Freitag, 12. Juni 2009

In praise of...Margaret Thatcher


In sticking with my theme of Big Beasts of the British Conservative Party in the 20th century, my hero of the day is Margaret Thatcher. I was inspired to write this after reading Daniel Hannan's column on his blog today. Hannan is always readable and makes you think, even if I don't always agree with him.

About Thatcher though he is spot on, and he made me think about that number of people who are anti-Thatcher without having any real idea of what she did. I know because I used to be one of them.

In many parts of the UK Thatcher is still regarded as one step from the devil. I was told horror stories from a young age about the destruction she had wrought on towns and families like my own in the 1980s. The father of one of my friends used to make a big point of spitting on the floor whenever she was mentioned.

When I moved down south at the age of 18, and then abroad three years later, and actually began to study the facts for myself objectively, my eyes were opened to a mass of information about the conditions Thatcher inherited and how much she did to create what we have today. There is no doubt in my mind today that she was a woman of extraordinary vision and resolve who did a great deal to turn around a clearly failing economy.

I suspect that Hannan's hypothesis of why she is hated so much by the left is correct:

"what Lefties (with honourable exceptions) find so hard to forgive is the lady's very success: the fact that she rescued a country that they had dishonoured and impoverished; that she inherited a Britain that was sclerotic, indebted and declining and left it proud, wealthy and free; that she never lost an election to them."

For Margaret Thatcher read the equally loathed (and often by the same group) United States, globalisation and Manchester United. There is nothing that inspires quite as much anger and derision as a competitor that comprehensively beats you time after time after time.

Tame the Commission


Samuel Brittan in the FT today makes a very persuasive argument for a halt to further European integration. What the EU needs, he says, is legitimacy not democracy.

There is much to say for this argument. The most common complaint against the EU is not that it is not that citizens don't have enough opportunities to vote. Last week's European elections, with their 43% turnout and overwhelming focus on national issues proved that. In reality the most common complaint is about the "unelected Eurocrats in Brussels".

The only way that the EU can obtain such legitimacy is to abandon the pledge of "ever closer union" and focus on being a collection of member states, with decisions taken through the Council of Ministers. The European Commission's role in this would be that of a normal civil service.

For me the most striking indication of the Commission's failing is its entry exam, where one of the key tests is candidates' knowledge of the history of the European Union. Does this test initiative, responsiveness, analytical skills, intelligence, adaptability, resourcefulness, competence or anything else relevant to the job of running Europe? No, it just says that you can cram a lot of facts into your head and keep them there for 24 hours.

The system is being overhauled next year in favour of a competence-based exam with less facts and more thinking. This is the first step in the right direction.

Donnerstag, 11. Juni 2009

Britain may bounce but Brown will still sink


The British economy has taken quite a battering recently, both verbally and literally. When this crisis hit the United Kingdom was in a particularly bad position.

This was for three main reasons. Firstly, the UK was over-exposed in the financial sector, with the City of London playing a key role in its economy as a result of the slacker regulation brought in by Margaret Thatcher and carried on by Tony Blair.

Secondly, the British pound was overvalued against the euro and the dollar, which is bad news for exporters at a time of rapidly diminishing world trade.

Thirdly, Gordon Brown's years of heavy borrowing as the Chancellor of the Exchequer and the resulting deficits that had been racked up did not make happy reading as the crisis hit and large numbers looked to the government for a bail out.

Yet the first two of these problems appear to have been at least partly resolved, as a result of government action and the laws of economics. The financial sector has been supported aggressively by Brown, who effectively took the lead in calling for massive government fiscal stimuli to combat the drastic decrease in private sector credit. This has largely worked, and some British banks, notably Barclays, have even managed to avoid government help altogether.

And the pound's value has dropped dramatically against the dollar and the euro, giving a timely boost to Britain's relatively small yet nevertheless significant export industry.

The question of the third point is still in the balance, and the British public are almost certain to have to tighten their belts in the next few years as taxes are raised and public spending cut to service Britain's debts. Yet rapid economic recovery, which would significantly alleviate the burden on the tax payer of this, appears to be closer than most commentators have allowed for.

As Paul Krugman wrote yesterday, the British economy is recovering more quickly than any of its significant European competitors (Germany, France, Italy and Spain) and may even have started growing again already (Krugman: A British Bounce?).

Should this turn out to be true though it will no doubt benefit the Conservative Party who are poised to take power at the next general election which could happen any time given the swell of discontent from within the Labour Party and the British public as a whole. Labour's disastrous showing at the recent European elections, and Brown's immense unpopularity mean that it will be the Tories who will mostly likely rule Britain for the next decade.

George Osbourn, the Shadow Chancellor, admitted recently that the Conservatives could become very unpopular very quickly if forced to raise taxes and cut public spending shortly after coming into office. Yet at this rate they will enjoy a significant bounce as the British economy grows again on their watch.

Dienstag, 9. Juni 2009

"A very, very sad day for British democracy"


You are unlikely to guess correctly where the title of this post has come from. It does not refer to the 35% turnout in last week's European elections. Nor is it a quote from a reader of Vogue upon hearing that Gordon Brown had been voted 12th sexiest man in British politics. It isn't even about the BNP winning two seats in the European Parliament (which in fact could turn out to be a Good Thing, as Gideon Rachman showed yesterday).

No this quote comes from Nick Griffin, leader of the "odious" BNP (for some reason journalists seem to feel the need to always insert such adjectives before actually naming said party) after he was pelted with eggs yesterday outside the UK Houses of Parliament whilst trying to give a victory speech. See the disappointingly brief video of the egg pelting here. And Griffin's response on BBC here claiming that a "Labour Party sympathiser", "funded by British taxpayers' money" had "tipped them off" certainly enhanced his credibility and silenced his critics who claim he is a conspiracy theorist preying on baseless popular prejudice and dividing British society to win easy votes. "A very sad day for British democracy" Griffin concluded.

Well yes, it was. The last time the United Kingdom was threatened with fascism, it mustered over 1,000 aircraft, many more brave young men, an at that time state of the art air defence system, and a national resolve never seen before or since, and slugged it out with the German Luftwaffe over the skies of Britain's industrial cities. Now we get 50 students who can't even chant the same words, some hastily-made paper signs (good job it wasn't raining) and a few (no doubt free range) eggs, most of which hit the Sky News cameraman.

Is this the arsenal of democracy in 2009? Or have most people realised (whisper it quietly) that if you ignore Griffin and his army of failed Rugby League players from Warrington they will just go away? Imagine for a moment him standing there jabbering away about racial purity surrounded by an unnecessary amount of bodyguards whilst shoppers drifted by carrying on their conversations about where to get the best bargains and a lone tramp looked on from across the road swigging his special brew. Wouldn't that have been a better response?

In praise of...Winston Churchill


My hero of the day is Winston Churchill. An obvious one I know but I wanted to get off to a good start.

I came across this quote from a 17 year old Churchill to his friend in Niall Ferguson's Empire:

"I can see vast changes coming over a now peaceful world; great upheavals, terrible struggles; wars such as one cannot imagine; and I tell you London will be in danger - London will be attacked and I shall be very prominent in the defence of London...I see further ahead than you do. I see into the future. The country will be subjected somehow to a tremendous invasion...but I tell you I shall be in command of the defences of London and I shall save London and the Empire from disaster".

The ramblings of a boy admittedly, but interesting reading nonetheless.

What Europe needs is a wake up call


The most notable thing about the European parliament elections this week was not the two seats won by the British National Party, despite what the steady stream of updates on my facebook news feed told me ("not in my name", "oh my god i want to cry" being amongst the more coherent comments). Nor was it the 17% turnout in Slovakia. It wasn't evening the impressive performance of Europe's centre-right parties against the continent's hapless Socialists.

No, the really crucial indicators of, well, anything were the low turnout and focus on national issues. This is the clearest indication of what Europe and its people have become: apathetic and unable to see outside of their own borders. I went to school with a very likeable and polite boy, who I am still in touch with, who illustrates my point very well. Whenever the issue of citizens' disenchantment with the European Union come up, he often springs to mind. He is 24. His only experience of foreign countries is Irish bar-heavy resorts in Greece and Spain. He once moved away from home but was soon back again for his Mother's cooking. He is what you might call casually racist.

Whenever the topic of Europe comes up between us, my friend has two very clear messages to deliver: He is British, not European, and he does not want Britain to hand over any power to the European Union. My friend is typical of people in Britain, and to a lesser extent across Europe. Whenever I talk to him I cannot help but feel that Europe has lost its way.

The European Union started out with noble aims and a genuine direction. Its underlying raison d’etre at the outset was the need to prevent war in Europe, specifically between Germany and France, by tying the old foes and their unlucky neighbours together through mutually beneficial trade agreements.

This was no idealistic whim, but a serious undertaking by serious people for serious ends. War had twice brought Europe to its knees in the space of a generation, leaving homes, families and lives destroyed forever. Very few in Europe had been left unaffected, most had suffered occupation at best. The war memorials that remain in Europe’ villages, towns and cities attest to the scale of death that occurred.

What started as a way to prevent this happening again gradually developed into an impressive trading bloc, gaining strength and momentum from the introduction of three new members each decade in the 1970s, 80s and 90s and the relative decline in power of European states in relation to countries in the East and developing world. Admittedly Europe was becoming a harder sell as the war became an increasingly distant memory, but at least in continental Europe there was a clear feeling that Europe was stronger together than apart.

The year that the European Union lost its was 1989, the year that the Berlin wall came down and central and eastern European states, which had been for so long subdued by the spectre of Russian tanks rolling into their cobbled centres. They struggled out from under the iron grip which had stifled their potential and creativity for over 40 years and mainly looked West for support and guidance as they sought to dash towards prosperity and a new cultural awakening.

Suddenly the bureaucrats in Brussels and the leaders of the European Union Member States saw an opportunity for glory. Having civilised themselves after the war they now saw a glorious opportunity to spread their great invention east, to allow those previously oppressed by communism to enjoy the freedoms of the European Union.

Again, noble aim. The EU certainly had a lot to offer the east, and the east was more than keen to get stuck in. Yet what happened in 2004 was ill-advised at best and catastrophic at worst. Full membership, with lapse and loosely-imposed conditions basically translated into a second Marshall Plan. The difference this time was that so few conditions were imposed that the money is ending up right in the pockets of the former elite, in an orgy of corruption as local politicians fall over each other to funnel greater and greater swathes of cash into their pockets and those of their friends.

Bulgaria is the obvious example that springs to mind, due to the fact that they have had their funds cut off until they clean up their act. Yet this is just the tip of the iceberg, and the reality is that, should western taxpayers know what was being done with their hard earned money, the EU might just collapse altogether. Yet most western taxpayers do not really know what is being done with their money in the East, and as a result the perpetuation of the old communist elite through the corrupt use of EU money goes on.

Yet this is the symptom, not the cause of the problem. 2004 happened almost by accident, because the European Union's leaders, and in this I include the Commission, the Council and the Parliament, did not really know what else to do. Simply not being communist, the last thing that had really tied the European Union together, was gone. A new mission had to be found.

Here I come to my point. My argument is not with the European Union, like my friend and so many others. The European Union is a good thing on many levels and in many ways: it contributed to peace in Europe (although the Marshall Plan, the US military presence and the threat of nuclear war did more). It allowed me and so many others to move around and work and study and experience other cultures without the need to spend money and waste time on visas. The euro is a godsend, as anyone who regularly travels within Europe for work will tell you. The single market has freed up countless sums of money for firms to invest in innovation and hiring new staff, and for consumers to raise their living standards by buying better quality products, that would otherwise have been lost to tariffs.

My argument is also not that Europe has lost its relevance, but rather precisely the opposite. Unlike the UN, the OSCE and countless other international bodies who appear to be drifting aimlessly as their budgets suck more and more money from national governments, the European Union is as vital now as at any time since the war. Next time you are in a newsagents, pick up a copy of the Economist, the Financial Times or any other decent publication dealing with international finance or economics. Read their articles and look at their tables on the GDP of China, Japan and the United States. Look at the wage levels in these countries, at their productive capabilities and at the environments they create for business. Then move on to resource-rich economies like Russia, Iran and Saudi Arabia, or rapidly emerging ones like Brazil, South Korea and India. You will start to see what I mean.

Europe may still have three of the world's top six economies in terms of GDP, but this advantage is fading rapidly. As Wolfgang Munchau outlined in the FT yesterday, the long term outlook for Germany is not good. A government faced with a likely strengthened euro, a (linked) decline in exports, and an inability and unwillingness to encourage domestic demand (partly due to a fear of inflation) is not in a good position, considering the export-driven nature of Germany's economy. The French may be sitting pretty for now, resting on their laurels of large-scale state interference in the economy and tough business regulations, but their growth model and growth record is weak to say the least. In the long term we are all dead, as Keynes famously acknowledged, but if direct competition comes their way it will be the French farmers who will be the first to go. As for the third member of the EU's "big three", the United Kingdom, the prospects look even more dire. With a clearly failing political system and a spiralling set of hefty bills to pay, the UK will take a long time to get up from a particularly heavy blow. That is even if, and this is a big if, the ace in the pack, the City of London, recovers quickly.

The EU mission is therefore clear: a genuine bloc of countries with an agreed on set of principles to tackle the biggest crisis that is has faced since the Second World War. In an increasingly globalised world, with increasingly strong competition from emerging economies and other established powers, Europeans simply cannot hope to maintain their current standards of living any other way.

This is the message that policymakers across the continent should be delivering to their electorates. The problem of declining and ageing populations, high wages and therefore production costs, and a lack of new innovation and ideas, is not a Greek or Spanish or Irish or Polish problem. It is a European problem, requiring a European solution.

The European Union has so far failed to get close to the sum of its parts. The world's biggest trading bloc is nowhere near its most active, or most vocal on the world stage. Despite having two of the world's finest armies in the UK and France, Europe has no military role to speak of. Despite having the world's best universities outside of the United States, the European contribution to international dialogue on solving the pressing issues of the day is pitifully small.

A genuine European-wide debate, led by politicans of courage and of substance would be a start in this process. Policy makers have a whole arsenal of facts at their disposal to show that Europe needs to work together to preserve its high standards of living, should they wish to use them. The Chinese do not care whether we see ourselves as British or European, they are only interested in whether we are still a serious power to be reckoned with. Relevance can only be maintained by a united Europe. And it might make those holidays in Ibiza just a little bit cheaper.