Saturday, June 07, 2014

Harking Back to an EEC just for trade and business....which never existed

UKIP and other euro sceptics want to hark back to a wonderful time when the EU was merely an economic trading area for business, free from politics and the notion of federalisation.

Unfortunetly that is a mistruth which uses the same PR names for the institutions which were then used to achieve the reverse impression- namely that the peace seeking federalists who had a vision of locking the nations into a federally enforced economic peace driven by a common market for steel and coal, which would castrate nationalism and the power of member states to build economic walls and thus hoard commodities, build huge military might and inflict economic sanctions on other european competitors or countries.

The whole concept is political  by nature as much as it is about markets and m,poney
By having international agreement which later lead to laws ratified in member states' own judiciaries, the nature of the beast is political. Member states have interests which are pro union, member states then have some interests which could be adversly affected by the laws. Commonality and agreement on the legal structures and details requires poltics.

Also on the Tories much avoided 'social chapter' which they say is a last straw, this was in fact one of the first straws in the European Steel and Coal Economic agreement where coal miners in particular across europe recieved social welfare from centrally directed taxation, a levvy of 1%, which was used for granting home ownership loans or better public housing initially.

One of the aims of the 1951 Treaty of Paris then was to reduce potential for inequality across europe and inequal sharing of wealth or control of markets. This was in fact well on course to be achieved until the 2008 financial crisis and the long term recession which followed. This was precipitated  by capital lending too flippantly to both states and private banks based on fiendish financial return mecahnims which prove to be corrupt, unlawful and putely opportunistic lying throughout the international credit system. The EU and the Eurozone have been landed with the blame by the right wing media and by a public scepticism and collective memory of how good things were before EU and Eurozone. The fact is that capitalism has become too powerful and too anarchic to be left to such laisez faire loose liberalism and we are all paying the price, with most EU countries opting to penalise the poor and public employees as the actual cause of the recession or the easiest target for cuts which are popular amongst the 'moral majority' or working and retired former working people.

A step back from federalism is however to the author's mind a correction in the centering of power between France and Germany, who have lead the austerity war against countries whose crime was to say yes to seemingly favourable loan terms or seemingly endless supplies of credit, based on tax raising ability which paid no attention to the lessons of the cyclical or sinusiodal nature of economies and the global trade economy as an entity.

In stepping back and focusing on free trade, and tackling the spiralling cost of assylum seekers and illegal immigration, the EU will quite likely regain credibility as an organ and gain the trust of being a common platform for agreement rather than the current perception of Brussels being a Metademocracy, while the parliament in Strasbourg being a toothless, paper tiger. 

The Eurozone neither precipitated the financial crisis nor did it actually worsen the effects of the long term recession in the author's opinion. To the contrary, individual currencies may have faired far worse under this period, with hyper inflation possible and stagnation as seen in Argentina, where the US dollar was likely to become the only feasible currency.   The German lead bail out packages hurt, but hypeinflation for the Drachma or Paso would have possibly been far worse, as in fact this finance crisis has been in some measures corrected for inflation, worse than the wall street crash in the 1930s.

In returning to free trade and common market concepts, job creation may rise much faster but may be uneven across Europe and this may mean that monies currently used for bailing out banks vis a vis, paying off their international creditors, the super rich elite and multinational finance houses, that this proportion of EU budget be used in future for reversing the negative effects of austerity in the latin countries in particular, while also raising access to education and living standards across the union. 

Racism has been joined by fear of radical islam and resentment of public spending on assylum seekers, mainly from muslim countries. Romany people begging and their petty crime across the EU is seen as a problem by the public, although very few are affected and many romany folk are law abiding. The EU rightly identifies this group as having an acute need for investment in education while Romania and Bulgaria who have the largest permanent populations of them stand poorly in terms of monetary means and political will to help these people improve their standard of living by economic activity.

This latest EU MEP election has sent a shock wave across the european centre right and socialist parties alike, however it is a wake up call to the general percieved dissatisfaction with immigration and standard of living. The latter is mostly fuelled by the continuing love affair with home ownership and equity growth in private property. Capitalism found that there was more money to be made by restircitng sale of land for property while consumers had an expectation for positive equity and leveraged themselves ever more to get on and up the property ladder. With real estate prices maintained at a high level in the main metropolises and industrial valleys, the situation is excaerbated by high building costs with a shortage of skilled labour and a lack of interest in higher risk, lower reward building which is likely to be needed in the coming years.

So far in the northern european countries, the ageing population has been kept mostly happy, most of the time by national governments of a centre right nature, but the dissatisfaction felt in the more youthful latin countries now will perhaps spread to the north as the baby boomers offspring find themselves at a lower standard of living than their parents, while the young grand and great grand children start to resent being the ones left to pay taxes and health insurance which supports an ageing population of pensioners living longer lives.

Dissatisfaction has been expressed in the Right side of politics in France and the UK due to long standing immigrant scepticism in major parts of the society, and also a degree of nationalism and ' our people first'.   France still practices instituionalsied racism against the employment of individuals with north african immigrant names and backgrounds. In the UK it was the Tory vote and previous non voters who turned to UKIP, not labour voters, while in France it was the white working class who voted Le Pen in with her watered down racism. 

The move to immigration and assylum seeker scepticism is a wake up to the legt wing and the liberal centre right that these issues and in particular, the issues of percieved job stealing, and larger the islamic extremists which have to be tackled. At least the perception of this must be tackeld along with the weaknesses in the southern borders.  We are likely to see less immigration from Russia and her allied nations, but the author and most commentators do not see that the two centres of power in the EU will move away from the principle of free movement of labour. They may move to a restriction on free movement of unskilled labour by use of vagrancy laws as is practiced in France  now. 

One other possible long term result of the euro sceptic upsurge is that the common agricultural policy moves towards a free market, where smaller producers will need to then cooperate to maintain prices, or maintain a niche product with higher margin. A move to a free market economy for farming has many benefits to society in the EU, and will also expose consumers to the true costs of food production and how that must be a larger part of their home economics. Also it has international benefits in being able to restrict import of US and Chinese subsidised products while allowing sub saharen and other developing nations to find a new, viable market for their grain and other products at a market price, rather than having to compete with subsidised rich western farmers.

Norway where the author writes from, pays for access to the EU while not having any real say over any policies and also having to swallow many of the EU directives if she wants to continue trading.  This of course creates conflict with the national agricultural policy, which is of the 1950s "socialism for capatilist farmers" model by in large. Further more because Norway has retained much of its oil wealth through union driven high wages, rising oil prices and effective state pension investments, she is now forced to pay annual sums for EU access which are far in excess of EU inflation.   She cannot veto these or cite her own need for infrastructural renewal or agricultural reform as greater needs than the billions of Euros extra to be paid over the next five years. So Norway is by no means a model for the UK, whose trade is so dependent on the EU.  

By way of summary, change to a system whcih then precipitates improvement in that system and better living standards, often begins with a political shock followed by a quantum leap towards a new Belle Epoch, and this is perhaps the direction europe will take. The EU we know today is a poltical body and its predecessors have always had political objectives in securing peace and prospertiy across post WWII europe. The UK should look to Norway. whose main exports are to the global market for oil and salmon, and realise that the more diversified economy of the UK cannot come to the table like Norway, and deny itself voting rights in Brussels and Strasbourg.