.

Self-Organising materials

Another future disrupter of  market economies is self-organising materials. Imagine a material which did not have a fixed state but could assume different states to perform different tasks. Such a material could perform as a  wondrously enhanced Swiss Army knife  without the need to have  any permanent specific tools, viz:

 A. System Functionality

We aim to create a system of sand grain sized modules that can form arbitrary structures on demand. Imagine a bag of these intelligent particles. If, for example, one needs a specific type or size of wrench, one communicates this to the bag. The modules contained within first crystallize into a regular structure and then self-disassemble in an organized fashion to form the requested object. One reaches in, grabs the tool, and uses it to accomplish a meaningful task. When one is done with the tool, it goes back into the bag where it disintegrates, and the particles can be reused to form the next tool. Such a system would be immensely useful for an astronaut on an inter-planetary mission or a scientist isolated at the South Pole. Even for the average mechanic or surgeon, the ability to form arbitrary, task-specific, tools would be immensely valuable in inspecting and working in tight spaces.(Self-Disassembling Robots Pebbles: New Results and Ideas for Self-Assembly of 3D Structures (http://groups.csail.mit.edu/drl/wiki/images/5/5d/RobotPebblesWorkshop-GilpinRus-ICRA10.pdf).

This system uses electromagnets and a subtractive system. It begins with a quantity of the grain sized modules and removes those which are not needed for a specific item, just as a sculptor starts with a block of marble and creates by removing material. Unlike a sculpture when the object is no longer required the totality of the grain size modules reforms until it required to form  an object again.

That is self-organising materials as tools, but any object could in principle be so created, even complicated machines. All that would be required is a form of self-organising  material  flexible enough to  translate any  digital map into a real object.

The effect of widespread use of self-organising materials  would mean that much of traditional manufacturing would become unnecessary. That would have serious effects on demand because employment would be substantially reduced.

Intellectual property

The wholesale removal of production and supply by innovations such as 3D printing and self-organising materials have  serious  implications for intellectual property.    If everything is reduced to a digital representation,  where will ownership of ideas and physical  creations lie?  At present it is possible to have patent(s)  in an object, but what if anything can be scanned and  a 3D print made from the scan? Who could claim that a patent had been infringed if the item complained about  was the results of a scan produced by the person making the 3D print?  That would not be the equivalent of someone taking an object or process and simply reproducing it by physically duplicating by an act of copying.   Rather, it would be akin to the situation where someone photographs a painting then mass reproduces the photograph.  There would be no obvious breach of patent  because the copies would be of the photograph taken of the painting not of the painting itself and the creation of a photograph is an act of artistic creation in itself .

In such circumstances patent rights would become effectively null and void.  If there was an attempt to reform patent law to include replication of an original patented design,  however reproduced, if it was identical or even merely  had a large degree of similarity with the scanned object,   it is unlikely that it would be enforceable. That is  because  all any person wishing to replicate an object would have to do to put themselves arguably beyond a patent would be to manipulate the data from the scanned object  to make it other than identical with the original object which was scanned and then argue the changes were sufficient to constitute something different in quality to the scanned original object.   That would be a never ending playground for the lawyers as people squabbled over what constituted a significance similarity.

There would also be an obvious reason why enforcement would fail: the sheer numbers of people copying things, with most of them doing it simply for themselves or at least on a very small scale. The patent holders would be faced with a similar problem to that faced by the creators of digital material such as films or music who still suffer massive breaches of copyright.  Patent holders  would  be overwhelmed by the numbers  of breaches.

There could also be problems over copyright. A person who scanned an object would be creating a digital data map of the object. That would be an original creation. Who would own the copyright of the data map? Presumably the person who scanned it, for the data map they have created is original.  If the data map was then sold to others there would  be a direct conflict between the rights of the patent holder of the scanned object and the rights of the copyright holder who created the data map. How could that be resolved? Frankly I doubt whether it could be in any coherent or effective legal manner. If copyright was legally denied to those who created a data map by scanning, such a law  would almost certainly have general implications for copying anything by any means, even including the copying of a painting by painting a copy.

Disruptive technological advances  do not have to dramatic or completely novel

General purpose robots and self-organising materials  are genuine  novelties in the sense of having no antecedents, but less novel  and exotic  technological advances  also contain threats of social and economic disruption.  Think of the effect that the automation of a single machine dedicated to one general type of  activity might have. An automated sewing machine  meets  that description and there are serious attempts being made to produce one:

Fully Automatic Sewing of Garments Using Micro-Manipulation

FBO – DARPA has provided $1.25 million for Softwear Automation to develop a complete work-cell called a Beta Unit for fully automated sewing. That includes a numerically controlled sewing machine that tracks fabric movement by observing passing threads and under servo control moves the fabric under the needle stitch by stitch. Complete production facilities that produce garments with zero direct labor is the ultimate goal.

The military’s annual clothing budget at $4 billion dollars and employs about 50,000 people.

The US annual import of sewn items is approximately $100 Billion per year.

The technology proposed appears to allow cutting and sewing at costs LESS THAN in China. There is only one basic innovation required; that the metric of motion should not be meters or inches but rather thread count in the fill and warp directions. (Wovens and leather like materials need a slightly different measure.) This leads to THREE fundamental technical issues that have largely been solved and discussed below as well as more routine engineering development.

“The automation process proposed by Dickerson works something like this. First, an “overhead, pick-and-place robot” grabs the necessary pieces of fabric and places them at the head of a sewing machine. The appliance itself would be equipped with “machine vision” capabilities, specific enough to spot and track individual fabric threads. That intel would “provide fabric location information” to actuators that operate the sewing machine’s needle and thread, and “budgers” — motorized balls, underneath the sewing machine that latch onto the fabric via vacuum seal — that move the material to and fro.”  http://nextbigfuture.com/2012/06/fully-automatic-sewing-of-garments.html

If such a machine is invented much of the emerging economies of the developing world would be lost  because of their  very heavy reliance on producing clothes. And that is just one machine. Other basic manufacturing processes currently relying on cheap labour in places such as China and  India  could be and almost certainly will be invented.

What should be done?

Governments should be considering  the implications of any disruptive new technology and planning to deal with the problems they create, for example, by deciding now whether to ban or restrict the use of general purpose robots or to rejig the way a society produces goods and provides services, rather than wait for the reality of the new  technology to be upon us.

Dispiritingly,  governments  are, with the notable exceptions of GM foods and alleged man-made climate change,  ignoring the potential  dangers technology can  present.  In most instances the potential dangers are not even part of the  mainstream political discourse, not least because  there are no powerful and well funded  interest groups lobbying  about technologies such as robotics.

The irony is that GM foods and man-made climate change either present no proven danger (GM foods) or have no proven foundation (man-made climate change),  while dangers posed by technologies such as  general purpose robots and  3D printing contain  very real and obvious dangers

Why do GM foods and man-made climate change appeal to many while  fears over technologies such as robotics and 3D printing lack a  public voice? Probably because digital technology has become so much a part of our lives.   Most people simply think of the idea of robots and 3D printing as simply a development of what they already use and increasingly interact with on a quasi-human level.  Green issues are set apart from such everyday experience.   There is also probably an element of people thinking they will be treated as SF addicts at best and  unbalanced at worst if they start  raising fears about robots, 3D printers  and suchlike. They should put aside their fears of being embarrassed and think about the practical  implications of such technologies.

Book review – The Liberal Delusion

John Marsh, Arena Books, £12.99
Robert Henderson
“Is Western society based on a mistake?” asks John Marsh in his introduction. The possible mistake he considers is whether liberals have a disastrously wrong concept of what human beings are and what determines their behaviour  which leads them to favour policies that are radically out of kilter with the way human beings are equipped by their biology to live.
It is not that liberals do not believe in human nature as is often claimed. It can seem that they do  because they insist that nurture not nature is the entire font of human behaviour and consequently it is just a matter of creating the right social conditions to produce the type of people and society the liberal has as their ideal. But liberals balance this rationale on a belief that humans are naturally good, an idea which itself assumes innate qualities. Hence, they believe in an innate human nature but not one which bears any resemblance to reality.
The belief that disagreeable aspects of human nature do not exist and that all human beings are innately good is a product of the Enlightenment, where it took its most extreme and ridiculous  form in the concept of the ‘noble savage’. Marsh will have none of it. He debunks the idea thoroughly. He sees human beings as not naturally wholly good or bad but the product of natural selection working on the basic behaviours of humans. In this opinion he leans heavily on the Canadian-born evolutionary biologist Steven Pinker who in his The Blank Slate dismisses the idea of the noble savage with a robust
A thoroughly noble anything is an unlikely product of natural selection, because noble guys tend to finish last. Nice guys get eaten
If there is no rational reason why anyone should  think that human beings are innately good , why do so many, especially of amongst the elite, fall for the idea? Marsh attributes the phenomenon to the idea being emotionally attractive. There is plentiful evidence for this. One of the pleasures of the book is its first rate line in quotes, many of which are staggering in their naivety. He cites the grand  panjandrum of atheism and a fervent believer  in innate human goodness Richard Dawkins as writing in The God Delusion
I dearly want to believe we don’t need policing – whether by God or each other – in order to stop us behaving in a selfish or criminal manner
So much for Dawkins’ scientific rationality.

A religious realist – Baltasar Gracian, author of the Art of Worldly Wisdom
Or take the case of A. S. Neill, founder of  the famous or infamous (depending on your politics) Summerhill School, which did not require anything in particular from its pupils:
I cannot believe that evil is inborn or that there is original sin…. We set out to make a school where children were free to be themselves. In order to do this we had to renounce all discipline, all direction, all suggestion, all moral training, all religious instruction…We had a complete belief in the child as a good, not an evil being. For over forty years this belief in the goodness of the child has not wavered
That is a quasi-religious statement no different from a Catholic saying they believe in the Trinity.
In the first half of the book Marsh questions and finds wanting in varying degrees just about everything the modern liberal holds dear: that human nature is good and rational and formed by nurture alone, that freedom is the primary end sought by humans, that morality is a set of shackles rather than a safety catch on human behaviour, that science is an unalloyed good, that religion is no more than harmful fairy stories; that a county’s history and customs are at best unimportant and at worst a malevolent means of maintaining an undesirable status quo, that economics should be determined by the market, that universalism and multiculturalism are unquestionably desirable, equality is always beneficial, and the idea that the individual has primacy over the group.
Some of these liberal ‘goods’ are contradictory, for example, the clash between equality and the individual. To enforce equality inevitably means impinging on the wishes of individuals. Doubtless a liberal would argue that the individual should only have their wishes met insofar as they do not impinge upon the wishes of others. In practice that means a great deal of coercion to prevent individuals satisfying their own wishes, and often such coercion occurs where individuals have perfectly reasonable and moral wishes which cannot be satisfied at the same time. For example, two sets of parents may want to send their children to the same school where there is only room for one child.
There are also heavy question marks over whether modern liberals actually believe in individual freedom. The idea that human beings should and can be manipulated into behaving in a certain way by producing social circumstances which engender the desired behaviour is determinist. Where is the freedom if human beings are seen merely as automata responding to the stimuli of their circumstances? Nor is the ‘freedom’ liberals are supposed to espouse a general freedom. The individual in modern Britain may be free to drink what they can afford to buy, or be as sexually promiscuous as they choose, but they are not allowed any freedom of speech which attacks the core values of political correctness. Who would have thought even twenty years ago that English men and women would be appearing in the dock for saying things which went against the politically correct ethos, but that is precisely what is happening with increasing frequency.
It is also arguable that the modern liberal is interested not in individuals but groups. It is true that human ‘rights’ are exalted by liberals, but these are not really individual rights but communal ones. For example, a law which grants free expression or insists on due process is an individual right because it applies in principle to all. Conversely, if (for instance) ‘hate speech’ is made illegal, this is a de facto communal right given to particular groups, because in practice certain groups enjoy much greater protection than others, for the police and prosecuting authorities are not even-handed in their application of the law.
The second part of the book is devoted to the morally disreputable means by which liberals have propagated their beliefs. Marsh is unforgiving about this aspect of liberalism. It involves persistent dishonesty when dealing with evidence which contradicts their world view. The dishonesty consists of both calling black white and conscientiously ignoring and suppressing that which contradicts the liberal world view. In the case of Britain he singles out the BBC as being hopelessly biased towards the liberal left world view, with a particularly strong line in Anglophobia, something he illustrates by citing the BBC’s After Rome, a programme which painted Dark Ages Islam as a vibrant civilisation and Dark Ages England as primitive and barbaric (p152).
The author laments the fact that liberals have generally been silent on the abuses of Communist regimes whilst engaged in a never ending raking over of Nazi malevolence. He cites as a rare and most honourable leftist exception Malcolm Muggeridge, who exposed the Stalin-inspired Ukrainian famine and searingly described the all too many useful idiots of the British liberal left at the time:
Travelling with radiant optimism through a famished countryside, wandering in happy bands about squalid overcrowded towns, listening with unshaken faith to the fatuous patter of carefully indoctrinated guides, repeating the bogus statistics and mindless slogans – all chanting the praises of Stalin and the Dictatorship of the Proletariat (p138)
There is a further problem which Marsh spends a good deal of time examining. It is not clear exactly what constitutes the modern liberal. Many of the most enthusiastic enforcers of what we now call  political correctness do not call themselves liberals, but are members of the hard left or  representatives of ethnic and racial minorities who see political correctness not as a moral corrective but as an instrument to promote their individual and ethnic group advantage, often with the greatest cruelty. Nor is this simply a modern phenomenon for it has been happening since the 18th century.
Marsh patiently records atrocities in gruesome detail generated by those following secular and rationalistic systems of thought deriving from the ideas of Enlightenment, from the grotesque slaughter of the French Revolution to the insanities of various communist and fascist regimes in the 20th century. This is a truly depressing catalogue not merely of murder on a colossal scale but murder committed with atrocious cruelty. His tale of atrocity begins with the suppression of the Vendée rebellion by Republicans during the French Revolution, where men were castrated before death and women killed by explosives detonated within their vaginas, to the madness of Mao’s “Cultural Revolution” which rode on slogans such as “smash the old culture“ and the terrible promise of the Red  Guards that “We will be brutal”.
Marsh’s judgement of liberalism both in its beliefs and the practical consequences of its implementation verges on the despairing:
To sum up: in the past there were positive aspects to liberalism, but at its core lies a deeply flawed attempt to impose a romantic, but unrealistic, view of human nature on society. Because it is fundamentally untrue, lies, bullying and coercion are needed to impose it, and opponents must be silenced. Because its view of mankind is idealistic, its devotees think it must be true, and are strongly committed to it. It is congenial to people who are well-meaning and who have a naïve rose-tinted view of the world, which avoids dwelling too much on the ugly side of life, like the single mum in a tower block in Tottenham, trying to keep her children safe and worrying about gangs and knife crime. It is in denial of the fact that many aspects of life are worse today than in the past. Liberals cling to their views, ignoring the evidence of science, psychology, anthropology, history and social workers. It is a blind faith in a Utopian project , which blithely dismisses reality and regards its opponents as prejudiced. There is nothing to discuss because we are right. Sadly, for its devotees, truth will out in the end. The experiment was foredoomed from the start (p171)
Damning as that judgement is, I think Marsh is being rather too generous to liberals (especially the modern ones) when he credits them with being generally well-meaning. They are ideologues. That makes them dangerous, because any ideology removes personal choice in moral decision making as the mind becomes concentrated on fitting the ideology to circumstance rather than addressing each circumstance pragmatically. As Marsh points out, it also gives the individuals captured by the ideology an excuse to behave immorally in the enforcement of the ideology on the principle that ends justify means. That is particularly so with ideologies which are what might be called millenarian in their psychology, with a promised land at the end of the ideological road. Political correctness is of this type.
Once someone has accepted the validity of ends justifying means and they know or even suspect  that the means will cause harm, that removes any claim to being well intentioned because their final end good intentions are swallowed by the immoral means. Nor can any ideologue, liberals included, rationally have any confidence that a great upheaval of a society will result in their desired ideological ends. What history tells us is that tyranny or chaos are invariably the results of such attempts.
There is also a tremendous arrogance in assuming that it is possible to define what is desirable human behaviour and what is a good society. Liberals may imagine that what they purport to be the ultimate human goods – non-discrimination, equality and the primacy of any individual are objectively what they claim – but in reality they are both no more than value judgements and highly questionable in terms of their outcomes. Modern liberals, or at least the true believers, are really just another set of self-serving egotists who think they know how others should live.
There is a looming leviathan throughout the book that is largely ignored, namely mass immigration and its consequences. Marsh to his credit does mention immigration as a problem, both in terms of weakening British identity and causing resentment amongst the native white population, but it does not feature in more than a peripheral way. Marsh never really asks the question “how much of the change in general British behaviour and the nature of British society in the past fifty years is due to mass immigration?” The answer is arguably a great deal, because multiculturalism and ‘anti-racism’ have been used as levers to promote the ‘anti-discrimination’ and ‘equality’ agendas across the board.
In the end Marsh stumbles in his task of debunking modern liberalism, because he is reluctant to face the full implications of what he is saying. In his introduction he writes,
So is this book a straight-forward attack on liberalism? No. It is not as simple as that. There are some areas in which I believe liberals are right. I acknowledge that some liberalism is necessary and beneficial. Few would want to go back to the restrictions of the Victorian era or live under a despot. There was also a need to free us from a negative attitude towards sex. Liberals are right to be concerned about inequality and to fight for social justice. There still remain great inequalities and their campaign for greater fairness deserves support. I welcome the undermining of the class system, the greater opportunities open to women and the improved treatment of racial and sexual minorities – the decriminalisation of homosexuality
He cannot quite bring himself to go all the way and see modern liberalism for what it is, a pernicious system increasingly aimed at suppressing the resentment and anger of the native British population as the consequences of mass immigration become ever more obvious and pressing. Clearly he agrees with much of the central politically correct agenda, but it is precisely that agenda which has created the present situation and it is difficult to see how such an ideology could ever have resulted in any other outcome once it became the guiding ideology of the elite – because the ends of political correctness run directly against human nature and can only be enforced.
Marsh’s sympathy with political correctness leads him wittingly or unwittingly to risk having his  argument distorted by concentrating not on the whole but a part of British society and treating that part as representative of Britain. Take the question of liberalism undermining the poor by making them dependent on the state and denying them moral guidance at home and in school. Marsh uses an interview with the youth worker Shaun Bailey (chapter 11) who works in a poor area of  London. The problem is that Bailey is black and this colours his interpretation of what is happening. He looks at the experience of blacks and treats that experience as representative of the poor generally, which it is not. For example, poor white Britons may have a greater incidence of one-parent homes and fathers deserting mothers now than previously, but the incidence of these behaviours amongst poor whites is much lower than it is amongst poor blacks, whether British born or  immigrants. Yet Bailey’s views are represented as being generally applicable to British society.
Despite these caveats, I strongly urge people to read the book. The Liberal Delusion is important because it succinctly performs the task of pointing out that the liberal emperor has no clothes or at least very tattered and insufficient ones. That is something which is sorely needed. The book’s value is enhanced by being  written in a lively and easily accessible style. Just read it with an understanding of the limitations imposed by Marsh’s residual, almost subliminal, hankering after the core values of political correctness.
First published in The Quarterly Review

http://www.quarterly-review.org/?p=1790

See also The Liberal Bigot

The EU: Making the going good for getting Out

ROBERT HENDERSON  suggests some ways in which the No side can maximize its chances of winning the referendum on EU membership

Amidst all the confusion and excitement of bringing about a referendum on Britain’s membership of the EU, it is easy to forget that there are considerable risks associated with the vote. The government will almost certainly campaign to stay in, as will the Labour Party, and many institutions, lobby groups, media groups, foreign governments, and influential individuals. Public opinion, although hardening towards leaving, is fickle and cannot be relied upon. A decision to stay in would probably destroy the UKIP, and would also seriously undermine Conservative Eurosceptics. It is therefore essential that we should think about the likely shape of the campaign, and how we who believe in leaving can improve the odds.

The general strategy

A) How to leave

Article 50 of the Lisbon Treaty states

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49. (http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-6-final-provisions/137-article-50.html).

It is strongly implied in in  para 3 of  the Article that unilateral withdrawal is possible :

“ The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2”.

However, the clause does not explicitly  give the right of unilateral secession and could be interpreted as merely referring to how any agreement might be scheduled to take effect. The other EU members could adopt this interpretation to thwart the UK leaving without declaring UDI.

The Vienna Convention on the Law of Treaties cites two legitimate  instances where a party wants to withdraw unilaterally from a treaty which does not make any provision for withdrawal : (1) where all parties recognise an informal right to do so or  (2) the situation has changed so substantially  that the obligations of a signatory are radically different from that which was originally agreed to.   The informal right patently does not apply in the case of the EU. As for radical changes to the obligations of a signatory, that would be difficult to sustain. It is true that the organisation (the EU) the UK belongs to now is radically different from that which they originally joined in 1973 (the EEC), but the  UK has signed  new treaties to agree to the new circumstances as they have arisen.  Hence, there would be no radically changed obligations which had not been taken on formally by the UK.

The only precedent  of any sort for withdrawal is Greenland’s  secession  in 1985 from the European Economic Community (EEC).  The was facilitated by the Greenland Treaty. However, it is not  an obviously relevant precedent because Greenlanders retain Danish citizenship for  Greenland has home rule not full independence from Denmark. They are consequently full  EU citizens.  Because Greenland is also one of the  Overseas Countries and Territories of the EU it  is also subject to some EU law and regulations, mainly those relating to the Single Market. .

Even if it is accepted by the other EU members  that there is a unilateral right of secession,  the fact that it  could only  take place legally after two years would give the remainder  of the EU the opportunity to run the UK ragged before the UK left.

As for getting an agreement which would allow the UK to generally re-establish its sovereignty, especially over the control of its borders, this is most improbable.  A  Qualified Majority in the European Council  is required  and even if such a majority is obtained the European Parliament can block the secession. The potential for delay and blackmail by the EU of the UK is considerable.

In any event it is likely is that the EU would  drive a bargain which is greatly to  the UK’s disadvantage because the  Eurofederalists would be terrified of creating a precedent for any other EU member which might wish to radically change their relationship with the EU.  That would make them demand conditions of the UK which were so unappealing it would deter other member states from following suit. There is also  the danger that  the Europhile UK political elite  would take the opportunity to agree to disadvantageous terms for the UK simply to keep the UK attached to the EU in the manner that Norway and Switzerland are attached. The treaty arrangements of  Norway and Switzerland  are routinely portrayed  by supposed  Eurosceptics  as purely trade relationships. They are not. Both countries are firmly within the EU straitjacket. Indeed, the Europhile BBC  ran a story in 2012 entitled Non-EU Norway ‘almost as integrated in union as UK ‘ (http://www.bbc.co.uk/news/world-europe-16594370). As for Switzerland, a glance at their treaty arrangements will show their close EU embrace http://www.europa.admin.ch/themen/00500/index.html?lang=en.  Most importantly they have no control of immigration from the EU . If the UK signed up to the Single Market after formally leaving the EU  we should be in the same boat.

The OUT camp must make it clear that  it would be both damaging and unnecessary for the UK to abide treaty requirement. Even if the UK did not try to sign up to  the Single Market, it would allow the EU to inflict considerable damage on the UK both during the period prior to formally  leaving and afterwards if  the price of leaving with the EU’s agreement was  for  UK to sign up to various obligations – for example, to continue paying a large annual sum to the EU for ten years.

There is also the danger that the stay-in camp could use Article 50 to argue that whether the British people want to be in or out, the cost of leaving would be too heavy because of this treaty requirement.

The Gordian knot of Article 50 can be cut simply by passing an Act of Parliament repealing all the treaties that refer to the EU from the Treaty of Rome onwards. No major UK party could  object to this because all three have, at one time or another,  declared that Parliament remains supreme and can repudiate anything the EU does if it so chooses.

If the stay-in camp argue that would be illegal because of the treaty obligation, the OUT camp should simply emphasise (1) that international law is no law because there is no means of enforcing it within its jurisdiction if a state rejects it and (2) that treaties which do not allow for contracting parties to simply withdraw are profoundly undemocratic because they bind future governments.

The OUT camp should press the major political parties to commit themselves to ignoring Article 50. If a party refuses that can be used against them because it will make them look suspicious.

Before the vote

B) The parties’ plans of action if there is a vote to leave

It is important that all the parties likely to have seats in the Commons after the next election are publicly and relentlessly pressed to give at least a broad outline of what action they would adopt in the event of a vote to leave. Left with a free hand there is a serious danger that whatever British  government is  in charge after a vote to leave would attempt to bind the UK back into the EU by stealth by signing the UK up to agreements such as those the EU has with Norway and Switzerland which mean that they have to (1) pay a fee to the EU annually, (2) adopt the social legislation which comes from the EU and (3) most importantly agree to the four “freedoms” of the EU – the free movement of goods, services, capital and  labour throughout not merely the EU but the wider European Economic Area (EEA).

It is probable that the Westminster parties will all resist this, but that would present them with two problems. First, a refusal to do so would make them seem untrustworthy; second, if one party laid out their position but the others did not, that would potentially give the party which did say what it would do a considerable advantage over the others which did not. If no party puts its plans before the public before the referendum, there should be demands  from those who want the UK to leave the EU that  any new treaties with the EU must be put to a referendum and, if they are rejected, the UK will simply trade with the EU under the WTO rules.

C) Repudiate re-negotiation before the referendum

Supporting the negotiation of a new relationship between the UK and the EU before a referendum is mistaken, because it would seem to many to be giving tacit approval for renegotiation and legitimize the possibility of the UK remaining within the EU. It is also rash, because  the likelihood  of the EU giving nothing is very small. Indeed, they might well give something substantial, because the UK leaving the EU would be a very great blow to the organisation. The UK is the country with the second largest population within the EU with, depending on how it is measured, the second or third largest  economy and the country which pays the second largest contribution to the EU budget. For the EU to lose the UK would not only be a blow in itself, it would also create a very strong precedent for every other EU state, especially the largest ones. If  the UK left and prospered, the temptation would be for other EU states to leave.

If the EU offered  a big carrot such as the abolition of benefits  for migrants to the UK  from the rest of the EU until they had lived in Britain for ten years, that could  seriously  undermine the resolve of those wanting the UK to leave the EU because it would dovetail with British fears of mass immigration from the EU and the mainstream media representation of the immigration  problem as being essentially a welfare problem. The Europhiles would then be able to represent the immigration threat as no longer a threat as they bleated their  mantra “the only immigrants will be those who are working and paying their taxes”.  That would be difficult for any mainstream British politician or party to counter because they have all be peddling the line of welcoming “hard working immigrants” for years.

But even if negotiation produced nothing of substance, as happened with Harold Wilson’s “renegotiation” of 1975, it would be a mistake to imagine that it would not influence the referendum result. The electorate is divided between the resolute come outs, the resolute stay-ins and the wavering middle. A claim by the stay-in campaigners that something had been conceded by the EU, however  insignificant, would provide the waverers with an excuse to vote to stay in because they could convince themselves they were voting for change. If the EU were to offer nothing, waverers might see this as evidence that the EU was too powerful to oppose.

Those who want the UK to leave should unambiguously put the case for no renegotiation. Dismiss anything Cameron (or any other PM) brings back from the EU by way of altered terms as being irrelevant because the EU has a long record of agreeing things with  the UK and then finding ways of sabotaging what was agreed. In addition, a future British government may agree to alter any terms offered at the time of the referendum. The classic example of this changing of agreed terms happening in the past is Tony Blair’s giving up of a substantial amount of the Thatcher rebate in return for a promised reform of the Common Agricultural Policy (CAP), a promise which was never met. That episode produced my all-time favourite amongst Blair’s penchant for lying. Two days before he went to the EU meeting at which he  gave away a substantial part of the rebate he declared during Prime Minister’s Questions that the rebate was “non-negotiable – period”.

It is difficult to envisage any British prime minister not trying to  negotiate with the EU before a referendum, but it might just  happen if whoever is in power when the referendum is announced were to be told privately by the  major EU players that nothing will be given and the prime minister of the day concludes it would be best to pretend that a decision had been made not to negotiate rather than risk the humiliation of getting nothing, perhaps not even a pretence of negotiation before nothing is given. Why would the EU do this? They might calculate that it would be a gamble worth taking to send a British PM away with nothing, whilst hoping the referendum vote would be to stay in because then the power of the UK to resist further integration would be shot.

If the EU offers nothing, the OUT camp should welcome the fact and stress to the public that if the referendum is to stay in,  the EU could force any federalist measure through because not only would any British government be much weakened in its opposition to more federalism, the UK political class as a whole would more than willing to go along with it because of their ideological commitment to the EU.

D) After the vote

Ideally the government which deals with the EU after a vote to leave will have committed themselves to a plan of action before the referendum vote.  However, as described above, it is quite possible that this will not happen because  the UK’s overwhelmingly Europhile political class will try to re-entangle the UK with the EU. To prevent them doing so there should be a concerted campaign after the vote to ensure that the British public understands what is being done on their behalf with a demand for a further referendum to agree any new treaty.

The terms of the debate

It is essential that the Europhiles are not allowed to make the debate revolve around economics. If they do it will effectively stifle meaningful debate. As anyone who has ever tried to present economic ideas to an audience of the general public will know it is a soul-destroying experience. Take the question of how much of UK trade is with the EU. The debate will begin with the stay-in camp saying something like 45% of UK trade is with the EU. Those wanting to leave the EU will respond by saying it is probably less than 40% because of the Rotterdam/Antwerp effect. They will then be forced to explain what the Rotterdam/Amsterdam effect is. That is the point where the general public’s concentration is lost and the debate ends up proving nothing to most of the audience.

But although nothing is proved to the general audience by detailed economic argument, the audience will remember  certain phrases which have considerable  traction. In amongst the serious debating on the issue of trade there will be phrases such as three million jobs in Britain rely on the EU and dire threats about how the EU will simply not buy British goods and services any more. This is nonsense, but fear is not rational, and many of those who vote will enter the voting chamber with fear of losing their jobs  in their heads regardless of what the OUT camp says if the debate is predominantly about economics. Shift the debate away from economics and the fear-inducing phrases will be heard less often.

National sovereignty

How should those wanting to leave the EU shift the focus of debate? They should put the matter which is really at the core of the UK’s  relationship with the EU  – national sovereignty – at the front of the  OUT camp’s referendum campaign. Campaign under a slogan such as Are we to be masters in our own house?

Making national sovereignty the primary campaigning issue has the great advantage of  it being something that anyone can understand because it is both a simple concept and speaks directly to the natural tribal instincts of  human beings.   Being a simple concept readily  and naturally understood,   it is a far more potent debating tool than arguments attempting to refute the economic  arguments  beloved of the stay-in camp.  The fact that the natural tribal instincts have been suppressed for so long in the UK will increase its potency because most people will feel a sense of release when it begins to be catered for in public debate.

The appeal to national sovereignty has a further advantage. Those who support the EU are unused to debating on that ground. That is because uncritical support for the EU has long been the position of both the British mainstream political class as a class and of the mass media. That has meant that the contrary voice – that which wishes Britain to be independent – has been largely unheard in public debate for thirty years or more. Where it has been heard, the response of the pro-EU majority has not been rational argument but abuse, ranging from patronising dismissal of a wish for sovereignty as an outmoded nationalism to accusations that national sovereignty amounts to xenophobia or even racism. These tactics – of excluding those who want to leave the EU from public debate and abuse substituted for argument – will no longer be available to the  pro EU lobby.

Immigration

The most threatening and energising subject relating to the EU for the general public is immigration. The public are right to identify this as the most important aspect of our membership of the EU because immigration touches every important part of British life: jobs, housing, education, welfare, healthcare, transport, free expression  and crime besides radically changing the nature of parts of  the UK which now have large populations of immigrants and their descendants.

The public rhetoric of mainstream politicians and the media is changing fast as they begin to realise both what an electoral liability a de facto open door immigration policy is, as the effects of mass immigration become ever more glaring. The argument is shifting from the economic to the cultural.  For example, here is the Daily Telegraph in a leader of 25 March:

“The fact is that, for many in Britain (especially those outside the middle classes), it is not just a matter of jobs being taken or public services being stretched, but of changes in the very character of communities. Those changes may not necessarily be for the worse: as the Prime Minister says, Britain’s culture has long been enriched by the contributions of new arrivals. But as long as ministers treat immigration as a matter of profit and loss, rather than the cause of often wrenching social change, they will never be able fully to address the grievances it causes.” (http://www.telegraph.co.uk/comment/telegraph-view/9952717/Immigration-and-the-limits-of-the-possible.html)

This new frankness in public debate means that the OUT camp can use the immigration argument freely, provided they keep the language within the confines of formal politeness. The subject will naturally dovetail with the emphasis on national sovereignty because the most important aspect of sovereignty is the ability to control the borders of the territory of a state.  Judged by their increasing willingness to talk publicly about immigration, it is probable that the mainstream UK parties will be content to go along with  ever more frank discussion about immigration.

The economic argument must be kept simple

It will not be possible to avoid  economic arguments entirely. The OUT camp should concentrate on repeating these two facts:

The disadvantageous balance of payments deficit the UK has with the EU

The amount the UK pays to the EU

Those are the most solid economic figures relating to the EU. There is some fuzziness around the edges of the balance of payments deficit because of the question of where all the imports end up (whether in the EU or outside the EU through re-exporting), while the amount the EU receives is solid but it has to be broken down into the money which returns to the UK and the amount retained by Brussels. Nonetheless these are the most certain  figures and the least susceptible to obfuscation by the stay-in side.

The best way of presenting the money paid to the EU is simply to say that outside the EU we can decide how all of it is spent in this country and to illustrate what the money saved by not paying it to the EU would pay for.

It will also be necessary to address the question of protectionist measures the EU might take against the UK if the  vote was to leave. It is improbable that the EU would place heavy protectionist barriers on UK exports because:

1. The massive balance of payment deficit between the UK and the rest of the EU, which is massively in the EU’s favour.

2.  Although the rest of the EU dwarfs the UK economy, much UK trade with the EU is heavily concentrated in certain regions of the EU. The effect of protectionist barriers would  bear very heavily on these places.

3. There are strategically and economically important joint projects of which the UK is a major part, like Airbus and the Joint-Strike Fighter.

4. The Republic of Ireland would be a massive bargaining chip for  the UK to play. If the UK left and the EU rump attempted to impose sanctions against Britain this would cripple the RoI because so much of their trade is with the UK. The EU would be forced to subsidise the RoI massively if protectionist barriers against the UK were imposed. The EU could not exempt the RoI from the sanctions because that would leave the EU open to British exports being funnelled through the Republic.

5. The EU would be bound by the World Trade Organisation’s restrictions on protectionist measures.

The economic issues which are not worth pursuing in detail are those relating to how much the EU costs Britain in terms of EU-inspired legislation. It may well be that these load billions a year of extra costs  onto the UK  but they are not certain or easily evaluated costs, not least because we cannot in the nature of things know what burdens an independent UK would impose off its own bat.

Getting into detailed discussions about such things will simply play into the hands of  the stay-in camp because it will eat up the time and space available to those promoting the OUT cause.

Other issues

Apart from the economic questions, the stay-in camp will use these reasons for staying in:

That the EU has prevented war in Western Europe since 1945. This can be simply refuted by pointing out that the EU was not formed until  twelve years after WW2; that until 1973 the EU consisted of only six countries, three of them small,  and  of only nine countries until the 1980s. Consequently it would be reasonable to look for other reasons for  the lack of war. The two causes of the peace in Western Europe have been the NATO alliance and the invention of nuclear weapons which make the price of war extraordinarily high.

That nation states such as the UK are too small to carry any real diplomatic weight in modern world. That begs the question of whether it is an advantageous thing to carry such weight – it can get a country into disastrous foreign entanglements such as Iraq and Afghanistan – but even assuming it is advantageous, many much smaller countries than the UK survive very nicely, making their own bilateral agreements with other states large and small. It is also worth remembering that the UK has such levers as a permanent seat on the UN Security  Council (which allows the UK to veto any proposed move by the UN) and considerable influence in institutions such as the IMF and World Bank.

ROBERT HENDERSON is a London-based freelance writer

 

Originally published in the Quarterly Review

Published in http://www.quarterly-review.org/?p=1737

Margaret Thatcher and the cult of personality

Robert Henderson

Two Cults

Margaret Thatcher was the subject of a cult of personality. This was not the result of calculated  propaganda, but simply the creation of her extraordinary personality. Because the cult of personality developed not in a totalitarian state but a country where public opposition was possible, there were two cults of personality attached to her in a relationship which mimicked the matter/antimatter duality. These were the Thatcherite religious believers fulfilling the role of matter and the Thatcher-hating Left  acting as the antimatter.

Both the matter and the antimatter Thatcher cults were  potent.  The religious believers  bowed down before the great god MARKET (and Thatcher was his prophet) and, when things  went wrong,  did what all religious believers do until they lose their faith, denied reality by simply pretending something had not happened or by giving a calamity some  absurd spin to ”prove” the god had not failed.

For the Thatcher-hating Left she was the personification of the Devil and consequently credited with all manner of evil,  but, as is the way with personifications of the Devil, never portrayed as anything but powerful, a being possessed of a political juju (doubtless ensconced in her handbag) which could wreak any degree of havoc  with all that the Left held dear is if she so chose.   Like all those who believe in evil spirits the Thatcher-hating Left ascribed every act of ill fortune to her.

The attitude of both bands of cult followers was essentially superstitious, attributing powers to the woman which she did not, and often could not,  have.  The religious Thatcherites imagined she could  speak the spells which would miraculously convert Britain from a  country making silly old fashioned things such as steel, ships and cars and mining coal to a country stuffed to the gunnels with entrepreneurs creating new non-unionised service industries; the Left saw her as a witch practising black magic to contaminate and transmogrify the world they knew.

Because the Thatcherite religious believers  and her leftist haters  could not and still cannot see past the woman’s   gigantic political personality,  they made and continue to make the same mistake, namely, seeing the two cult figures as the reality while ignoring  her actual policies and their outcomes.

The reality of Thatcher

The reality of Thatcher is that objectively she achieved little if any of her wishes. It is a bitter irony for the woman (and Thatcherites generally)  that her policies were of a nature which  undermined the  ends  she espoused.  Perhaps the prime example is Thatcher’s  avowed wish to see a strong and wealthy Britain  whilst creating through her  commitment to laissez faire economics the very circumstances that would weaken the country. Under her economic regimen and its lingering aftermath ever since Britain  has become ever less self-sufficient in strategically important economic activity such as the production of  food and energy  and vast swathes of British business were  either bought up by foreigners or ceased to operate from Britain because of offshoring and the absence of government action to protect our own economy.   She simply did not understand that you could not have laissez  faire in both the domestic and international economic sphere and have a strong nation state.   Had Thatcher  known any economic history she would have realised that, but even without such knowledge  common prudence should have told her that a country which is dependent on others for necessary goods and services is a weak country.  Moreover, one of her claimed tutelary heroes Adam Smith readily understood there are things which are either strategically important such as armaments or social goods which are  never going to be supplied universally by private enterprise such as roads.  Thatcher never gave any indication of realising that Smith was not the unrelenting free marketer of her imagination.

Thatcher’s  failures in making policy to  achieve her ends were legion. She  destroyed much of British heavy industry in the belief that those made unemployed would rapidly be re-employed in private sector jobs. The new jobs did not materialise and she was reduced to presiding over massive and long lasting unemployment  which she funded with North Sea oil and gas tax revenue and the receipts from privatisation, whilst fiddling the unemployment figures shamelessly. She sold off state owned  services  (which belonged to the community as a whole not to the government)  in the belief that service would  be improved . It was  not. Instead vital services such as the railways and the provision of energy and water became ever more expensive whilst providing poorer service and less employment. She introduced so-called private business methods into the NHS and higher education in the belief that they would become more efficient. The result was massive increases in  bureaucracy and an ever climbing  cost of  both the  NHS and higher education and a substitution of the pursuit of  money for the public service ethos because money was attached to individual patients and students. She introduced the Community Charge or “Poll Tax” in the belief that it would be fairer than the old domestic rates. The result was widespread unfairness because it took no account of an individual’s means  and  provoked the nearest thing to a national movement dedicated to the non-payment of taxes known in modern times.  She raged against  EU interference in British affairs but signed up Britain to the Single European Act (SEA)  in the belief that it would create a genuine single market within the EEC.  It  did not create such a market and merely presented the EEC with an open goal for ever more audacious sovereignty grabs.  A supposed opponent of further mass immigration, her signing of the SEA also opened the door to free movement within the EU, a situation worsened by her strategy of dramatically widening the EEC.  She signed Britain up to the  She embraced “Care in the Community” for the mentally ill or disabled on the grounds that it was more humane than keeping  such people in long-stay institutions. The result was thousands of people left to largely fend for themselves in the outside world who were quite incapable of doing so. She sold off great swathes of social housing (which belonged to the community as a whole not to government) to tenants in the belief that this would result in a “property owning democracy” whilst more or less ending the building of new  social housing.  The eventual result was the growing housing emergency we have today. She instigated the disastrous “light touch”  regulation of the financial services  industry by abolishing credit controls and  failing to meaningfully regulate the  industry meaningfully after “Big Bang”  in 1986  which  effectively de-regulated the London Stock Exchange to bring in a brave new world of free trading (http://www.telegraph.co.uk/finance/financialcrisis/8850654/Was-the-Big-Bang-good-for-the-City-of-London-and-Britain.html)  with the dire results with which we are now living.

Even in the few areas where she was ultimately successful such as the Falkland’s War she was at best negligent in ignoring warnings from the Foreign Office of a growing threat to the Falklands  in the months leading up to the invasion and even after the expeditionary force had been dispatched  she agreed to a US organised plan which would have not offered the Islanders either self determination of or any meaningful security (http://www.telegraph.co.uk/news/politics/margaret-thatcher/10008116/Margaret-Thatcher-how-she-took-on-the-men-and-won.html).

There were also acts of omission and collusion with policies with which she supposedly fundamentally  disagreed.  Most importantly, Thatcher failed utterly to carry her strong views against further mass immigration into her period in office. Not only that but, as already mentioned,  she made things much worse on that front by signing up to the Single European Act. She agreed to the institutionalisation of political correctness in public life, especially in the Civil Service, schools and universities. In addition, she allowed the “progressive” educational establishment to destroy a first rate  school examination system  by swopping the certificate of Secondary Education (CSE) and O(rdinary) Levels  for the dangerous absurdity of the General Certificate of Education (GCSE), an exam   supposedly for all 16 year olds but which was in reality two exams masquerading as one.  Despite the fact that Tory support rested heavily on the countryside  she allowed the de-regulation of rural bus services to occur  which reduced them so  severely that to live in countryside meant owning and driving a vehicle or at least having access to someone who did.  To make matter worse, this was done in tandem with a wilful neglect of the then nationalised railways.

The protests after her death were unsurprising

Just based on her economic disasters the uproar surrounding her death is unsurprising.  In the space of a few years she raised the unemployment  pay claimant count from 1.4 million when she took office in 1979 to 3.2 million by 1986 (http://www.economicshelp.org/macroeconomics/unemployment/measuring_unemployment.html) That bald figure is startling enough but the reality  is ten times worse. She  must have known her policies would result in mass unemployment,  at least in the short term, when she removed the financial support of taxpayers from nationalised industries or sold them off in the belief that private business would be able to do the job more efficiently with  much smaller workforces.   Further, as these industries were concentrated in areas where they were by far the dominant employer she should  have realised that structural unemployment would be created  in many parts of the country.  To imagine, as she did, that new jobs would rapidly sprout in the areas showed  a  shocking lack of understanding of economic history which has no example of such a thing happening on the scale required in 1980s Britain.

What is certain is the fact that she had no doubt about the destructive possibilities of laissez faire economics, viz:

“Adam Smith’s ‘invisible hand’ is not above sudden, disturbing, movements. Since its inception, capitalism has known slumps and recessions, bubble and froth; no one has yet dis-invented the business cycle, and probably no one will; and what Schumpeter famously called the ‘gales of creative destruction’ still roar mightily from time to time. To lament these things is ultimately to lament the bracing blast of freedom itself.” — Margaret Thatcher, Statecraft P. 462

A politician of conviction?

The idea that merely having convictions is praiseworthy is a rum one. Hitler, Stalin and Mao had convictions. But even  if the  quality of a person’s convictions is ignored, this is one of the most mystifying of myths attached to Thatcher.  The reality was she frequently changed her position on the most important issues she faced or adopted methods which went against her avowed policies when she had created a mess, most notably with the massive rise in unemployment resulting from her slash and burn approach to the British economy which greatly  increased the benefits bill for many years and left people unemployed for years, in many cases for decades.

The most significant publicly  admitted changes of policy  were on immigration, the Europe and global warming.  Before the 1979 election she had spoken of the need to control immigration  because the country was in danger of being “swamped”:

‘If we went on as we are then by the end of the century there would be four million people of the new Commonwealth or Pakistan here. Now, that is an awful lot and I think it means that people are really rather afraid that this country might be rather swamped by people with a different culture.’

She went on to say, ‘The British character has done so much for democracy, for law and done so much throughout the world that if there is any fear that it might be swamped people are going to react and be rather hostile to those coming in.’

 ‘If you want good race relations, you have got to allay peoples’ fears on numbers. […] We do have to hold out the clear prospect of an end to immigration…’ (http://www.runnymedetrust.org/histories/race-equality/59/margaret-thatcher-claims-britons-fear-being-swamped.html)

Once in office she did nothing despite still feeling strongly about the subject in private  (http://www.telegraph.co.uk/news/politics/margaret-thatcher/6906503/Margaret-Thatcher-complained-about-Asian-immigration-to-Britain.html).

On Europe she went through the following metamorphosis:

-          1975 she campaigned and voted for Britain to remain within the European Economic Community (EEC – the EU was only formed  by  the Maastricht Treaty in 1993).

-          By 1980 she was convinced that the EEC was not  acting in Britain interests.

-          By 1986 she had  signed the Single European Act giving the EEC immense powers to interfere  with Britain’s sovereignty.

-          In the late 1980s she adopted the policy of enlarging the EEC which meant that a vast new swathe of workers from poor countries would be allowed free movement within the  EEC.  The effects of this also allowed the federalists to press for things such as Qualified Majority Voting on the grounds that the EEC/EU had become too unwieldy to operate under the original  rules and to generally press forward with the creation of a United States of Europe.

-          In 1990  she took the UK into the Exchange Rate Mechanism (ERM)  despite being opposed to a single currency to which the ERM was a stepping stone with the pound effectively shadowing the Deutschmark.

The idea that Thatcher only realised what the EEC was after taking office in 1979 is simple nonsense. Thatcher’s speech to the  Conservative Group for Europe at the start of the Wilson referendum on the EEC clearly shows her viewing the EEC as far more than a  simple free trading area, viz:

That vision of Europe took a leap into reality on the 1st of January 1972 when, [ Edward Heath] Mr. Chairman, due to your endeavours, enthusiasm and dedication Britain joined the European Community.

 * The Community gives us peace and security in a free society, a peace and security denied to the past two generations.

 * The Community gives us access to secure sources of food supplies. This is vital to us, a country which has to import half of what we need.

* The Community does more trade and gives more aid than any group in the world.

* The Community gives us the opportunity to represent the Commonwealth in Europe. The Commonwealth want us to stay in and has said so. The Community wants us.

 Conservatives must give a clear lead and play a vigorous part in the campaign to keep Britain in Europe to honour the treaties which you, sir, signed in Britain’s name.

 We must do this, even though we dislike referenda. We must support the [ Harold Wilson] Prime Minister in this, even though we fight the Government on other issues.

 We must play our full part in ensuring that Conservative supporters say “Yes to Europe”. (http://www.margaretthatcher.org/document/102675).

In any case, the Treaty of Rome left no room to believe it was merely a free trade organisation.  No one could read that and be in any doubt  that the intention was to create a United State of Europe. Thatcher, the supposed obsessive  who was a stickler  mastering a subject,   should have read it before the referendum.

As for global warming, she started the ball rolling whilst in office and then reversed her position in her autobiography published in 2003. Here she is speaking to the  UN general assembly, in November 1989:

“What we are now doing to the world … is new in the experience of the Earth. It is mankind and his activities that are changing the environment of our planet in damaging and dangerous ways. The result is that change in future is likely to be more fundamental and more widespread than anything we have known hitherto. Change to the sea around us, change to the atmosphere above, leading in turn to change in the world’s climate, which could alter the way we live in the most fundamental way of all.

“The environmental challenge that confronts the whole world demands an equivalent response from the whole world. Every country will be affected and no one can opt out. Those countries who are industrialised must contribute more to help those who are not.” (http://www.guardian.co.uk/environment/blog/2013/apr/09/margaret-thatcher-green-hero)

By  the time she had published her political work Statecraft in 2003 she was thinking along these lines:

“The doomsters’ favourite subject today is climate change. This has a number of attractions for them. First, the science is extremely obscure so they cannot easily be proved wrong. Second, we all have ideas about the weather: traditionally, the English on first acquaintance talk of little else.

“Third, since clearly no plan to alter climate could be considered on anything but a global scale, it provides a marvellous excuse for worldwide, supra-national socialism. All this suggests a degree of calculation. Yet perhaps that is to miss half the point. Rather, as it was said of Hamlet that there was method in his madness, so one feels that in the case of some of the gloomier alarmists there is a large amount of madness in their method.” (http://www.masterresource.org/2013/04/thatcher-alarmist-to-skeptic/).

There were other issues where her public position was at odds with her actions, for example, the troubles in Northern Ireland and the rule of law. Thatcher claimed that there would never be a surrender to  IRA terrorism.  Yet after she narrowly escaped death in the Brighton Grand Hotel bombing in 1984 (12 October)  the Anglo-Irish agreement was signed little over a year later in November 1985 giving the Republic of Ireland government  a say in what happened in Northern Ireland and committing the British Government to accepting the principle of a united Ireland if a majority were in favour. (http://news.bbc.co.uk/onthisday/hi/dates/stories/november/15/newsid_2539000/2539849.stm). There was no obvious reason for such a change of heart beyond the fear generated in Thatcher by the bombing of the Grand Hotel.

As for the rule of law, far from respecting it as she claimed, she laid the basis for the ever increasing authoritarianism of the British state by permitting the police to act unlawfully during the miners’ strike by stopping miners and their supporters from travelling across the country and turning a blind eye to any police excesses as they clashed with the miners and their supporters.

A politician of conviction? Only if you define  someone as such who runs from one position to another while vigorously embracing each  successive position regardless of its  contradiction of a previous  advocated policy or set of ideas.

Nor was she someone who would take responsibility for her actions. When she found her policies were a disaster she either claimed she had been badly advised or cheated (for example, the Single Market, global warming) or attempted to ignore the mess she had created  (for example, enduring mass employment and ) by misrepresenting it, or in the case of unemployment, using North Sea oil  tax revenues,  the privatisation receipts and blatant manipulation of the unemployment statistics to paper over the unemployment cracks.

Why did Thatcher get things so horribly wrong? 

Why did Thatcher get things so horribly wrong?  Her behaviour  strongly suggested that she was seriously lacking  psychological and sociological insight. This meant she constantly made horrendous mistakes such as trusting the EU over the single market and imagining in truly infantile fashion that millions of jobs shed from heavy industry and coal mining would be rapidly replaced by “modern” jobs in the service and light industry sectors.  Her record in choosing people to support or employ was also dismal.

Far from being a free thinker her cast of mind  made her the ready captive of an ideology:

“…as Leader of the Opposition MT once cut short a presentation by a leftish member of the Conservative Research Department by fetching out a copy of The Constitution of Liberty from her bag and slamming it down on the table, declaring “this is what we believe”. (http://www.margaretthatcher.org/archive/Hayek.asp).

It is dangerous to trust anyone who is  susceptible to ideological capture for the simple reason that all ideologies, whether sacred or profane, are inadequate descriptions of and guides to reality.    This means that ideologues constantly have to try to fit reality within the ideology rather than having  reality driving their choices.  Those which include economics are particularly dangerous because their reach is so vast.

Ideologies are the prime example of Richard Dawkins’ memes, mental viruses which capture the individual and direct their thought and behaviour.  Those who are captured by them by them give up their mental autonomy.  That speaks either of a character trait such as that of requiring a source of authority for choices or a  weakness of intellect which seeks ideological  algorithms  developed by others to answer political  questions because the person’s capacity to answer the questions by rational pragmatic examination based on their own knowledge and intelligence  is inadequate.

How good was  Thatcher’s mind? She  is frequently  represented by her adherents as ferociously intelligent.  This view  will not stand up to examination.  She read chemistry at Oxford but only achieved a second class honours degree (http://womenshistory.about.com/od/thatchermargaret/a/Margaret-Thatcher.htm).  Oxford at the time did not divide the second class degree into  upper and lower second classes  and had a fourth class honours division instead.  The old Oxford second  is generally taken to be the rough equivalent of an upper second.  That raises questions over her intellect.  Chemistry at degree level in the 1940s had not become heavily mathematized  as it now is.  Diligence would get a student a long way. This   quality Thatcher  reputedly  had in spades. If she did, the fact that she only took a second suggests that she was not very intellectually gifted. That is particularly the case when it is remembered that she went up to Oxford during wartime when competition for places was severely reduced because so many of the potential male students went into the forces rather than to university. A beta plus mind at best.

What people probably mistook for intelligence was her avid seeking and retention of data. But it is one thing to learn facts or arguments parrot fashion, quite another to mould them into a coherent intellectual whole.  Based on her frequent renunciation of previous positions, it is reasonable to assume that she simply did not have the intellectual wherewithal to put the data she took on board to any useful purpose. She certainly never  gave no indication that she ever saw the bigger picture.

There were also the question of her how fitted she was by experience to fill the role she played, that of the hard-core economic libertarian forever seeking ways of making people take responsibility for their lives both socially and in their work.  When I look at the present Tory front bench I have a similar feeling to that  which I experience when thinking of the Nazi leadership.  The Nazis had a rather noticeable lack of Aryan types amongst them: the present Tory front bench is remarkably short on people who have been entrepreneurs or indeed of people who have any great  experience of work outside the narrow confines of politics.

Margaret Thatcher was a forerunner  in this respect. She graduated from Oxford in 1947.  For the next four years she worked for various private companies as a research chemist. At the age of 26 she married a millionaire. He funded Thatcher’s career change from chemist to barrister. She took the bar exams in 1953 and practised (specialising in taxation) until 1961, the last two years of the period occurring after she was elected to the Commons in 1959.  After that it was all politics.

Thatcher’s experience of the real world of work is at best four years as a research chemist and eight years as a barrister.  However,  being married to a millionaire at the age of 26 rather dulls the idea of her living a normal working life.  The truth is she made her way not as a self-made woman but by the traditional route  for female advancement of marrying a rich man.

There was no need for Thatcherism

The really angering thing about Thatcher’s time in No 10 is that she could have done what she was elected to do, tame the unions, without engaging in the deliberate wholesale destruction and alienation of much of Britain’s heavy and extractive industry and the placing in private hands of the public utilities, especially those of gas, electricity and water.   This was because Thatcher had the great good fortune to arrive as Prime Minister just as North Sea oil and gas was coming on-stream in large quantities.  Those revenues alone would have provided any government with a very large safety net to finance temporary difficulties caused by serious confrontations with the larger trade unions.   She also enjoyed  the very large receipts from the big privatisations such as gas, electricity and BT.  No British government has ever had such a sustained revenue windfall as hers.

There was absolutely no economic need to destroy so much of British industry or place much of the state-owned  organisations  into private hands.  Continental countries such as Germany and Italy retained their shipbuilding; France,  Germany and Italy retained a native mass production car industry.  Germany still has a substantial coal mining industry. Privatisation proceeded at very different speeds throughout Europe.  That no other large industrialised  country followed Thatcherite policies  with anything like the speed or fervour of Britain  yet  survived and frequently out competed Britain economically  demonstrates that Thatcher’s policies were not a necessity but simply an ideological choice.

Her government could have spent the 1980s taming the unions sufficiently to prevent the excesses of the 1970s.  It is true that the very high level of unemployment  of the 1980s was an aid to this, but it was probably not the main rod which largely broke the Trade Unions’ back.  Home ownership had been rising steadily throughout the twentieth century and by the time Thatcher came to power in 1979 not far short of 60%. The highest it reached even after Right To Buy was only 69% – the idea that it was Thatcher who made it possible for the working man and woman to own their homes for the first time is another myth about her(http://www.telegraph.co.uk/finance/personalfinance/houseprices/10005586/Home-ownership-falls-for-first-time-in-a-century.html).  .

The fact that so many people were owner occupiers with mortgages  meant that they were much less willing than they had been to strike at the drop of a hat because they feared losing their home.  Even those who were not owner occupiers had much more to lose in terms of general comfort, security and prospects of greater opportunity for their children than had been the case before, say, 1939.  To take just one example, children from poor families had a greater opportunity than ever to enter  higher education. This growing reluctance to come  out whenever the union called for  strike  was why the National Union of Miners’ leader Arthur Scargill was not willing to hold a ballot of all  his members before calling a strike. He feared such a ballot would be lost.

The combination of this increasing  reluctance to strike amongst union members together with the legal restrictions on unions such as no secondary picketing and severe penalties for strikes called with a formal ballot would have been enough to end the anarchy which prevailed in the 1970s.

Apart from the social and economic upheaval of the Thatcher years, she can also be blamed for a continuation of the damage she caused both in the long term structural unemployment but also in the fact that she subverted  the Labour Party so that it adopted most of what was damaging from the Thatcher period, most particularly in the adoption of her devotion to laissez faire economics and in Labour’s all too ready acceptance of the EU  elite’s desire for comprehensive political and economic union.

The 1980s could have been so very different.  The revenue from North Sea Oil could have been put into a sovereign wealth fund which  by now would be worth hundreds of billions.  If  the Single European Act had not been signed the movement towards a  federal EU would have been halted in its tracks  (national vetoes applied to this area of decision making  at the time). If Thatcher had not argued for an ever wider EEC the poorer nations from the East would not have joined and the immigration threat they carry would not exist.  Indeed,   Britain could have left the EU entirely because the Tory Eurosceptics could have allied with Labour under Michael Foot or even Neal Kinnock. New social housing could have been built with the proceeds of Right to Buy thus obviating to a large degree the shortage of housing now.  If the nationalised industries had been sustained there would have been no serious structural unemployment.  Had proper attention been paid to the strategic importance of  essential economic areas such a food and energy self-sufficiency we should not be so dangerously reliant on foreigners for such things today.  Most importantly, if  that had been the general thrust of politics in the 1980s it is doubtful in the extreme that Blair and NuLabour would ever have arisen.

The tragedy of Margaret Thatcher is that she had a sense of patriotism and probably genuinely thought she was doing the best for her country at the time she implemented or advocated policies (her honesty when policies went wrong was  another matter).  The problem was that her judgement  and understanding was all too often hideously wrong or defective. She so often provided comforting rhetoric, especially on Europe and immigration,  but she never delivered the goods. The fact that she was such an overpowering political figure made things worse because it meant she could steamroller her cabinet on most issues at most times. It is difficult to think of another politician  in the past three centuries who wrought so much damage on Britain.

“Free markets and “free trade” = elite propaganda”

Note: I wrote this long eassay  in 2005. The financial crash and recession since provide added grist to my arguments as the rich get richer, most people get steadily poorer, public provision shrinks and the inequality between people swells.

The lessons of economic history tell this story: a strong domestic economy is necessary for sustained economic growth and stability. The freer the trade with foreign states, the less stable and secure the domestic economy.

Post-war economic experience illustrates this nicely. Britain experienced her strongest sustained growth in the period  1945-1972. This was a period of protectionism and much state intervention in the economy.  Problems arose in the 1970s, but these were largely due to the oil price spike  after 1973, a consequence of globalism.  However, even with the oil price spike, unemployment in Britain never went much above 1 million until Thatcher arrived and wilfully destroyed our heavy and extractive industries.
During the period 1945-1979, Britain did not suffer a serious sustained recession. From 1979 onwards, under the Thatcherite ideology we have had three serious recessions: in the early 1980s, the early 1990s and the present recession.
To our post-war experience I would add the fact that England  built her commerce then the first Industrial Revolution behind very restrictive protectionist measures such as the Navigation Acts.  RH

 

Robert Henderson 20 4 2012

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“Free markets and “free trade” =  elite propaganda”

Robert Henderson

1. Unquestioned ideas

2. The “Free Market” is a state regulated market

3. The “free market” as its proponents conceive it

4. How effective is anti-monopoly legislation?

5. Microsoft and Windows – a natural monopoly

6. The historical trend towards contraction of competition

7. “Free trade”

8. Has “free trade” ever been practised?

9. “Free trade” today

10. Does “free trade” deliver? The lessons of economic history

11. Is society materially enriched by “free markets” and “free trade?

12. What is meant by material enrichment?

13. How the market fails to provide what the customer wants

14. Relative poverty and wealth and happiness

15. Man does not live by bread alone

16. Geopolitics

17. The democratic deficit

18. Does “free trade” increase competition and choice in the long run?

19. The reality of our economic circumstances

20. Why elites are so keen on “free markets” and “free trade”

21. A sane alternative to globalism

22. Free trade as a religion

23. An elite ideology

 

1. Unquestioned ideas

Because they have the word free in them, the terms “Free markets” and “free trade” have seduced those of all political colours to treat them uncritically as ideas. They are considered good or bad but their intellectual coherence is rarely questioned.

Neo-liberals believe in a childlike quasi-religious fashion in the workings of Adam Smith’s “invisible hand”, which, moved by enlightened self-interest, supposedly creates the best of all possible material worlds through the operation of the market. Socialists see “free markets” and “free trade” as economic “state of natures” which must be ameliorated by the state before a civilised society can be realised. Conservatives in the traditional sense no longer exist as a recognisable political force in the West, but when they did exist they opposed “free markets” and “free trade” primarily on the grounds of national security and the general disruption to society that they caused. Nationalists of the fascistic kind have traditionally opposed the ideas because they see the nation as a single organism which can only be strong if it is master of its own destiny, something which can only be achieved (they believe) through state direction of both the internal  market and of external trade.

There are varying quantities of truth in all these ideological responses, but their utility is seriously tainted by the lack of any  objective or even properly defined and permanent prescriptive truth in the concepts of “free markets” or “free trade”. The reality of these ideas is that they are arbitrary chosen bundles of behaviours which  are excluded or included at the will of their proponents. Moreover, the bundles of behaviours are not static.

The widespread negligence in examining the coherence of these ideas is all the more remarkable because their incoherence as theories and the arbitrary and dishonest nature of their practical realisation is not only readily apparent but fundamentally undermining of the claims made for them by their champions.

2. The “Free Market” is a state regulated market

There is a splendid irony in the objection of the self-defined “free marketeers'” and “free traders” to state intervention for the natural end of a truly free market is monopoly – or at least greatly reduced competition resulting in oligopoly and the rule of cartels. All so-called “free market” societies recognise this by passing anti-monopoly laws. The “free market” is in fact a market controlled by the state in the most fundamental way, that is, to prevent its natural workings. It is one of the great propaganda triumphs of history that “free markets” have been successfully sold as being what happens naturally without state intervention. Call a spade a spade and substitute the truthful “state regulated non-monopolistic market” for “free market” and the psychological shape of the idea changes dramatically.  (Some casuistical “free marketeers”might argue that the “free” in free market applies to the workings of the market rather than the market as a natural phenomenon. That explanation falls because “free marketeers” invariably make the blanket claim that markets only work efficiently without government interference. Their honest position would be to state that they want state regulated markets to prevent monopoly. They will not do that because it would be an acknowledgement that state regulation of the market is legitimate and hence remove any general argument against regulation. That in turn would mean any form of state regulation would be potentially reasonable and consequently each form of regulation would have to be argued down individually on the merits of the case, rather than simply empty-headedly dismissed on the grounds of no regulation = good; regulation = bad.

The state regulated “Free Market” is not even a natural phenomenon made somewhat artificial by rules to exaggerate the natural phenomenon in the same way that we breed animals to exaggerate nature. Rather it is just about as far from being a natural phenomenon as anything can be for it goes against all Man’s inclinations, both individual and social.

Economic history is overwhelmingly a catalogue of market regulation, local and national, from guilds to governments. It would be surprising if it were not because human beings, like all other organisms, naturally behave to secure their own advantage or that of their group. Extended to the nation state, this natural behaviour has commonly resulted in domestic markets being protected against foreign competition. Whether this is a good or a bad thing is another matter – a question I shall deal with later – all I am concerned to do at this point is to nail down that the fact that protectionist behaviour is what is natural.

Historically, whether you were anything from a rich merchant to a poor day labourer  it was obviously not in your personal interest to allow others free access to your markets to offer the goods or services at a lower price or to work for lower wages. The merchant might be driven to bankruptcy by competition, the labourer from his job.  History also tells us that whatever their previous economic station, such people will probably not be able to find equivalent or better paid employment and often may not be able to find any employment at all where structural unemployment arises. What was historically true not only remains true today, but its effect is much magnified because the opportunities for competition are greatly increased by modern communications and the ease of travel and cargo transportation.

Of course, any individual or sectional advantage causes strains in a society and if the material privilege of any person or group becomes excessive, sooner or later there will be a successful revolt and the wealth in a society will either be shared more fairly through a change in the way the society is structured, for example, through the abolition of tolls, the ending of state monopolies or even through a removal of the rich as a class without any increase in the wealth of the majority.

But wherever wealth distribution through social change has occurred it has normally been done with the express intention of benefiting a particular group or even an individual in the case of monarchs. The odd thing about “free marketeers” is that what they ostensibly advocate is not to privilege any particular individual or group but to benefit society as a whole. Whether free markets do so is another matter, but that is their claim.

The “free marketeer” says to a population, do what I say and in time society will become richer. He does not say this person or that group will become richer or even all will become richer, but merely that the society as a whole will become richer. This is an extraordinary thing to ask people to trust in. It is also the most wonderful blank cheque ever written to a politician because not only does it absolve him or her of any need to take the responsibility for regulating the economy, it also means that he or she can never be held to account for dishonesty by any individual if that individual is personally worse off. All a “free marketeer” politician has ever claimed is that his economic way will make society richer. Provided society overall is richer, he has met his met his promise.

It is also telling for their intellectual credibility and honesty that “free marketeers” will oppose government interference in such matters as subsidies, quotas, embargoes, wage rates and working hours and grumble about tax rates and public expenditure, but are generally quite happy to see other gross distortions of the market deriving from government action. They not only tolerate patents, copyright and trademarks, but often defend them as property in themselves and as devices which actually improve economic performance because they encourage invention, investment and expansion. In addition, those who constantly bleat about Adam Smith’s “invisible hand” sorting out the business wheat from the chaff insist that limited liability is necessary. This of course is also a violent interference with the market because it means that the individual shareholder never takes full responsibility for their investment. (It is worth noting that the British industrial revolution – the one and only bootstrapped industrial revolution – took place before limited liability became legally possible (Limited Companies Act 1862) and at a time when patent rights were insecure and in practice limited to the domestic British market.)

It is true that none of these things are actually part of what the concept of a “free market” is and that they are inimical to such a market, but the fact that almost all modern “free marketeers” have tacitly incorporated them into their vision of what a “free market” is demonstrates their intellectual confusion (or dishonesty if you prefer).

3. The “free market” as its proponents conceive it

Let us put aside for the moment the fact that “free markets” are state regulated markets and ask the question what is a “free market” as it is conceived by “free marketeers”? A jolly good question. Even if market distortions which appear acceptable to “free marketeers” such as patents and limited liability did not exist, that would leave many other things which prevent unfettered domestic competition. In an advanced modern economy these include:

Taxes

Non tax fiscal measures, for example, control of interest rates

The state of the currency

Exchange controls

Overall Government expenditure

State Subsidies

Industry and trading standards, official and otherwise

Public sector employment

Transport costs

Public ownership

Defence

Direct and indirect Government intervention

Copyright, trademarks and patents

The moral and social climate, for example, a tradition of wWelfare or the feeling of the

people, for example, the national feeling of Japanese Practical cultural barriers

such as the difficulty of a language

Dumping

Transport costs

Working hours

Trading laws

Labour laws

Wage rates

Bureaucratic differences

Company laws – particularly the attitude towards foreign ownership

Banking laws

Banking system

Social policy – welfare, health and so on

Physical infrastructure

Honesty of public servants

Foreign policy

National strategic considerations

Education – The amount spent, school leaving age, curriculum,

Limited Liability

Environmental laws

Some of these things such as subsidies, patents, quotas and limited liability could be obviously and legitimately ruled out of order by a “free marketeer” because they are deliberate state interferences with competition, but what of items such as the provision by the state of education or the physical infrastructure of a country? They are undeniably distortions of competition at some level, but they are not deliberate attempts by the state to distort competition. A purist “free marketeer” could just about say such things were no business of the state and still be intellectually coherent because it is possible to conceive of a society without such state provision. But however purist they might be, sooner or later the “free marketeer” will run into features which undeniably restrict competition but which must exist simply because they are an inescapable part of society. The most obvious is tax.

Any modern state needs a large tax revenue to sustain itself, the only questions to determine being how large should be the revenue and what  it should be spent on? Some things such as defence and policing are inescapable expenditures for any state, although even there the amounts to be spent are debatable and elastic. Items such as education and welfare are more subject to variable expenditure. Nonetheless, substantial amounts are as a matter of contingent fact invariably spent on such items by all advanced states. Such countries also engage to a lesser or greater degree in all the forms of regulation listed above.

In theory, and even more in practice, the notion of a “free market” seems to rest on little more than anti-monopoly laws, wages and prices set by the market (although in practice this does not happen purely through the market because of welfare provision, tax regimes etc) and a lack (or at least a minimum) of state interference in such areas as health and safety, employment law and company law.

The inclusion of these narrow criteria are merely a subjective choice made from a much larger menu of man-made distortions of the market. Consequently, there is no objective coherence to the concept of the “free market” as it is conceived by the “free marketeers”. It is an arbitrary ideology based on subjective choice.

4. How effective is anti-monopoly legislation?

Anti-monopoly laws operate within the constraints of the type of social and economic circumstances described above. That alone means they are severely limited in what they can do. They must, for example, tolerate state granted monopolies in the form of patents and copyright.

Anti-monopoly legislation generally only effectively attacks the problem from one end. A company can be prevented from growing its market share by taking over other companies but there is normally no meaningful restriction on a company growing its market share simply by expanding the existing company. Microsoft and the domination of Windows is a classic example.

Where companies try to expand by takeover, experience shows that those charged with applying the legislation allow very large parts of a market – 25% or more – to be held by a single company. The consequence is that a market which would seem to be an obvious candidate for competition, for example, food and domestic supplies retailing, can easily come to be dominated by three or four major players (as is the case in Britain).

There are also those products which are either natural monopolies because of the physical location of their infrastructure – railways, roads, the utilities such as gas – or which are inevitably going to have few entrants in the field because of reasons of cost, for example, aerospace, motor cars, ship building.

Finally, there are those rare markets which are dominated by one company simply because of the nature of their business. The classic example of this is Microsoft and their Windows operating system.

5. Microsoft and Windows – a natural monopoly

In South Park: The Movie, there is a glorious scene where, under martial law, Bill Gates is executed for falsely promising that Windows 98 would be “faster, easier to use and more reliable”. Many long-suffering Windows users doubtless wish that life had imitated art in that instance. Yet despite widespread dissatisfaction Windows remains the overwhelming dominant operating system.

At first glance it might seem that operating systems should be just the type of product which is open to fierce competition because software is a market which potentially has low entry costs. It is true that most areas of programming are competitive – within the constraint of the dominant operating system (OS) – but operating systems are the odd man out. The reason is simple. Once a single OS gained dominance, the chances of any other system effectively competing were very small. This is because the weight of programs available to run under the dominant OS soon became much greater than those which could be run under any other OS. Thus, it becomes inefficient to choose any other OS. That in turn means most of the software is written in a way to make in “friendly” to the dominant OS systems’ users. This further excludes OS competitors and the software to run under them because users, especially employers, do not want to spend the time training their employees on completely new systems, converting data  and so on.

The consequence is that Microsoft still has a stranglehold on the pc market. Moreover, if anyone wants to write any other software, they are constrained by the practical need for it to run under the Microsoft OS if they wish to reach the mass computer user market.

The near monopoly has lasted a long time. It has done this despite considerable attempts by both rivals and the US government to diminish their market position. Windows’ dominance looks secure for the foreseeable future.

 6. The historical trend towards contraction of competition

As remarked previously, the logical end of a free market is monopoly. The reason is obvious: competition tends to reduce the number of competitors through the natural process of success and failure and the takeover of one firm by another. In some trades this does not create an obvious serious anti-competitive difficulty because the initial capital investment is small and entry to the trade within the reach of many. But entry to a considerable and growing number of areas of manufacturing and service provision is too expensive for all but a few.

In a significant minority of trades starting a business from scratch is practically impossible for any one individual or even a group of private investors. The car industry is a first rate example, the number of companies now being small (and becoming smaller) compared with the number of even 40 years ago. Moreover, many of the car companies which do still exist do so only because of state subsidy and protection.

7. “Free trade”

“Free trade” is frequently treated as synonymous with international trade. In principle it does not have to be restricted to international dealings because the concept may be applied to any market, whether that be within a global, regional, national or even a local context. The United States for example displays considerable differences in local tax rates between not only states but within localities within a state, and, indeed, the ultimate aim of the “free trader” is to create a single world market. However, there are considerable differences in practice between domestic markets and international markets, not least because the criteria which are deemed to fall within the concept of “free trade” are not identical with those which are said to be a necessary part of the concept of a “free market”, for example, laws to prevent monopoly are redundant when it comes to international trade because one country will either supply or not supply goods and services to other countries and a country with a monopoly of an important good or service can as a matter of fact only be persuaded to supply the good or service against its will by extra-legal action, ultimately force or the threat of force. Consequently, it is convenient to treat “free trade” as being economic intercourse between nation states and that is what I shall do.

What does and does not constitute “free” international trading? In times gone by, people would have pointed to those honest workhorses of restriction: embargoes, quotas and tariffs and navigation laws and not much else. But in the modern world things are much more complicated as we discover almost daily during the seemingly interminable EU squabbling and the GATT rounds.

Some things are obviously incompatible with “free trade” such as embargoes or state subsidies, but what of different tax regimes, welfare provision or labour regulations? Why should they be excluded from the things which should not be tolerated in a “free trade” regime? After all, a low company tax regime could be regarded as a form of state subsidy to business and all welfare provision could be regarded as a subsidy to wages.

But even such items are straightforward compared to others. What of national sentiment which gives a preference to home produced goods regardless of whether they represent the best value when judged purely by price and quality? Should a country be forced to take the cheapest of  any particular equivalent good or service, regardless of the wishes of the  people of that country, on the grounds that not to purchase that which  gave “best value” constituted “unfair competition”? A reductio ad absurdum? Well, consider the fact that public bodies within the EU (which for these purposes includes any organisation drawing part of their income from public funds) must allow any company within the EU to bid for any work put out to contract, and if the lowest bid is not accepted, the public body risks being fined for a breach of the Single Market rules.

Even more problematic are things which are simply effects of economic activity. Take true dumping, not the state subsidized export regimes which often pass for such, but a simple economic practice to maximise profit.

True dumping works like this. Imagine that a company can make 2,000 units a week. It covers its costs for all 2,000 units if each week it produces and sells 1,000 units at œ1 each. The company finds it can sell a maximum of 1,500 units in the home market at œ1. If it reduces the unit price to 75 pence it could sell all 2,000 but that would only produce the same amount of revenue as selling 1,500 at £1 each.

Consequently, it sells 1,500 in the domestic market at £1 each and the other 500 at 50 pence each (carriage paid by buyer) in foreign markets. Total sales are £1,750 instead of  £1,500.

That is a very simple model of dumping but something akin to it happens regularly with differential pricing from country to country (the European car market is a prime example of this). No state subsidy has been given, no state intervention of any sort has occurred. Why should it not be considered as reasonable a practice as the toleration of different national wage rates? In fact, why should it not be considered more reasonable because wage rates are directly linked to such hidden subsidies as those of welfare and low company taxation? (in fairness, the economic activity of the dumper would also be linked to wage and tax subsidies, but the connection would be more remote.)

Most contentious perhaps is the question of immigration. Does “free trade” require the movement of people as freely as goods and services? This is generally accepted as self-evident by purist “free traders”. Yet there is no logic to the claim. Economic forms are made for men not men for economic forms. We know as a matter of practical experience it is possible to have the exchange of goods and services without the mass movement of people. If a society decides that the benefit gained from the free movement of people is outweighed by the social disruption caused by such migration, it is a perfectly rational decision. A people may decide that they will have or not have free exchange or movement just as they may decide to have this or that level of taxation or welfare provision. It makes no more sense to say a society which restricts immigration – which all advanced states in practice do – is not a “free trader” than to say they are not a “free trader” because their income tax rate is higher or lower than that of their competitors.

The treatment of human labour as merely a factor of production (along with land and capital) is also incompatible with the liberal democratic tenets of the equal worth of each person and the rights and obligations of citizens. Allowing mass immigration to reduce wages or the exporting of jobs to cheaper labour overseas is treating human beings as being of no more account than inanimate objects. It is inhuman.

So what does “free trade” actually mean? Does it require merely that countries may trade with one another without any formal barriers such as tariffs and quotas? Or should it take into account all those items such as national tax regimes, non-tax fiscal measures, wage rates (where these are set by the state), standards of practice and manufacture (official and otherwise), and the size of the public sector. All of these are controllable either entirely or to some degree by men. In other words, they could be removed or altered.

If a definition of “free trade” is accepted which includes these and other non-traditional elements of market distortion, the ultimate logic of the definition is that “free trade” as a global concept cannot exist until all peoples and countries are reduced or elevated to the same general economic condition.

Those who run the European Union would say that is precisely what is required, at least within the EU. But the experience of trying to create unified trading conditions at a supranational level in the most advanced of supranational political and economic entities, demonstrates just how difficult it is to create a supranational market in which there is a broad uniformity in the trading conditions within its constituent national parts. Despite nearly half a century of trying through treaty after treaty and the covering of the EU members with an avalanche of EU directives, there is no meaningful economic uniformity within the EU, either in the circumstances of private enterprise competition or in the function of the state. The introduction of the Euro has painfully revealed exactly how disparate the economies of even the richer EU states still are with Germany needing low interest rates to re-inflate and Italy requiring high rates to control public spending and the European Central Bank paralysed by their inability to square such an economic circle.

The Holy Grail of “free traders” is comparative advantage. This is a first rate example of a neat and emotionally satisfying (to a certain type of mind) intellectual idea which bears little relation to reality. The idea is that every country concentrates on making what it is best at and the overall global product rises because of increased efficiency. Even in theory this is rather dubious because it ignores every other aspect of society than a narrow view of economic relationships and assumes tacitly that a comparative advantage will last. David Landes in his The Wealth and Poverty of Nations (Little, Brown and Co 1998) cites the instance of the Englishman John Borrow, who in 1840 urged the states of the German Zollverin to concentrate on growing wheat, and sell it to buy British manufactures and comments: “This was a sublime example of economic good sense: but Germany would have been the poorer for it. Today’s comparative advantage…may not be tomorrow’s.”

The truth is that any definition of “free trade” is as subjective as that of a “free market”. It has no natural boundaries because the implications of both ultimately embrace the whole of human material endeavour and there are no true natural variables on which to base a definition – even those which might at first glance appear to be objectively and naturally set, such as wages and prices, are determined by matters other than the market, for example tax regimes and welfare provision.

8. Has “free trade” ever been practised?

Between 1860 and 1914 Britain operated the best approximation to “free-trade” the world has seen. In the period 1840-1870 not only did she by degrees open her markets to all regardless of whether other countries reciprocated, but the size of the British state was so tiny that the distortions of government expenditure and taxation were minuscule compared with the present day. But achieving the best approximation to “free trade” was not difficult to achieve because no other country of any size has ever seriously attempted it for any length of time.

For a quarter or a century or so, Britain got away with the ill-effects of being a reckless “free trader” whilst other major countries remained protectionist to varying degrees. She escaped the consequences for three prime reasons: Britain’s industrial dominance, long distance transport of bulk goods remained cumbersome and expensive and the fact that America and Europe were strangely slow to follow Britain’s example and industrialise.

That all changed in the 1870s. Bulk transport was becoming much easier and cheaper. Railways – ironically more often than not built with British capital and technical expertise – had begun to have a considerable influence on the continent and in America and were beginning to snake across Australia and South America. Perhaps most importantly the age of the practical steamship and refrigeration arrived. Manufactured goods, food and raw materials could now move around the world in volumes which dwarfed anything which had gone before. British farmers were especially badly hit when the Americas and Australasia flooded the British market with food and wool.

To these developments, and arguably in part as a consequence of them, there was a widespread retreat into a deep protectionism in the 1870s, most notably by the USA and Germany. Britain failed to respond to these developments by guarding her own markets.

The period of 1870-1914 saw the predictable results of Britain’s quixotic refusal to guard her markets when all about her were assiduously doing so: she lost her general industrial predominance, well nigh destroyed her farmers and failed to dominate vital new industries, such as the chemical, which at one time she had led – Britain produced the first synthetic dye (Perkin 1856) and the first synthetic plastic (Parkes 1855). Two of the most enthusiastic protectionists, the USA and Germany, became the first to exceed Britain’s GDP.

Bismarck summed up what had happened in a speech in 1882 when he said: “I believe the whole theory of free trade to be wrong…England abolished protection after she had benefited from it to the fullest extent. That country used to have the strongest protective tariffs until it became so powerful under their protection that it could step out of those barriers like a gigantic athlete and challenge the world. Free trade is the weapon of the strongest nation, and England has become the strongest nation in the world owing to her capital, her iron, her coal, and her harbours and owing to her favourable geographical position. Nevertheless, she protected herself against foreign  competition with her exorbitant protective tariffs until her industries  became so powerful.”

But even the “free-trade” Britain practised was far from complete. Government contracts were generally given to British companies. Ditto municipal contracts. Moreover, there was a strong sense of patriotism in the country which, as with the present day Japanese, mitigated the effects of free-trade. Nor, of course, was there a WTO, EU or any other body to question and interfere with the internal economic workings of Britain such as taxation, interest rates or working conditions.

British “free trade” was further complicated by the existence of the Empire and a widespread imperial sentiment which created the opportunity and the desire to trade with members of the Empire rather than the rest of the world. It does not do to over-egg the effects of this because British trade with the world outside the Empire, especially the USA, always remained strong, but it undoubtedly significantly distorted British trade.

9. “Free trade” today

If “free trade” was a gigantic gamble for an industrially, commercially and politically dominant Britain in 1850, it is vastly riskier for any country now. Transport even after the arrival of railways and the steamship was still expensive, slow and cumbersome compared with now. The electric telegraph was the height of sophistication. Most parts of the world could not engage in international trade on their own terms because they were colonies, under the practical control of foreign powers or unindustrialised.

Today physical transport is fast and cheap. In place of the telegraph, we have the internet. Many countries have industrialised. The age of formal empires is over.

But there is more than political and technological change which makes a difference between our own time and the last outbreak of “free trade” mania. The “free trade” being advocated now is doctrinaire to the point of idiocy, namely the god of comparative advantage (the idea that each nation should concentrate on those products which are most profitable and forget the rest) is to be applied to everything, even (in the EU) to all public contracts, including those for weaponry. Childishly doctrinaire as they were as they played with their untried intellectual toy, even the most extreme “free traders” in the 1830s and 1840s saw that some parts of the economy could not be reasonably opened to competition for strategic reasons, military supplies being the prime case.

Let us suppose that we had a perfect “free trade” world now, a world in which there were no tariffs or quotas or embargoes or “standards” to meet; that all the artificial restraints on trade were removed; that no government subsidized productive employment in any way and all that remained to differentiate countries were market decided labour rates, carriage costs and the cost of nonproductive public works such as justice and the army. What then?

The consequences would be extremely dangerous for the West. Farmers in the First World would be on their knees and mass production of virtually anything in general demand would quickly become impossible because whatever a company’s efficiency, it simply would not be able to compete with labour which was a tenth or less of the cost of its own native workforce. All such countries could do is try to make high-value goods,

Even if the redundant working populations of the First World could find alternative employment, which is dubious, their countries would be left utterly at the mercy of those who now produced their food and most of the manufactured goods they consumed.

10. Does “free trade” deliver? The lessons of economic history

Free traders base their case primarily on the increase in prosperity which they believe will only come through increased global trade. The general answer to that claim is that Man does not live by bread alone. Moreover, even if there is a general rise in the global product at present, it does not necessarily follow that the same or better result could not be achieved by other means. The experience of all industrialised countries to date is that industrialisation is best achieved – perhaps can only be achieved by protecting the national economy. Indeed, there is a powerful logic in the idea that developing nations today require protection more than the early industrialising states because the early industrialising nations had little competition.

But even if it could be shown indubitably that the global product is increased more by “free trade” than by protection, it does not follow that it is in a particular country’s interest to adopt free trade. Consider the position in a national market which operates “free trade” within that market, but protects its trade and industry from foreign competition. Companies go bust if they do not compete. But successful companies take their place and continue to provide employment at broadly similar rates of pay. The logic of global “free trade” is that countries which cannot compete will go bust and not be replaced by others in the domestic market. There will be no replacement jobs within the bankrupt country because the successful competitor is abroad.

The most lethal ammunition to discharge at “free traders” is the fact that no country in the history of the world has industrialised successfully without very strong protectionist measures being in place. That includes the first industrial nation, Britain, which spent a couple of cosy centuries behind the Navigation Acts, the first of which was passed in 1651, before becoming a free trader. Not only that, but Britain only adopted “free trade” principles after she had become heavily industrialised and did so at a time when the country was still the dominant industrial power in the world by a long chalk and her exports were more or less guaranteed to sell in foreign markets.

Before Britain dropped her old colonial protectionist system in the mid 19th Century, she had industrialised in the modern sense from scratch and expanded her GDP massively. Perhaps most impressively she had managed to continue to largely feed herself without the price of corn going sky high, despite the fact that the UK population almost doubled between 1801 (the first Census) and the repeal of the Corn Laws in 1846.

As described above, Britain’s experience during her most committed “free trading” period was one of declining market share and commercial and industrial dominance while rigid protectionists such as Germany and the USA experienced massive growth. Of course, Britain could not hope to remain so dominant but her decline was remarkably rapid. In 1870 Britain was the richest country by GDP in the world: by 1914 both Germany and the USA had larger GDPs. Moreover, by religiously adopting open markets, for capital as well as goods and services, Britain seriously distorted her economy. Vast capital exports resulted in underinvestment in Britain and foreigners manufacturers and traders took full advantage of Britain’s open doors. The result was that by the Great War in 1914 her farmers were on their knees and modern industries such as the chemical and pharmaceutical were sadly undeveloped because of foreign competition (this distortion of the economy was soon to be a great national embarrassment during wartime when many industries were found to be inadequate to replace imported goods).

Here is a German voice from 1913: “By its free trade policy England has been more useful to us than its numerous political machinations have been harmful to us. Where would our sugar industry – one of the first items to help us in our economical rise – have been today, or our textile and iron industries, had it not been for the free markets of England? Nowhere: we should have been entirely without our new German capital, our financial resources. On the back of free trade England we grasped at and secured our economical world-power….Industrial and political supremacy go together. Warships are machines, and the nation which succeeds in attracting the centre of capital is the nation that can afford to build most. The present rulers of England represent the fourth generation of dictators to the world. It will not be easy for them to give up the role of ‘primus inter pares'”. (Prof von Schulze-Gaevernitz quoted – p347 -in The fall of protection 1840-50 by Bernard Holland)

Britain limped on with “free trade” after the Great War until 1931 when the secular religion was abjured, at least temporarily, during the Great Depression. Although unemployment remained high by historical British standards until WW2, the British economy behind protectionist barriers recovered quickly compared with most of the rest of the world. Most interestingly, the newer high-tec industries such as the motor, chemical and electrical recovered and grew fastest following their protection.

From 1945 to the mid eighties of the last century at least, Britain continued in an essentially protectionist system, as did the rest of the world. The world economy grew strongly during the period despite the protection. Even within the EU the “free market” mania did not really get under way until the Single European Act of 1985.

It is true that since protectionist barriers have come down over the past 20 years economic growth has been strong in the First World, but then it has been strong behind protectionist barriers and, indeed, with state direction of the domestic market. Germany under Hitler in the 1930s recovered amazingly quickly, despite the fact that the Nazis pursued an economic course which was probably as close to autarky as it is possible for a major modern state to bear. Imports and exports were regulated according to what was perceived to be necessary to make Germany strong through self-sufficiency. What Hitler did not do was attempt to run industry directly. Instead, the Nazis allowed private enterprise to run commerce and industry whilst directing what was produced and supplied.

All that tells us three things: that “free trade” is not necessary for rapid economic growth, that state regulation of the domestic market and international trade is not a recipe for disaster and that being a “free trader” when the rest of the world is not reciprocating is a mug’s game.

11. Is society materially enriched by “free markets” and “free trade?

This is an impossible question to answer categorically because there is no way knowing what would have happened if protectionism had remained full blooded throughout the last century and a half. One can compare growth rates under stronger or looser protection regimes, but they really say little because the other determining factors such as public expenditure have varied so greatly. These variables also blur judgement about the comparative merits of controlled and “free” domestic markets.

The most certain thing one can say from the economic experience of the developed world is that governments running commercial industries such as coal and steel directly is generally a mistake. (Governments are the natural suppliers of universal services such as healthcare only because private provision of such things is never adequate.)

What is certain is the fact that the material effects of “free trade” are far from uniform. It is no consolation to those who suffer along the way that others may benefit from their disadvantage. The next generation or the generation after that may be richer but why should their benefit be brought at the cost of disadvantaging a prior generation? Certainly no politician or political party standing at an election would dare to do so on a platform of “we shall make many of you poorer to make future generations richer.” Those living at any point in time have their own moral context and needs.

The constant economic turmoil caused by “free trade” and its inevitable concomitant, the supranational corporation, undeniably leads to  circumstances which greatly disadvantage large swathes of the population in the First World through the removal of First World jobs to the rest of the world. At worst, these people become the perpetual victims of structural unemployment (try getting a job in an area where the main employer closes and you have no scarce or easily transferable skills or you are middle-aged or, indeed, try opening a new business or becoming self-employed in a depressed economy): at best they are driven into ill-paid and uncertain employment.

 12. What is meant by material enrichment? Britain as a case study

The assumption is that the material conditions for most have improved considerably over the past two hundred years. Any economics textbook will plot economic improvement in terms of rising real wages. But those supposedly rising real wages are based on measures which are often questionable, incomplete or derived from very narrow data such as corn prices. Even modern measures such as the Retail Price Index (RPI) are not static, their content and weighting being regularly revised. Nor do such measures fully represent the true costs of necessities, the most notable distortion in Britain being the failure of the Retail Price Index (and its successor index the Consumer Price Index) to reflect housing costs fully. Any comparison between different times based on such measures needs to be treated with caution.

Of course no one in their right sense would question whether there has been massive material advance in the past two centuries. A more  interesting question in our context is whether most people are materially better off now than they were in 1960s, by which time a fully fledged welfare state was bedded in, housing, both owned and rented, was reasonably priced, social housing was being built in massive quantities, university education was not merely free but students subsidized with grants, unemployment was tiny and inflation low.

Today the welfare state is constantly under attack by the British political elite and in some areas such as NHS dentistry already seriously inadequate, while the state pension is much reduced as a fraction of the average wage following two decades of increases linked to the cost-of-living pegging rather than increases linked to the average national wage.

Housing of all sorts in most parts of the country is presently absurdly costly and social housing is greatly reduced through Right-To-Buy and minimal new building since the 1980s.

The cost of university education is rocketing and grants are a distant memory.

Unemployment remains high today (2005) even by the official figures –  approximately 950,000 by the claimant count and around 1.5 million by  the most widely used international measure – figures which most  probably severely understate the real unemployment level because it ignores the considerable disguised unemployment within the 2 to 3  million people currently on long term sick benefit payments (the 1980  figure for such people was 600,000). The increase in those staying on at school after the age of 16 and going on to university has also reduced the present figures by taking hundreds of thousands out of the jobs  market for years. From 1945 to the late seventies unemployment never rose above a million on the official claimant count and for most of the time was considerably lower even with little disguised unemployment and far fewer people staying in education after the school-leaving age (which was only 15 until the mid sixties).

There are other fundamental social changes which bear upon the material state of the nation. Many more people today have to travel long distances to work than they did forty or fifty years ago. That is costly both in terms of fares and time. More generally, it is increasingly difficult for someone on the average wage to support a family on that wage. That often means both parents have to work not from choice but necessity.

Taxation bears much more heavily on the poorer part of the population now than it did in the past. Direct taxation – income tax, national insurance, inheritance duty – applies to many more people now than it did in 1960, primarily because a failure to maintain personal allowances and tax bands at a reasonable level. Direct taxation is also broader in scope, for example VAT compared to purchase tax. Such taxation takes proportionately more of the income of the poor than the rich.

It is a moot point whether overall people are generally materially better off than they in 1960. They may own more trinkets such as TVs and computers and some imported goods such as clothes may be at least much cheaper, but those are small advantages to set against the great increase in housing costs and commuting fares and the diminishment in social provision. Doubtless a section of society has benefited, but it would be a brave man who wanted to argue that the condition of the vast  majority has improved, especially the poorest third of the population.

Many will read this with astonishment, saying but we have so much more today, dazzled as they are by the many new products. It is important not to confuse technological advance with “free markets” and “free trade” or general material wellbeing. People are undoubtedly better off in 2005 in terms of being able to purchase such things as cars or electronic goods then they were in 1960. But people in 1975 were also better off in those respects than those who had lived fifteen years before. That improvement was long before “free markets” and “free trade” had become the elite ideology. It is worth adding that new products often result in additional expenditure regardless of whether the individual really wants the product – any product which becomes widely used is difficult to resist. Technological innovations are particularly prone to induce reluctant purchases.

13. How the market fails to provide what the customer wants

There is no better modern example of the market failing to provide what the customer both needs and wants than the computer industry. If it was driven by the customer, the computer industry would produce hardware and software which was easy to install, had continuity of use, was simple to use and was supported by adequate help lines and manuals. The industry signally fails to do any of these things.

Hardware and software are of course purchased in ever greater volume and computer services, including maintenance, continue to swell. But that is not an indication of customer satisfaction. Rather, it is simply a reflection of how computers have become an inescapable part of our lives, not only as obvious computers but also in the guise of so many of the other machines we use – everything from phones to intelligent clothes. Business and public administration have become so dependent on their use that they cannot do without them. That being so, whatever is on offer, however unsatisfactory, is bought out of sheer necessity. The computer companies have the modern world over a barrel.

It might be objected that although most people cannot completely escape computers at their work, they do not have to bring them into their private lives. Yet increasing numbers buy computers for private use.

Why do they do that if the machines are so unreliable and demanding? Simple: once a significant minority have private computers and business uses them very widely, it becomes very difficult for the rest to resist,  not least because businesses and government increasingly require those dealing with them to do so by computer. But there are other pressures as well.

We have long passed the point where a handwritten document is likely to be read by most people in business unless it is an order or payment. Now, except between social contacts, everything must be word-processed to be acceptable. A word processor or access to one has become a sine qua non for anyone who wishes to be taken seriously. Even amongst private individuals a letter is increasingly seen as unusual or even quaint.

With emails, we have not come to the stage that telephone ownership reached a quarter of a century ago when not to have a phone became considered eccentric, but we are rapidly moving towards it.

Employers increasingly wish to contact employees by email wherever they are and this means the choice is often between having a computer and email at home or not having a job.

Those with school age children, whatever they think of computers, find it next to impossible to deny their children not only a computer but access to the internet, both because the children want it to match their peers and because they have been brainwashed into believing that a computer is essential.

In short, people are increasingly being driven to become computer owners and users not because they actively want to, but because they feel isolated and excluded if they remain computerless. Again, as with the analogy between telephones and emails, within the foreseeable future, someone without a computer is in danger of becoming in the eyes of the majority as much as an oddity as someone without a TV is now considered.

14. Relative poverty, wealth and power

Even if most people or even all people were in absolute terms better off as a consequence “free trade”, that does not mean that their general situation has improved in power terms.

Wealth is not merely an advantage for what it can directly buy but also for the power it brings. The poor are doubly disadvantaged by their poverty by their restricted ability to purchase what they want and their subordination to those who can purchase anything they desire. Consequently, the ordinary man or woman may well be happier and freer in a society which is materially poorer overall but which is less oppressive through the absence of great differences in wealth. Charles Darwin in the Voyage of the Beagle describes a port in South America which suffered an earthquake while the Beagle was there in harbour. The town attached to the port was virtually destroyed and its inhabitants were reduced at least temporarily to the same material level. Darwin noted the happiness, almost gaiety, of the population after this happened.

The example of Britain is instructive when it comes to relative wealth. Until the 1970s inequalities in wealth were narrowing. Despite all the puffing of the “trickle down” of wealth which supposedly results from Thatcherite “free market” practices, wealth distribution has not changed dramatically over the past quarter century of “free market” policies by successive British governments.

A Royal Commission (1976-79) on the distribution of income and wealth found that in 1976 the top 1 per cent of the population owned 25% of all personal wealth, the top ten percent raked in 60% and the bottom eighty per cent had a measly 23% (Penguin Dictionary of Sociology p72). The Inland Revenue figures for wealth distribution in 2002 are show the top 1 per cent own 23% of national wealth and the bottom fifty per cent of the population have a staggeringly small 6% (Office of National Statistics (ONS) website – published 2004). Those figures, eye-opening as they are, conceal the fact that wealth inequality in 2002 would be much greater than 1976 were it not for the increase in home ownership and the rise in house prices.

Another ONS report (2005) entitled “The long shadow of childhood” (TLSOC) based on research by the London School of Economics concludes that there has been remarkably little change in social mobility in Britain over the past 30 years. The study was based on census records between 1971 and 2001.

TLSOC also demonstrated how the social and economic status of children is very much tied to that of the parents. For example, more than two thirds of those with parents in professional or managerial jobs managed to take a degree: of those with semi-skilled/unskilled parents, 14 per cent had a degree.

15. Man does not live by bread alone

Even if the “free traders'” claims of an overall increase in the wealth of a society were true, there would still be strong arguments against the policy because a society is more than its crude economic relationships.

Human beings do not like too much uncertainty. A certain amount of stress is good for them, but only so much. Like masochists and physical pain, human beings are comfortable with stress only in so far as they feel it is within their control. Manifestly, for many people the uncertainty they experience is utterly outside their control. This widespread insecurity leads not merely to individual suffering but damages the social fabric by generally diminishing confidence in the future and the ability to cope in the here and now.

A 2005 study (Molly Watson Western Mail 31 9 2005) by a Cardiff University Department of Psychology team led by Prof Aylward Mansel suggests that the general level of happiness in the Depression was greater than it is now (the team analysed data from surveys of assessing happiness and contentment from the past 70 years.) This conclusion might seem absurd to most people living today who, if they have any conception of the Depression, it is one of a dire time packed with the most horrendous stress. Yet the findings of the report have a certain plausibility because in the 1930s there was undoubtedly a greater sense of social solidarity, especially amongst the working class, than there is now and civil society was far stronger then – the working class not only lived in close-knit communities which offered support to those who fell on hard times, but they were woven into supportive institutions such as the co-operative movement and unions. They were anything but socially isolated whereas today people are often isolated. Social involvement, the Cardiff University study found, was the single most important cause of happiness or unhappiness.

One must be cautious with such studies because however scrupulous the researchers a degree of subjectivity is inevitable. Nonetheless the equation of isolation with unhappiness will, I think, strike a strong chord with most.

There is also the question of a people’s self-confidence. If a nation’s visible and everyday manufactures are predominantly foreign, it tends to produce a sense of dependence in the individual. A man looks around and can find next to nothing he can identify as produced either in his own country or made by companies owned by his countrymen. Not unnaturally he begins to lose confidence in the ability of his own country to stand alone. Peoples throughout history have allowed themselves to be conquered simply because they believed themselves to be generally inferior to those who confronted them and slaves have been routinely controlled by owners who deliberately attempted to reinforce their sense of inferiority.

16. Geopolitics

Free trade is postulated on an absurdity, namely that the world will no longer see wars which will significantly disrupt trade, or at least the trade of the First World. It is a fool’s paradise.

Those with memories greater than that of a goldfish may recall the help and support Britain received from her supposed EU “partners” in the Falklands. Remember how France supplied military equipment in the form of missiles to the Argentine during that war. Imagine what would have happened if Britain at the time had relied largely on equipment which was either wholly or partly produced abroad. Suppose, for example, her main fighter aircraft had been produced by an EU consortium (as it soon will be), what guarantee could Britain have had of fresh supplies of spare parts and weapons during the Falklands war?

The dependence on foreign suppliers affects even the greatest states. The New York Times (29 Sept 2005 – “More US weapons have foreign roots”) documents the reliance of the US military on foreign suppliers. This is still small as a percentage of the whole defence budget but it is growing and already encompasses important areas such as bio-chemical warfare protective suits.

17. The democratic deficit

“Free trade” emasculates democracy. It does this by confining politics within narrow limits. The present “free trade” agreements mean that no political party can easily stand on a platform of extending state intervention, whether by nationalisation, trade restrictions such as embargoes or the subsidy of its own industries. A party which wished to do any of these things could of course propose to withdraw from the treaties, but that would be in practice a very difficult course to follow, especially where the treaty obligations go beyond mere trade such as those involved in membership of the European Union.

Loss of democratic control is obviously to the disadvantage of the masses. However, it also has implications for competition. The prevention of the formation of monopolies and cartels can be done at the national level, but it is impossible when companies become supranational. You offend against America’s anti-trust laws? No problem, you remove your manufacturing abroad to countries which are happy to have you (or at least their clients are) regardless of what arrangements you may have made with competitors or the any monopoly position.

18. Does “free trade” increase competition and choice in the long run?

In the industrialised world at least, the experience of less restricted trade since 1945 is that competition has reduced not merely in the capital intensive industries and occupations but in those which are not obvious. The numbers of farmers has greatly contracted, but so have the number of storekeepers as chain stores and supermarkets have overwhelmed the individual proprietor. In fact, it is difficult, perhaps impossible, to find a mature field of economic activity, that is ,  one which has not sprung up since 1945, which has not displayed reduced competition within the post-war period.

Some of this reduction in competition is simply due to the working of the domestic market towards monopoly, for example, the growth of chain stores, but much of it is directly related to the removal of protection for First World economies.

It is true that large parts of the world have industrialised and increased the number of international competitors, but the overall number of businesses in the developed world has been reduced. multinationals control much of the economic activity of the Third World and, in some industries, dominate the national markets of the First World.

The car industry is a wonderful example of the squeezing of competition. All over the world car companies are being taken over by the giants and many car companies which do exist rely on state aid and favours. The number of companies now being small (and becoming smaller) compared with the number even 40 years ago. Moreover, many of the car companies which do still exist do so only because of state subsidy and protection.

Other traditionally important industries where competition is greatly reduced are aerospace, aviation, shipbuilding, oil, chemicals, steel and farming.

19. The reality of our economic circumstances

What we have does not even fall within the arbitrary and narrow definitions of “free markets” and “free trade” which most of their adherents espouse. States still protect their economies with state subsidies, favourable tax regimes, quotas and tariffs. Nonetheless, protectionist barriers have been reduced sufficiently to severely damage first world industries through products from the developing world with their absence of labour laws and wages many times less than those of developed economies.

First World economies have also exported vast numbers of jobs to the developing world. These range from manufacturing to skilled white collar work such many IT functions. The old middle-class belief that they were immune from the effects of globalisation has received a rude buffeting.

At the same time as jobs and industries have been exported, the industrialised world has increasingly allowed the purchase of native companies by foreigners. Perhaps the most dramatic example of this has been the complete transfer of London merchant banks to foreign ownership.

The fourth strand in the modern “free trade” web is immigration. Since 1945, with the exception of Japan, the First World has allowed through a mixture of design and neglect of border controls, vast numbers of immigrants into their territories, most of whom have been unskilled or low-skilled.

The primary consequences of the slowly evolving post war international economic regime have been two. The first has been the gradual growth of dependence on the imports of vital goods and services by the developed world and a loss of governmental control of companies within their borders, not least because any large multi-national can hold the threat of upping sticks to another country if a government does not play ball.

The second consequence has been the degradation of the economic circumstances of those whose jobs were most at threat from the internationalisation of trade. Those affected are mainly the poorer and less qualified workers and their dependents. They have found their opportunities for work much reduced and the pay and conditions for the suitable work which remains eroded by extra competition from both native workers chasing fewer jobs and immigrants competing for the same jobs.

Those whose jobs opportunities have been degraded have suffered a form of theft. Had mass immigration and the export of jobs been prevented, the wages for the jobs taken by immigrants would have been higher than they are when subjected to the additional competition of immigrant labour and the exported jobs would not have been exported, which in itself would have tightened the labour market. In societies of rising aspiration, this could result in jobs considered menial being better rewarded than those which enjoy high status under “free trade” circumstances. It might be necessary to pay a sewage worker as much as a doctor. Doubtless many would throw their hands up at this. But there is no logic to such a response, because in a society with a large private enterprise component a wage is simply a response to the value the market puts on a job. Unskilled workers may not earn as much as the average doctor or lawyer at present, but skilled tradesmen such as plumbers and builders often do.

20. Why elites are so keen on “free markets” and “free trade”

“I just think that a lot of modern corporate capitalists — the managerial class basically — has no loyalty to any country anymore, or any particular values other than the bottom line.” (Pat Buchanan quoted by Daniel Brandt in his article “Class Warfare” in issue 13 of Namebase Newsline -http//www.namebase.org/news13.html).

Buchanan is grasping a demon which he only dimly apprehends. What is happening is vastly more significant. We are presently witnessing the creation of an international class of plutocrats who care for nothing but their own class. They have the potential to form a true international aristocracy. If that happens, the imperfect democratic control the masses have been able to exert over their elites in the past century will end. The prime tool for the creation of such an international aristocracy is “free trade”.

There are parts of Western elites which are more or less reluctant to embrace “free markets” and “free trade”, but the general economic trend is clear: the internationalist, globalist creed is the dominant philosophy when it comes to trade and increasingly the idea of “free markets” in the domestic sphere is being accepted in practice if not in overt political policy.

Why have these elites moved from their previous socially oriented nationalism to internationalism? The answer to this question reveals the nature both of elites generally and the particular philosophy they currently support.

In most circumstances throughout history the wishes of the mass of a population have been of little or no account in any formal sense. The masses made their presence felt through rioting and social disturbance or as pawns in the service of elite members who wished to rebel. An elite took note only when they were frightened enough – the creation of a form of national public assistance by the Poor Law of 1601 is a classic example of such behaviour.

Eventually, representative government evolved to the point where the masses began to have a direct say in the political process through the vote. The elite as a group did not welcome this but felt it could not be resisted. It was not democracy to be sure but elective oligarchy, which was buttressed by elite constructed devices to exclude new entrants into the political process such as first past the post voting, election deposits and a very strong party system. Nonetheless, once the franchise was broadened the masses were able to exercise a large degree of democratic control because politics was still national and a political party had to respond to the electors’ wishes. The elite resented this control over their behaviour as all elites do and looked around for a way to diminish democratic influence. They found the means to do it through internationalism.

In a sovereign country elected politicians cannot readily say this or that cannot be done if it is practical to do whatever it is. That is a considerable block on elite misbehaviour. So elites decided that the way round this unfortunate fact was to commit to treaties which would remove the opportunity for the electorate to exercise control. The most notable example is the Treaty of Rome and the subsequent treaties which have tied Britain into the EU.

Vast swathes of policy are no longer within the control of the British Parliament because of these treaties. Add in the treaties tying Britain to the UN and the WTO and the commitment of every mainstream British party to them, and democratic control has essentially gone.

But internationalism is not simply a bureaucratic elite device to weaken democratic control, it is a sociological event in itself. An elite thinks of itself as a separate group, a group which may in some circumstances extend beyond national boundaries and jurisdictions. The medieval aristocracies of Western Europe thought themselves part of a chivalric whole. When Charles I of Egland was executed in 1649 the monarchs of Europe were horrified because they thought it would set an example for other royal killings.

The ruling elites in the First World today have a class interest which binds them more closely to one another than to the people they rule. Indeed, there is arguably a greater sense of international elite solidarity than ever before. This is because modern communications allow people, goods and ideas to move with an unmatched ease. Because of this the international class can constantly revitalise and extend their group solidarity.

The advantage to the elites of this culturally based international solidarity underwritten by many personal elite relationships across national boundaries, is that it allows them to weaken even further their dependence upon their immediate (native) populations, because not only does a particular national elite have a ready made excuse for not doing something – our treaty obligations will not permit it – but the personal relationships and the growing sense of class solidarity increases the confidence and hence the willingness of the various national elites to act ever more in the international elite class interest.

Indeed, the more they are together and the more they act together, the more natural it will seem.

It is important to understand that elites are not engaged as a group in a conscious conspiracy against the masses. What happens is that the psychological and sociological forces which press upon us all lead the elite to adopt policies which always lead to their retention of power. It is not difficult to see how this happens.

All human beings have a powerful ability to write a narrative in their heads which will persuade them that they act not from self-serving or disreputable reasons but honourable and socially useful ones. The consequence of this is that while individual members of an elite will consciously comprehend the likely effect of their ideology, the majority will simply accept their ideology at face value. This helps to bolster and stabilise the elite’s position because no elite ideology ever overtly states that the masses will be disadvantaged if the ideology is followed, and in the case of formal democracies, the ideology positively claims to materially better society as a whole. This will emotionally reassure most elite members, who will bolster their acceptance of the ideology through inter-elite conversations – if most or all those in a group are positive about something, that is most powerful social reinforcer.

21. A sane alternative to globalism

Economic history suggests that the most effective general strategy to promote economic development in a country is to allow competition within the domestic market (where it does not create serious social discord) whilst regulating international trade through protectionist measures sufficient to maintain the general capacity of a country to point where it can maintain itself in an emergency such as war or blockade and be sovereign in most circumstances.This would require the judicious use of embargoes, tariffs and quotas to ensure that all the vital industries remain as a presence in Britain.

A few industries should be in principle wholly supplied from the British market. These are defence equipment and the various energy sources. The reasons for defence equipment provision being domestic are simple: any foreign supplier can cease to supply goods for political reasons or simply be unable to produce the goods when wanted at all or in sufficient quantities.

Energy supplies should be domestic because if they fail the whole of society is brought to a halt. Self-sufficiency in energy in any advanced country could be achieved in the medium term by nuclear power supplemented perhaps by new sources of energy such as wave and current power and bio-fuels.

A country should also build up a stockpile of essential materials such as metals and the minerals used in the chemical industry. Five years national supply should be a minimum.

A country should be able to feed its population from its own production at a pinch. In Britain this is possible with modern crop yields and animal husbandry. Crop yields are considerably greater than they were even in WW2 and the opportunities for increasing the volume of animal products have multiplied greatly over the past 60 years, for example, in the massive development of poultry farming since 1945.

75% of the market in every other vital industry should be reserved for the domestic market. What is a “vital industry”? Try these for starters: metal (especially steel), chemical, biotech, computers, robotics, motor vehicles, shipping, aerospace, clothing, building, machine tools.

I would also reserve to domestic production at least 25% of the market for goods that are useful but not vital to provide a base for an expanded home production in times of emergency. Trade in wholeheartedly nonessential goods – Christmas trees, pogo sticks and suchlike – could be “free”.

I am not arguing for autarky. What I am advocating are trading circumstances which allow a nation to defend its national interests, particularly in time of war or international crisis. The measures I propose would produce self-sufficiency in food where necessary, the maintenance of the ability to manufacture a complete range industrial goods and most importantly the maintenance of an arms industry which can produce a full range of weapons necessary for the defence of the country.

Such a system would provide the security the state requires and permit very substantial international trade even in essential goods.

Obviously such a regime could not be followed in its entirety by most states. However, all could exist within those parts of it suited to their circumstances, for example, Britain could manage the entire regime, many third world countries could be self-sufficient in food.

22. “Free markets” and “free trade” as a religion

Free marketeers fancy themselves to be rational, calculating beasts. In reality, their adoration of the market is essentially religious. They believe that it will solve all economic ills, if not immediately, then in the medium to long term. Armed with this supposed objective truth, they proselytize about the moral evils and inefficiencies of public service and the wondrous efficiency and ethical outcomes of private enterprise regardless of the practical effects of their policies or the frequent misbehaviour of those in command of large private companies. Their approach is essentially that of the religious believer.

Like the majority of religious believers, “free marketeers and traders” are none too certain of the theology of their religion. (I am always struck by how many of them lack a grasp of even basic economic theory and are almost invariably wholly ignorant of economic history). They recite their economic catechism sublime in the concrete of their ignorance.

The religion has its roots in the first half of the 18th century when there were occasional attempts to suggest tariff reform, but the idea only became a serious political policy in the 1780s with the advent of Pitt the Younger as Prime Minister in 1784 who long toyed with “economical reform”.

The 18th century also provided the religion with its holy book, The Wealth of Nations by the Scottish philosopher and economist Adam Smith. This strongly argued for “free markets” and “free trade”, but Smith also recognised the demands of national security, the need for government to engage in social provision such as road building and maintenance which would not otherwise be done and, must importantly, the nature of a society and its economy. Here is Smith on the Navigation Acts: “…the Act of Navigation by diminishing the number of buyers; and we are thus likely not only to buy foreign goods dearer, but to sell our own cheaper, than if there were a more perfect freedom of trade. As defence, however, is of much more importance than opulence, the Act of Navigation is, perhaps, the wisestof all the commercial regulations of England.” (Wealth of Nations Bk IV. ch ii)

But Smith and his book suffered the fate of all those who found religions, secular or otherwise. As the decades passed Smith’s cautious approach was redrawn in the minds of his disciples to become a surgically “clean” mechanical ideology in which all that mattered was the pursuit of profit and the growth of trade and industry through the application of the “holy edicts” of open markets and comparative dvantage. The disciples, like other religious believers, avidly quoted the passages from their holy book which suited their purposes and ignored those which did not. They also found a further holy text in homas Malthus’ Essay on Population of 1802, whose predictions, although unproven by events, could be used to demonstrate that economic expansion was vital if widespread starvation was not to occur.

The clinical, soulless and inhuman nature of the laissez faire idea as it evolved is exemplified by the English economist David Ricardo. Here is a flavour of his mindset: “Under a system of perfectly free commerce each country naturally devotes its capital and labour to such employments as are most beneficial to both. The pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most economically, while increasing the general mass of the production it diffuses general benefits, and binds together by one common tie of interest and intercourse the universal society of nations”. (David Ricardo in The fall of protection p 174).

The Napoleonic wars largely foiled Pitt’s wish for broad reform and placed “free trade” in suspended animation as a serious political idea until the 1820s, when cautious attempts at tariff reform again were made. But underneath the political elite was a radical class who were very much enamoured of wholesale economical reform. With the Great Reform Act of 1832 they were given their opportunity to become part of the political elite. They took it with both hands, their most notable and extreme proponents being John Bright and Richard Cobden backed by the intellectual power of David Ricardo – all three became MPs.

Within a dozen years of the first election under the Great Reform Act’s passing, Parliament had been captured by the disciples of Adam Smith and the pass on protection had been sold by of all people a Tory prime minister, Sir Robert Peel, an action which kept the Tories from power for most of the next 40 years.

Such was their religious credulity that the “free traders” advocated not merely opening up Britain’s markets, both at home and in the colonies, to nations who would allow Britain equivalent access to their markets, they advocated opening up Britain’s markets regardless of how other nations acted. The consequence was, as we have seen, disastrous for Britain.

Disraeli in a speech on 1st February 1849 cruelly dissected this insanity:” There are some who say that foreigners will not give us their production for nothing, and that therefore we have no occasion to concern ourselves as to the means and modes of repayment. There is no doubt that foreigners will not give us their goods without exchange for them; but the question is what are the terms of exchange most beneficial for us to adopt. You may glut markets, but the only effect of your attempt to struggle against the hostile tariffs by opening your ports is that you exchange more of your own labour each year for a less quantity of foreign labour, that you render British labour less efficient, that you degrade British labour, diminish profits, and, therefor, must lower wages; while philosophical enquirers have shown that you will finally effect a change in the distribution of the precious metals that must be pernicious and may be fatal to this country. It is for these reasons that all practical men are impressed with a conviction that you should adopt reciprocity as the principle of your tariff – not merely from practical experience, but as an abstract truth. This was the principle of the commercial negations at Utrecht – which were followed by Mr Pitt in his commercial negotiations at Paris – and which were wisely adopted and applied by the Cabinet of Lord Liverpool, but which were deserted flagrantly and unwisely in 1846″. (The fall of Protection pp 337/8″).

Ironically, the “free traders” make the same general errors as Marxists. They believe that everything stems from economics. For the neo-liberal the market has the same pseudo-mystical significance that the dialectic has for the Mar ist. Just as the Marxist sees the dialectic working inexorably through history to an eventual state of communism (or a reversion to barbarism to be exact), so the neo-liberal believes that the market will solve any economic problem and most social ills. Neither ideology works because it ignores the realityof human nature and its sociological realisation.

The one track economic mentality of the early “free traders” is well represented by the father of J S Mill, James Mill:”The benefit which is derived from exchanging one commodity for another arises from the ncommodity received rather than the from the commodity given. When one country exchanges, or in other words, traffics with another, the whole of its advantage consists of the in the commodities imported. It benefits by the importation and by nothing else. A protecting duty which, if it acts at all, limits imports, must limit exports likewise, checking and restraining national industry, thus diminishing national wealth.” (The fall of protection p 174). And to Hell with any social or strategic consideration or changing economic circumstances.

After the Great War and the fall of “free trade” as public policy in 1931, the religion went underground for nearly fifty years. When it re-emerged as a political idea in the 1970s the politicians who fell under its spell were every bit as unquestioning and credulous as those of the 1840s. Tony Blair’ statement on Globalisation, ie, free trade, at the 2005 Labour Party Conference shows that it is alive and kicking today.

Scorning any attempt to discuss Globalisation, Blair said of those who wished to oppose it “You might as well debate whether autumn should follow summer”. (Daily Telegraph 1 10 2005.)

None of this would matter very much now if those who believe in “free markets” and “free trade” were without political power. Unfortunately, theirs is the elite ideology of the moment and the past 25 years. In Britain, the Tories may be more fanatical in their devotion to the market as panacea, but Blairite Labour have caught more than a mild dose of the disease. A good example of this is their response to house price hyperinflation where they desperately and futilely attempt remedies within the constraints of what they perceive to be “free market” disciplines rather than opting for the obvious state generated remedies such as restricting immigration, building a great deal of social housing and forcing developers to release land for building.

Both the traditional Left and Right have been duped by globalisation. The Left initially welcomed globalisation as a dissolver of national sovereignty, but they are discovering by the day just how restrictive international treaties and membership of supra national groups can be. As things stand, through our membership of the EU and the World Trade Organisation treaties, no British government could introduce new socialist measures because they cannot nationalise companies, protect their own commerce and industry or even ensure that taxpayers’ money is spent in Britain with British firms. A British government can have any economic system they like provided it is largely free trade, free enterprise.

The Right are suffering the same sickness with different symptoms. They find that they are no longer masters in their own house and cannot meaningfully appeal to traditional national interests because treaties make that impossible.

But there is a significant difference between the position of the two sides. The traditional Right have simply been usurped by neo-Liberals in blue clothes: the traditional Left have been betrayed by a confusion in their ideology which has allowed their main political vehicles to be surreptitiously by the likes of Blair.

The left have historically objected to “free-trade” on the grounds that it destroys jobs and reduces wages. But what they (and especially the British Left) have rarely if ever done is walk upon the other two necessary planks in the anti-“free trade” platform: the maintenance of (1) national sovereignty and (2) a sense of national cohesion. The consequence is that the Left has been and are still struggling with two competing and mutually exclusive ends: internationalism and the material improvement of the mass of the people.

23. An elite ideology

The best way of judging any political ideology is to ask cui bono? (who benefits?) The obvious answer in the case of “free markets” and “free trade” are those who believe (with good reason) that they nor their dependants will never be amongst those who will suffer the ill-effects of free trade. These people are and will continue to be overwhelmingly drawn from the middle and upper classes for the same reasons that such classes have always maintained their superiority, namely that such people will have inherited wealth, social connections and superior opportunities for education which are denied to the majority.

The new international elite is neither left nor right. Its ideology is simply designed to promote the interests of the elite. It has aspects of right and left, but they are merely the policies which allow the elite to both disguise their true intention and to give a pseudo-moral camouflage to their ends. They speak of the internationalist equivalent of “motherhood and apple pie” with exhortations to “end world poverty” and fund a “war on disease worldwide”. If I had to find a term to describe this elite I think I would settle for neo-Fascist because so much of what is proposed is reminiscent of fascism.

It is also telling that Western businessmen who ostensibly support the idea of the positive effects of competition arising from “free markets” and “free trade” never want it for themselves. They always happily grab a state subsidy or an embargo if it is to their advantage. None of the US airlines had any hesitation in grabbing billions of dollars from the Federal government after 911. Large companies publicly complain of government regulation while secretly welcoming it because they can bear the cost of it more easily than their smaller competitors. Multinationals shamelessly play one country off against another in their search for massive subsidies and other favours before they deign to operate in a country.

Countries play the same game, cheating wherever they can. And the more powerful the state the greater the cheating, both in terms of helping particular industries with direct state aid and in the formulation of the treaties governing world trade. Hence, the USA presents itself as the ultimate champion of free enterprise whilst being both now and throughout its history one of the greatest of protectionists and state subsidisers of its industries – that it is seen widely as an enterprise society is one of the great propaganda triumphs of history. Its behaviour after 911 is symptomatic of the unequal nature of modern “free trade”.

The US not only handed, as mentioned above, billions to its ailing private airlines, but put up protective tariffs to protect its steel produces.

It was ever thus. The two greatest names of the early Industrial Revolution, Josiah Wedgewood and Matthew Boulton, were happy to climb on the Enlightenment bandwagon with its beliefs in the universality of Mankind and advocate lesser tariffs and freer trade -until the proposed freeing threatened their own businesses.

What goes for businessmen goes for the individual worker. Who has ever met someone whose job was threatened by “free trade” speaking in favour of it?

Abe Lincoln’s used to put this question to pro-slavers who said slavery was a boon for the slave because they were provided for and were free of normal responsibilities: “What is this good thing that no one wants for himself?” An equivalent question should be put to the “free traders”.

The truth is simple: “free markets” and “free trade” are simply part of an elite ideology and like all elite ideologies they serve the purposes of the elite first, second and last. Those not of the elite who espouse it act merely as useful idiots to promote the interests of the elite.

Opposition to globalisation should not be a Left or Right issue. The socialist and the Conservative should both resist it because it removes the ability of the electorate to control those with power and the power of their political movements to realise their ends.

What should be public and what should be private?

Robert Henderson

Since 1979 every British government has perpetually tinkered with the balance  between private or state provision. Despite the Thatcherite cry for small government the state has has spent  a very large slice of GDP t throughout that time, In 1979 the percentage was 42.75% and in 2010 45.45% The lowest in the period was 34.25%  in 1989 (http://www.ukpublicspending.co.uk/uk_20th_century_chart.html).  However, there have been considerable changes in how the money has been spent.  All the major  nationalised industries have been placed in private hands, Britain’s defence capability has been reduced dramatically;  great swathes of public provision has been either put out to private contract entirely or restructured through mixed public/private enterprises such as the Private Finance Initiative (PFI) and council houses have been  sold off without any attempt to replace them ensure an adequate supply of affordable housing for the future.

Recent governments of any political colour have shown themselves to be firmly in the globalist camp and have allowed more or less unrestricted immigration which has both restricted employment opportunities for native Britons and reduced  wages.  This has added to the massive  unemployment, admitted and disguised, which was created by the structural unemployment resulting from the destruction of Britain’s heavy manufacturing and extractive industries in the 1980s. The immigrants have  also competed for houses and public services  such as education and healthcare.  All of these things mean that much more of public spending goes on the Welfare State and allied services than it did in 1980.

The globalist mania is still upon us with the belief in all major parties that the market is the panacea. This leads the present government to  continue with the idea that anything done by private enterprise is by definition superior to that which is provided by the state, the two great privatising pushes being to privatise the NHS by stealth and the Royal Mail by any means possible, with the first  tentative steps to sell off the country’s roads being taken in their wake. There is next to no serious discussion about what should be privately  and what should be publicly provided. This essay is an attempt to fill that gap by asking the question what should be provided by the state and what should be left to private business and not-for-profit organisations such as charities.

It is easy in principle to decide whether something should be left to private or public enterprise. Simply ask five questions:

(1) Is the service or product generally considered to be a necessity?

(2) Will profit compromise safety?

(3) Is the service obviously inappropriate to be left in private

hands, for example policing or defence?

(4) Can the service be provided by private enterprise without subsidy?

(5) Can free enterprise be reasonably expected to deliver the necessity universally?

If the answer to any of (1)(2)(3) is YES or the answer to either (4) or (5) NO, then it should in principle be provided either directly or indirectly by the state.

What should be provided directly by the state?

Certain things should be reserved to the state as a matter of absolute principle. They are defence, foreign policy, policing, justice, the implementation of judicial sentences and decisions and the administration of welfare. They should be reserved absolutely because either they involve the use of force or the threat of force, punishment or the distribution of taxpayers’ money in areas such as unemployment benefit.

For reasons which I shall shortly examine, the state should also directly control any essential service which is a natural monopoly. What counts as a natural monopoly? Railways and utilities such as water and energy are examples They are natural monopolies because it is simply not practical to have competing lines running to the same destinations or competing utility pipes and cables supplying the same area.

It is possible, as has happened in some of the British privatisations, to allow different companies to compete to supply services such as trains, energy and water, but that is at best an insufficient or incomplete competition and at worst a wholly bogus one because the actual lines of supply – the railway track and the pipes or cables – still have to be maintained and owned by some organisation, private or public. That means the infrastructure has to be either owned publicly or, if owned by a private company, the company must be rigorously controlled by the state, as is the case with the British telephone landline infrastructure which is owned by the privatised British Telecom.

British government interference with natural monopolies since privatisation has gone far beyond controlling the infrastructure. In the case of the railways, a considerable public subsidy has been paid and continues to be paid to the private operators. In every monopoly industry a regulator has been appointed to control both prices and, in theory at least, to force companies to do things such as provide a certain level of investment in new equipment and to be conscientious when it comes to maintenance and operation of the infrastructure. To pretend that these monopoly industries are private companies working in a free market is patently absurd. They are effectively public services contracted out to private contractors.

A few services only work as monopolies, the classic example being the universal letter post, that is, letters delivered to any part of a territory for the same price. This only works if it is a monopoly because if there is competition from private companies or municipal postal services they will take sufficient of the profitable trade in the towns and cities to make it impossible for the universal supplier, in this country the Royal Mail, to subsidise the loss making deliveries to parts of the country outside the main urban centres. No private company would ever provide universal coverage unless they had a monopoly.

Why should the state directly control essential monopolies? Firstly, because there is no opportunity for meaningful competition and consequently the state must step in to prevent abuse of the monopoly position. To do that, as we have seen, it has to interfere very strongly with the running of the monopolies. In practice, it can only efficiently do this if it directly controls the monopoly.

If the state subcontracts an essential monopoly to private business or allows private business to buy a monopoly two general problems arise. The first difficulty is that a private business may at any point fail as a business or simply refuse to continue with a contract if it is not making money for the business. If that happens the state is over a barrel because it does not have the resources to immediately take over the enterprise, nor is it probable that another private company would be able or willing to step in at a moment’s notice – the worst outcome would be the cessation of a vital industry. Nor, if a company failed, is it obvious how a Government would prevent its assets being sold by a liquidator. In principle when Railtrack failed – the company which after privatisation had the responsibility for maintaining the infrastructure of the British rail network – the shareholders owned the assets (the railway infrastructure including much highly profitable land) and the creditors had a legitimate charge on them.

Clearly no government could allow the railway or vital industries such as water, gas and electricity simply to go under, either at the national or regional level. Hence, any government will, when shove comes to push, have to pay through the nose (your taxpaying nose in fact) to maintain the threatened industry, whether that be through enhancing a contract to make it more profitable, granting more profitable contracts to a new private contractor or through the payment of outright subsidies. A government is in a similar bind if a company is doing a bad job: they cannot simply sack them because who is to take their place?

Natural monopolies also raise other problems if they are in private hands. There is insufficient public control over areas such as maintenance and strategic planning. Good British examples can be found in the privatised water and energy industries. In the case of water the privatised companies have failed to invest adequately to stop the considerable loss of water from cracked pipes. Nor has a single major reservoir been built in England since privatisation. These investment failures have occurred despite the water companies consistently making healthy profits. The Water Regulator huffs and puffs but achieves little because the water companies know he can do little. Indeed, he has to date not even fully used the powers he has despite issuing many warnings to the water companies. And the Government? Well, they could pass a new law giving them direct powers over the water industry but what then? If a water company simply refuses to do what is needed where does the Government go? Nowhere fast is the answer.

With energy it is the strategic planning which is emasculated. Successive British governments have allowed Britain to sleepwalk into a position where the country went rapidly from being self-sufficient in energy to becoming a net importer. This was entirely predictable as it was known long before it happened that North Sea oil and gas was going to decline substantially from the beginning of the century. Despite this no meaningful strategic planning has taken place since privatisation with governments until very recently childishly claiming that it was not for them to interfere in the actual provision of energy now the industry is privately owned (the Blair Government has just woken up to the strategic danger of being dependent on foreign supplies but even now -2006 – no definite decision has been made on future British energy policy). The upshot of this lack of planning has been rapidly rising energy prices since 2005.

If water and the energy utilities had remained in public ownership, the fact that politicians had ultimate responsibility for them would have ensured that maintenance and strategic planning was not neglected because no politician or government could afford to be blamed for a water crisis or soaring power prices. Government could also subsidise  prices, something it cannot do now even if it chose to because of EU  competition rules. . The same principle applies to most of the privatised industries – take away the political responsibility and the profit motive rules.

Certain things are simply too important to be left to private efforts. Natural monopolies such as the railways, water and gas are literally essential to the survival of an advanced state such as Britain. Because of that stark fact alone they need to be treated as something much more than a commodity which can be simply left to the market. They should to be seen for what they are, strategic assets, and placed firmly under national control.

There is a further general reason why essential monopolies should be in public hands – the need for general provision. Left to private enterprise, even with an unfettered monopoly only the profitable parts of an industry would be supplied. Roads and railways would only be maintained if the traffic warranted it. Gas, electricity, water and telecommunications would only be supplied where sufficient profit could be made. The problem is we do not want roads and railways only over profitable routes, or the utilities such as gas and water supplied only to urban areas. We want them over the entire country. Only public provision can truly satisfy that need. Of course, private companies can have a duty to provide a general provision placed on the them but what if none is willing to take it or they take on the responsibility but then fail to meet it? The government then has to decide to either subsidise the company directly or to loosen the contract conditions to which the company has agreed.

The final type of enterprise which the state should always take in hand are those which experience tells us are beyond the resources of private business. Private enterprise can never be trusted to handle Tunnel. Margaret Thatcher insisted that no British public money would be involved and that private enterprise would bear the entire cost. It soon became clear that this was a nonsense. The Tunnel itself was completed but the companies which built it were not so much bankrupt as on another planet called Debt. And this was despite the very serious amounts of money pumped into the enterprise by the French Government,  both directly and indirectly. The situation was rescued, if one can dignify what happened with the word, by the banks and other  creditors rescheduling debts so far into the future that they all but vanished and the French Government surreptitiously pushing in more money via the French banks. To this day, the Channel Tunnel is the whitest of white private enterprise elephants, with the latest ” debt restructuring” always just around the corner.

Direct provision also has a further benefit. While assets are publicly owned and employees directly paid by the state, it is politically much more difficult to reduce or abolish that part of public provision. If the provision is supplied by a private company their contract can simply not be renewed or cancelled. If the provision is directly supplied, the government has the ticklish problem of having to take responsibility for the redundancies, something which greatly raises the profile of the removal of the provision.

The best example of the dangers of losing direct provision is the gradual privatisation by stealth of the NHS. To suddenly privatise the entire NHS would be impossible, but salami slice it over ten or fifteen years by continually increasing the private sector involvement and the position is completely different. Then the politician can use excuses such as “So much of it is in private hands now that the rest might as well be,” “We can’t have such a comprehensive service because private companies can’t provide it” and “Costs have risen so much that we have to cut this or that”. The whole system will be such a confused mess of public and private that the public will not know what to think. Also, the privatisation by stealth may have surreptitiously changed the way the public view the NHS so they see it no longer as a national institution but merely as a provider of medical care through disparate means. That in itself would reduce the moral outrage needed for any successful public protest.

The railways – a classic public service

The railways in Britain are not simply a private enterprise. They are a necessity to maintain general economic activity. Take away the railways and a substantial part of those employed in London could not continue to work there because the roads will not take the extra traffic. The same applies, to a lesser degree, to other large cities and towns.

The railways also fulfill an important social functions in providing transport to those without cars, by reducing car use generally and moving much heavy goods traffic from the roads. Finally, railways have a strategic value in times of war or blockade.

Without massive public subsidy the railways could not be maintained. No national railway system in the First World operates without taxpayers’ subsidy. Parts of systems may be profitable but not the entire system. It is not that our railways would simply shrink if left entirely to private enterprise, most of the system would not run at all. Commuter traffic is running at near capacity in the South East of England and fares are already so high generally that the massive price hike needed to meet the full cost of rail travel would result in a vicious circle of decreased traffic and decreased revenue.

The cost of maintaining Britain’s railways is simply beyond the private sector. Profit can be made on some intercity routes but that is about it. Even with the massive subsidies given to private companies since privatisation – ironically substantially larger than the pre-privatisation subsidies in real terms – private companies have signally failed to invest adequately. Indeed, the companies have radically reduced staffing levels – which may well have contributed to some crashes – and have constantly failed to meet their timetables.

The farce of the company with responsibility for railway maintenance immediately after privatisation in Britain, Railtrack, is a cautionary tale in itself. It created a completely different culture from that under the nationalised railways. Instead of employing most of the labour directly, they engaged subcontractors to do most of the work. The army of skilled workers built up by the original private companies and inherited by the nationalised ritish Rail was dispersed in reckless fashion and, inevitably, control over standards of maintenance became much diluted as it always does with subcontracting.

To put the cherry on the Railtrack story, the financial resources of the company, even with public subsidies, proved hopelessly inadequate. In 2002 the plug was pulled and it went into administration to eventually re-emerge restructured as a not-for-profit company  Network Rail. But before the administration was done and dusted, the axpayer had to cough up a great deal of money to compensate  shareholders because the government was faced with legal  action by the shareholders alleging maladministration, an  action which looked as though it might not only succeed but in the  process wash some very dirty government linen in public over exactly why and how Railtrack went into administration.

Safety

There is a further consideration with public services – safety. It may be that the public will have greater confidence in, for example, a state run railway simply because it is state run. The public’s confidence might be completely unfounded but that would not matter: theconfidence itself is a valuable thing.

The experience of all privatisation has been to make money by enforcing massive job cuts. Of course there was overmanning during the nationalised industry days. The trouble is that the cuts made since privatisation have often gone beyond improving efficiency. They went to the limits of safety, and probably past it, in pursuit of profit. Maintenance staff were reduced and consequently maintenance was reduced. The facts which have emerged since the Watford train crash in 2000 shows beyond doubt that many of the people involved in rail track maintenance are inexperienced at best and completely raw at worst.

When the state does not take direct responsibility for a service which has inherent safety consideration, the danger is that governments will respond to any safety fears by imposing ever more onerous obligations on the private suppliers of the service. The private companies are also susceptible to being overly cautious after an accident has happened or a possible danger becomes the subject of public comment.

Train crashes in Britain have been thankfully rare under both nationalised and privatised regimes, but when they happened under the nationalised industry the government was able to keep the show on the road because the public had confidence that safety was not being compromised simply to save money. Since privatisation crashes

have been met with absurd caution by both the bodies responsible for the infrastructure and the Government, with the national rail network being reduced to a farce after cracks in some rails were found after the Watford crash mentioned above. For the better part of a year, rail travel became a misery as hundreds of emergency speed restrictions were introduced and rails were tested for cracks and a massive programme of ail replacement was begun. The consequence  was horrendous delays and vast numbers of cancelled trains. The effects are arguably still being felt in 2006.

Perhaps the classic industry to which the safety consideration applies is the production of nuclear energy. Despite this this Government is saying that if a new generation of nuclear power stations is built it must be with private money and run by private companies. A clear case of  ideology – private is best – driving common sense out of the window. (It should be added that Labour said the same when in office.)

Foreign ownership further complicates matters. When a massive explosion devastated a fuel storage and refinery complex in Hemel Hempstead in 2006 and further parts of the complex were thought to be in danger of exploding, it was impossible to get the necessary information quickly because the company which owned the complex was French and no one with  sufficient authority could be immediately contacted.

What should be provided indirectly by the state?

Just because something is a necessity does not mean that the state must or should provide it directly. In fact, the less direct provision the better, because in a free society government should only touch that which it needs to touch. For example, whereas there are not many possible suppliers of air traffic control systems or railways, there

are many possible suppliers of food. Government may safely leave food distribution to the private supplier and provide assistance where it is needed through payments to those in need. It should be noted that it is not the market or private enterprise which provides the general provision in cases such as food but the giving of taxpayers’ money to those who need it which provides the general provision.

Service is really the crucial criterion. Governments should become directly involved in industrial work very rarely – the exceptions are defence suppliers, utilities such as water, gas and electricity because of their status as natural monopolies and their immense importance. No nationalised industry making or extracting anything has ever been an economic success. Governments running manufacturers, farming or the extractive industries such as coal mining are neither necessary nor desirable, because private enterprise will always do the job adequately and more efficiently provided the economic circumstances are right,that is, vital industries are protected through tariffs, quotas or subsidies to the extent necessary to make them profitable.

But such vital industries are the Government’s business because they have both a strategic and a social and economic value. Consequently, governments do have is a responsibility to ensure that they are maintained.

Any country which cannot feed itself, produce all essential manufactured products and services, is not self-sufficient in energy and does not have substantial reserves of essential raw products such as iron ore, is constrained in what it may do both nationally and internationally and the greater the reliance of imports, the greater the constraint. Of course any advanced industrial state will not be completely self-sufficient, but it is possible for a country to have a large degree of self-sufficiency in the essentials especially food. With modern crop yields and modern animal husbandry, Britain could feed itself at a pinch if her market for food was protected to allow reasonable profits to be made by farmers using not merely the best or most convenient land, but the more marginal land as well.

Where a country is severely dependent on imports, as is the case with Britain, they are utterly at the mercy of international blackmail and events. Even the most powerful state in the world, the USA, is much restricted because of its reliance on imported oil. Such constraints have the most serious of consequences. Would George Bush  have invaded Iraq if the USA was not reliant on Middle East oil? I doubt it.

The free trade dream of buying where a product can be produced cheapest is based on the absurd premise that never again will international circumstances arise which will place any country at risk of war or blockade. There is also the question of what happens when raw materials run short and the scarce materials either remain in the countries of origin or go to the richest and most powerful countries with the rest left to go hang. Free trade is not merely a fantasy but a dangerous one in the long term.

There is also the economic and social case for protection. Cheap imports from countries which have labour costs many times below those of the mature industrial states, goods made cheap by state subsidies and plain old-fashioned “dumping” means that no company in the West is able to compete with the imports. The effect of allowing such imports is twofold: either the workers in the importing countries must take lower wages or, more probably, watch the obliteration of the domestic industry.

The same thing happens where mass immigration is permitted. If the immigration did not occur the wages for the type of jobs which immigrants take would be higher. That in turn would lessen or end the shortages of native workers willing to do them. For most jobs all that is needed to solve a shortage of labour is a wage sufficiently competitive with other employments to attract enough applicants. A good example in Britain are nurses: a shortage of native applicants a few years ago has been turned into a surplus now by a substantially increase in their pay.

The loss of jobs and suppression of wages through cheap imports, outsourcing, or large scale immigration has considerable social and economic effects. Those who lose their jobs either remain unemployed or take jobs which pay much less, are less secure and have lesser benefits. Those who remain in their jobs but whose pay is suppressed suffer similar difficulties. Both groups find their spending power is reduced. They pay less tax. If they are unemployed the Treasury is a net loser. New immigrants compete for scarce public goods such as free healthcare, education and social housing. Most particularly they compete most directly with the poorer native members of society who have most need of such social supports.

Poor pay, insecurity, unemployment and competition from mass immigration all place a severe strain on the social cohesion of a country.

Neither the Left or Right need recoil in horror at the idea of a judicious protectionism,a strong immigration policy and a commitment to public provision for those things which cannot be provided by private enterprise either efficiently or at all.  The Labour Party has been strongly protectionist throughout most of its history. The Tory Party was protectionist before the repeal of the Corn Laws in 1846 and protectionist again between 1931 and the advent of Margaret Thatcher. For most of their history both parties have been in practice opposed to mass immigration. Both Labour and Tories have been comfortable with state provision in the past.  There is nothing but their ideological obsession with laissez faire economics and globalism to stand in the way of returning to a more balanced view of how the state should intervene.

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