by Glenn N. Holliman
The responses to Terry Field's opening paragraphs have been robust but very polite (unlike many USA controversies, i.e. the current presidential primary contests). Terry now continues Part 2 of his 'Why the U.K. should remain in the E.U.' He is laying the base of his argument, and there is more to come after this. His tour of the last forty years in history is insightful and gives one much on which to ponder.
As he says, pull up a chair, get another cup of coffee and have a read, allowing time for reflection (and a photograph of Steph's olive tree in Adelaide). -GNH
To Stay in the E.U. continued, Part 2....
by Terry Field
All this sets the scene for British accession to the
then 'Common Market'. (1970s)
The final accession, much manipulated by the two major
parties so as to maximally promote and minimally discuss the idea of accession,
was done in the context of a country that was entirely convinced that it could
not succeed in any other way.
Britain was 'the sick man of Europe;
described by Dean Acheson as having 'lost an empire and not yet found a role'.
The Europe that Britain joined
was one utterly dominated by the French. Germany was paying in all respects
for its actions, and said nothing. It financed all, contributed all, agreed to
all, was invisible.
Its pain and discomfort was reflected by its political
impotence. The 'EEC' that developed from the 'common market' was composed of
western European nations; Germany
was split in two and occupied in the east. The Soviet
Union was the alternative power to the United States, and attracted the
emotional loyalty of much of the European and British left. Much of government
policy in all European states, and Britain, reflected this, and
accommodated socialist values.
The economies of France and Britain were
highly distorted by 'directed' government action. The 'market' was super-controlled,
regulated, suppressed. Social equality, massive infrastructure projects, and politicised engineering decisions were the
order of the day. Plans, ' five year plans', 'town-planning' etc, all accounted
for the majority of activity.
In Britain most manufacture was either
nationalised or controlled as to investment and activity, by the state. This
was, at an emotional level, both expected and accepted by a population
conditioned by the environment of total war from 1914-18 and 1939-45 with
economic depression in between.
This was a benign
environment for the European Economic Community
to operate within. Common income levels across the market nations ( more or less),
acceptance of directing government and an autocratic power in the East to
concentrate minds.
This was a period of recovery from violent autocracy and
war, with an American superpower to show the pleasures of high levels of
personal consumption that all Europeans hungered for.
There were certainties.
Life was less
personal, and more 'group' based. There was the protecting hand of the state,
the sense of safe passage from birth to death, and the comfortable assurance
that the Welfare State would guarantee the life and the rights of the citizen.
To be a consumer in a market economy was all but meaningless for British and
French people.
Then the Soviet Union
collapsed.
Completely unanticipated, the alternative reality in
the East was no longer there. In its place, the United States offered safe,
unchallenged super-prosperity. The life of the American, experiencing what we
were told was the 'American Dream' could be ours. How? By accepting the
replacement of the 'directed' economy with the 'market' economy. Free trade.
work, personal responsibility, guaranteed success- the True Liberty of Choice.
How far did this new liberty ( at least new for
British and Europeans) go?
All the way. On a visit to New York during a particularly unpleasant
winter, during the late 1980s, I listened as Americans discussed the liberty of
tramps to fail economically and die on the streets of exposure.
Liberty without restrictions. No top; no bottom.
This rewriting of the place of the citizen in the mind
of American society was as novel and disconnected from its past as it was in Britain. Or was
it? No, not really.
The 'kid-in-a-candystore' experience of the American as he
or she ripped the abundant resources from a capacious continent was bound to
produce a more cavalier attitude to group behaviour.
How did the European societies react to this radically
changed landscape?
The British enthusiastically accepted the 'freedoms'
the market offered. The restraints that controlled aspiration and governed
social relationships between people were cast aside. Old state-controlled
industries, now hollowed-out shells, empty of capital were allowed to fail. Petro-currency
prosperity both accelerated de-industrialisation and facilitated importation of
goods from the East for trivial payments. Winners won big; losers skulked away,
said nothing, disappeared.
The sun was out, the beach went on for ever. Joy
unconfined.
The late 1980s became a time of consumer pleasure burying
the idea of the value of the citizen in Britain. It now mattered much more to
be well employed in a major - or profitable minor - corporation - than it did to
be a 'citizen'.
The de-industrialisation was so extreme in Britain that
the German head of BMW at the time, Herr Bernd Pischetsrieder, commented ' we
are observing your deindustrialisation in Britain; you will permit us not to
join you?'
This was mirrored in the United States, with similar
euphoric results.
The American Dream could now be achieved with no real
work requirement at all. Selling was what mattered. Making was for dummies.
Nobody cared that the power of manufacture resided
elsewhere; nobody remembered that Chemical Bank got rich from the deposits of
the chemical industry. That industry made wealth, made banks, made the future.
Those of us properly trained in economics well
understood the future that was unavoidable - the transfer of wealth arising
from manufacture in China
and elsewhere to western banks to be re-invested in the west at almost no cost
by a sophisticated banking system that was used to doing exactly that with the
revenues of foreign petroleum-producing states.
What we had not reckoned with was President Clinton -
or Gordon Brown.
The 'liberation' of the banking system, at a stroke,
allowed the banks to merge high street banking with risk lending, but more
importantly massively increase - by a factor of x 40 - the size of the depositor and lender base,
relative to the capital invested.
Thus the banks generated gigantic paper profits,
buoyed the economy by free lending against illiquid as well as liquid assets,
and filled the treasuries of the Anglo Saxon nations with gigantic receipts
that fuelled a consumption binge and the construction of unproductive real
estate.
The banks balance sheets become as large or larger than the economies
where they were registered; the guarantors of their liabilities - never really
their assets - were the nation states that now played Russian roulette with paper
money.
The collapse was inevitable; I say this with the
confidence of one who sold every asset just prior to the 2007 crash (yes 2007,
NOT 2008, that was merely the market reaction).
Europe crowed it was an Anglo
Saxon problem; they had, after all, had to listen at their dismal 'summits' to
the humourless Brown grandstanding that the financialised economy was the way
to go, the British success that they should have the courage to copy.
The puffed up leaders of Europe
sniffed and sneered. They would be fine; all was controlled there, was it not?
NO. It was not. Their banking system had done
precisely what all others had done; the economic illiterates in the
chancelleries of Europe just did not know that
it had all been done quietly.
The recapitalisation of the Banks in Britain and the
United States, and the model of de-corporatisation of 'non-performing loans' by
transferring them to national 'balance sheets' propelled debt levels to
percentages of GDP not seen since the end of general war, and in some cases,
particularly the United States, ever.
The European states did not recapitalise their banks;
they operate out of government guarantee of balance sheets, and issued equity
has withered on the vine more severely than in either Britain or the USA.
The results of this approach, (in my view a
Bernanke-inspired over-reaction to the history of the Great Depression, and a
gigantic failure of both analysis and appropriate decision-making) - now means
the West will grow at a snail's pace for quite some decades; that interest rates
must remain at very low levels for national budgets to be able to be written at
all; and the technology driven and market-generated extreme social inequality
that this economic management has generated since Clinton is now apparently
intractable.
MY SUMMARY OF BRITAIN'S RECENT PAST THAT INFORMS THE PRESENT DEBATE IS NOW COMPLETED.
You can
all breathe now, get a cup of coffee and a biscuit ( or indeed two, preferably
chocolate digestives) and relax.
Now, with the 'table set', Terry in his next post writes about why he reluctantly supports the U.K. remaining in the E.U. Stay tuned.
Thanks for your comments (articles!) to date.
From Australia and her Olive Tree....
Dear Glenn
Aaaagh, I’ve now swayed back on to the other side, to David of Normandy. He knows it won’t be easy to break away and go it alone, but to have again control of one’s own borders and the accountability of one’s own politicians, are two key points. He puts it beautifully when he says: We shall not solve everything by leaving the EU for the safety, security and prosperity of our people. By leaving, our debts will remain, but security will be a little easier when we can control our bordersproperly. Prosperity will be up to us taking advantage of new found freedoms to trade and why should we fear reprisals as it is not in the interests of exporters on the continent to cut off their noses to spite their faces.
The one huge advantage that we shall gain is that our politicians will be fully exposed and their decisions theirs and theirs alone. No longer will they be able to hide behind the unaccountable bureaucrats in Brussels.
I also didn’t know that David Cameron had not received the full concessions the UK needed so desperately if it were to stay in the EU. This is a VITAL point.
From Steph who uncharacteristically teeters on the fence over this ants nest.
From David in the Midlands of England responding to President Obama's pro E.U. Statements....
But it's not interference - it's good advice given by one friend to another!
I would hope that, were New York State to contemplate seceding from the USA, most New Yorkers would be happy to have almost anyone tell them -
"Don't do it - such a course of action would be madness" - and
"You'd never be able to negotiate a trade-deal with the EU: well, you might, but you'd have to wait at the back of a long queue, because the EU is far more concerned with arranging such deals with big trading blocs like the USA."
From a noted Barrister in the Commonwealth of Pennsylvania....
Glenn, some thoughts ---
Dean Acheson got it right.....Britain lost an empire and is still searching for a role.....of course, the English Channel will do that do an island nation.
Acheson, of course, was referring to the role of Britain in world affairs in the late 1940's after World War II and after India became independent. That search for a role continued for Britain into the 1950's as Britain withdrew "east of Suez" after the catastrophe with the Franco-British-Israeli invasion of Egypt in 1956 and into the 1960's as the "winds of change" blew across Britain's colonies in Africa. Having spent a semester in London in the fall of 1964, I remember well the arguments leading up to the election in October 1964 concerning the role of Britain in the world, especially the role inside or outside of Europe. Taking the long view, I think the role of England in western Europe (especially in France and the Low Countries) has been of concern of kings and policy makers in London for over 600 years.
Might the same analysis be made of France?....the losses at Dien Bien Phu and in Algeria in the 1950's still reverberate across French society. Having been to Montreal twice, I can testify to the sentiments of many French Canadians (who feel that they lost the ability to have an empire in North America) as they reflect on the outcome of the Battle on the Plains of Abraham in 1759
Might the same analysis be made of Russia?....it lost an empire in 1991 and is still searching for a role. Certainly the Crimea, the Ukraine and maybe the Baltic states come to mind.
Might a somewhat similar analysis be made of the United States? Although American did not have a geo-political empire to lose, it has after the disastrous invasion of Iraq (with all its repercussions) lost its willingness to project military and political power in various parts of the world unless its vital national interests are at stake.
Is Afghanistan or Libya or the Crimea or the Ukraine or Yemen or Somalia or the South China Sea an area involving vital American national interests? Are any of those areas worth the loss of life and treasure that would be involved if American projected its military power in those areas? Maybe yes, maybe no.
I hope that gradually the American public is coming to realize that John Quincy Adams, a great Secretary of State, got it right---American should "not go abroad in search of monsters to destroy."
Having been since 1991 the world's only super power and having slowly recognized since 2003 the limits of its military power and its ability to project its military power, American is still searching for its role in the world.
NUF SED on a beautiful Sunday in April
Read this article. NOTHING else is of the slightest consequence compared to this matter. Nothing. The article comes from the UK paper The Independent, always correct and in depth on climate change. The author of the piece is Charlotte England. I see Sarkosy (past and perhaps future president of France) has said he will hit the US with a carbon tax on all its transactions with France if Trump rips up the Paris accord. This reality is too appalling to contemplate without a good slug of Bourbon or Scotch. - Terry Field
