Showing posts with label movement. Show all posts
Showing posts with label movement. Show all posts
Tuesday, 1 August 2023
Saturday, 15 July 2023
A Level Economics 4: Production Possibility Frontier
Consider an economy that produces both cars and bicycles, and it is currently operating at point A on its PPF curve, producing 100 cars and 200 bicycles. Explain the difference between a movement along the PPF and a shift in the PPF using this scenario. Additionally, discuss the implications of these changes on the economy's production possibilities.
A movement along the PPF refers to a change in production quantity of one good relative to another caused by reallocating resources within the existing production capabilities. On the other hand, a shift in the PPF represents a change in the overall production capabilities of the economy, resulting from factors such as technological advancements, changes in resources, or improvements in productivity.
In the given scenario, let's explore the implications of both movements along the PPF and shifts in the PPF:
Movement along the PPF: Suppose the economy decides to produce 150 cars and reduces bicycle production to 150. This movement along the PPF curve signifies a reallocation of resources from bicycles to cars, leading to a change in the production quantities of both goods. This movement does not expand or contract the overall production possibilities of the economy but reflects a choice to produce more cars at the expense of fewer bicycles.
Shift in the PPF: Now, imagine that the economy experiences a technological advancement in automobile manufacturing, leading to increased efficiency and productivity. As a result, the PPF curve shifts outward, indicating an expansion in production possibilities. The new curve would allow the economy to produce more cars and bicycles than before, reflecting an increase in overall production capabilities. For instance, the economy could now produce 120 cars and 250 bicycles at point A on the new PPF curve.
The implications of these changes on the economy's production possibilities are as follows:
Movement along the PPF: This decision involves a trade-off between cars and bicycles within the existing production capabilities. Producing more of one good means producing less of the other. It demonstrates the concept of opportunity cost, as the economy sacrifices the production of bicycles to increase car production (or vice versa).
Shift in the PPF: A shift in the PPF curve indicates a change in the economy's ability to produce both goods. It represents economic growth and expanded production possibilities. With the outward shift, the economy can produce more cars and bicycles than before, leading to increased consumption and potential economic benefits.
In summary, a movement along the PPF reflects a reallocation of resources between goods within the existing production capabilities, while a shift in the PPF represents a change in the overall production possibilities of an economy. Both movements along and shifts in the PPF have implications for production quantities, trade-offs, opportunity costs, and the economy's capacity to produce goods and services.
Thursday, 22 December 2022
Friday, 25 December 2020
How UK-EU trade deal will change relations between Britain and Brussels
Sam Fleming and Jim Brunsden in The FT
The future relationship deal struck between the UK and the EU (24 Dec 2020) will bring far-reaching changes, as both sides are forced to adapt to the end of Britain’s 30-year membership of the European single market
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The trade agreement between London and Brussels will offer UK and EU companies preferential access to each other’s markets, compared with basic World Trade Organization rules — ensuring imported goods will be free of tariffs and quotas.
But economic relations between the UK and the EU from January 1, when the deal is due to take effect, will be on more restricted terms than they are now.
“Everyone needs to get prepared for a situation next year that will be very different to today,” said an EU official.
A trade agreement along the lines of the one negotiated between the two sides will leave Britain facing a 4 per cent loss of potential gross domestic product over 15 years compared with EU membership, according to the UK’s Office for Budget Responsibility. Failure to secure an agreement would have led to lost potential GDP of almost 6 per cent, the fiscal watchdog estimated.
Below are some of the benefits conferred by the UK-EU future relationship deal, which also includes security co-operation — and the important areas in which Britain’s links with the bloc will fall short of existing arrangements.
1. Trade in goods
The EU and UK’s starting point for the future relationship talks was that they should lead to a deal with no tariffs on trade in goods between the two sides. They also wanted no quantitative restrictions on the volume of goods that could be sold free of tariffs.
That was negotiated, meaning the deal will go beyond what the EU has done with any other advanced economy outside the European single market.
But the agreement is still a very different state of affairs to membership of the EU single market and customs union.
Once implemented, from January 1, a hard customs and regulatory border will exist between the EU and UK, and goods will face checks and controls that can be smoothed at the margins only by co-operation.
The deal will include facilitations such as co-operation on trusted trader schemes, but none of these erase border checks.
“The agreement provides for continued and sustainable air, road, rail and maritime connectivity, though market access falls below what the single market offers,” said the European Commission.
2. Fair business competition
The EU’s offer on tariff-free trade was contingent on the UK agreeing to uphold a “level playing field” on fair business competition in areas such as environmental standards.
Brussels was also keen to ensure the UK does not have unfettered scope to disburse state aid to prized industries, giving them a competitive advantage.
The agreement includes common binding principles on state aid, enforceable in both sides’ courts, which would be able to recover illegal subsidies.
It also includes a painstakingly negotiated “rebalancing mechanism” to deal with a situation where the sides’ regulations in areas such as labour rights diverge over time.
The mechanism, which would be subject to independent arbitration, would allow the disadvantaged side to impose tariffs to restore fair competition.
But, crucially for the UK, it will not be required to follow EU rules directly or be subject to the jurisdiction of the European Court of Justice.
Being outside the European single market has other regulatory consequences for Britain. For example, UK businesses will no longer be able to assume that product authorisations from British watchdogs will allow their goods to be placed on the European market.
3. Fish
The deal creates a five-and-a-half-year transition period during which EU fishermen will have guaranteed access to UK waters.
EU quotas in British waters will decline in the transition by 25 per cent compared with current levels, and this will have the knock-on effect of boosting how much UK fishermen can secure. EU boats currently catch about €650m of fish in British waters each year.
Once the transition period is over, EU boats’ access to UK waters will in principle depend on annual negotiations between both sides. Those talks will also determine the overall quantities of different species that can be caught.
Should EU boats’ access to British waters ever be revoked by the UK, the bloc will have the right to take compensatory measures. These include retaliatory closing of EU waters to UK boats, and the imposition of tariffs on British fish.
The deal also links the UK’s access to the EU energy market to access to British fishing waters.
The UK warded off EU demands for a cross-retaliation power to hit other parts of the British economy should a dispute over fish escalate.
Still, the deal does provide a last-resort “safeguard” option that would allow either side to take emergency measures to protect coastal communities, subject to dispute-settlement arrangements in the agreement.
The deal enshrines the principle that Britain is now outside the EU’s common fisheries policy: an independent coastal state with sovereignty over its waters.
4. Financial services
The City of London will exit the EU’s single market for financial services at the end of the Brexit transition period on December 31.
Both sides have said that the new market access arrangements for UK and EU financial services companies should be based on unilateral decisions by Britain and the bloc, rather than be provided for in the trade agreement.
These so-called equivalence decisions involve each side evaluating whether the other’s financial services regulations are as tough as its own.
Banks and traders have acknowledged that the proposed system is more piecemeal than existing arrangements, and less stable. The EU did not announce any fresh equivalence decisions on UK access to the bloc’s markets alongside the trade agreement on Thursday, resulting in uncertainty in key areas including share trading and derivatives.
The two sides plan to put in place a regulatory dialogue on financial services based on a separate memorandum of understanding.
5. Migration
Current British and EU expatriates have their rights safeguarded by the UK’s 2019 withdrawal agreement with the bloc, but big changes to migration arrangements take effect from January 1.
Britons will no longer have the benefit of European freedom of movement: the right to go to any EU member state and seek to work and live there on the same basis as the country’s own citizens.
Instead, Britons will rely on a visa-waiver programme to travel to the EU for short stays, and on member states’ national rules for the right to work.
Ending free movement for EU nationals in the UK was identified by the British government as one of the benefits of Brexit, allowing the country to devise a new immigration system.
6. Security
The EU and UK have been at pains to emphasise the importance of continuing co-operation in the fight against terrorism and organised crime, although talks in this area were complicated by Britain’s determination to escape the ECJ’s jurisdiction.
But ahead of the deal being finalised, EU chief negotiator Michel Barnier confirmed the sides had found ways to maintain “close co-operation” on crucial matters including the work of the bloc’s crime-fighting agencies Europol and Eurojust, and the sharing of criminals’ DNA data.
Brussels said the deal “builds new operational capabilities, taking account of the fact that the UK, as a non-EU member . . . will not have the same facilities as before”.
The deal establishes that security co-operation can be suspended if the UK breaks away from the European Convention on Human Rights.
Friday, 10 April 2020
Information can make you sick
Trader turned neuroscientist John Coates in The FT on why economic crises are also medical ones.
As coronavirus infection rates peak in many countries, the markets rally. There is a nagging worry that a second wave of infections might occur once lockdowns are lifted or summer passes. But for anyone immersed in the financial markets there should be a further concern. Volatility created by the pandemic could itself cause a second wave of health problems. Volatility can make you sick, just as a virus can.
To get an inkling of what this other second wave might look like, it helps to recall what happened after the credit crisis. That event was both a financial and medical disaster. Various epidemiological studies suggest it may be responsible for 260,000 cancer deaths in OECD countries; a 17.8 per cent increase in the Greek mortality rate between 2010-16; and a spike in cardiovascular disease in London for the years 2008-09, with an additional 2,000 deaths due to heart attacks. The current economic crisis may be far worse than 2008-09, so the medical fallout could be as well.
Why do financial and medical crises go hand in hand? Many of the above studies focused on unemployment and reduced access to healthcare as causes of the adverse health outcomes. But research my colleagues and I have conducted on trading floors for the past 12 years suggest to me that uncertainty itself, regardless of outcome, can have independent and profound effects on physiology and health.
Our studies were designed initially to test a hunch I had while running a trading desk for Deutsche Bank, that the rollercoaster of physical sensations a person experiences while immersed in the markets alters their risk-taking. After retraining in neuroscience and physiology at Cambridge University, I set up shop on various hedge fund and asset manager trading floors, along with colleagues, mostly medical researchers. Using wearable tech and sampling biochemistry, we tracked the traders’ cardiovascular, endocrine and immune systems.
My goal was to demonstrate how these physiological changes altered trader performance. Increasingly, though, I came to see that a trading floor provides an elegant model for studying occupational health.
One remarkable thing we found was that traders’ bodies calibrated sensitively to market volatility. For humans, apparently, information is physical. You do not process information dispassionately, as a computer does; rather your brain quietly figures out what movement might ensue from the information, and prepares your body, altering heart rate, adrenaline levels, immune activation and so on.
Your brain did not evolve to support Platonic thought; it evolved to process movement. Our larger brain controls a more sophisticated set of muscles, giving us an ability to learn new movements unmatched by any other animal — or robot — on the planet. If you want to understand yourself, fellow humans, even the markets, put movement at the very core of what we are.
Essential to our exquisite motor control is an equally advanced system of fuel injection, one that has been misleadingly termed “the stress response”. Stress connotes something nasty but the stress response is nothing more sinister than a metabolic preparation for movement. Cortisol, the main stress molecule, inhibits bodily systems not needed during movement, such as digestion and reproduction, and marshals glucose and free fatty acids as fuel for our cells.
The stress response evolved to be short lived, acutely activated for only a few hours or days. Yet during a crisis such as the current one, you can activate the stress response for weeks and months at a time. Then an acute stress response morphs into a chronic one. Your digestive system is inhibited so you become susceptible to gastrointestinal disorders; blood pressure increases so you are prone to hypertension; fatty acids and glucose circulate in your blood but are not used, because you are stuck at home, so your risks increase for cardiovascular disease. Finally, by inhibiting parts of the immune system, stress impairs your ability to recover from diseases such as cancer, and Covid-19.
So why the connection with uncertainty? The stress response is largely predictive rather than reactive. Just as we try to predict the future location of a tennis ball, so too we predict our metabolic needs. When we encounter situations of novelty and uncertainty, we do not know what to expect, so we marshal a preparatory stress response. The stress response is comparable to revving your engine at a yellow light. Situations of novelty can be described, following Claude Shannon, inventor of information theory, as “information rich”. Conveniently, informational load in the financial markets can be measured by the level of volatility: the more Shannon information flowing into the markets, the higher the volatility.
In two of our studies we found that traders’ cortisol levels did in fact track bond volatility almost tick for tick. It did not even matter if the traders were making or losing money; just put a human in the presence of information and their metabolism calibrates to it. Take a moment to contemplate that curious result — there are molecules in your blood that track the amount of information you process.
Today, with historically elevated volatility, there is a good chance cortisol levels are trending higher. Immune systems could also be affected. When your body is attacked by a pathogen, your immune system coordinates a suite of changes known as “sickness behaviour”. You develop a fever, lose your appetite and withdraw socially. You also experience increased risk aversion.
Central to the immune response is inflammation, the process of eliminating pathogens and initiating tissue repair. However, inflammation can also occur in stressful situations, because cytokines, the molecules triggering inflammation, assist in the recruitment of metabolic reserves. If inflammation becomes systemic and chronic, it contributes to a wide range of health problems. We found that interleukin-1-beta, the first responder of inflammation, tracked volatility as closely as cortisol.
Recently we have focused on the cardiovascular system. Working with a large and sophisticated fund manager, we have used cutting-edge wearable tech that permits portfolio managers to track their cardiovascular data, physical activity and sleep. The cardiovascular system similarly tracks volatility and risk appetite.
In short, here we may have a mechanism connecting financial and health crises. On the one hand, fluctuating levels of stress and inflammation affect risk-taking. In a lab-based study, we found that chronically elevated cortisol caused a large decrease in risk appetite. Shifting risk presents tricky problems for risk management — and for central banks. Physiology-induced risk aversion can feed a bear market, morphing it into a crash so dangerous that the state has to step in with asset purchases. On the other hand, chronically elevated stress and inflammation are known to contribute to a wide range of health problems.
We are not accustomed to combining financial and medical data in this way. But corporate and state health programs should start.
The markets today are living through a period of volatility the likes of which I have never encountered. March was, to put it mildly, information rich. As a result, there is now the very real possibility of a second wave of disease. Viruses can make you sick, but so too can information.
As coronavirus infection rates peak in many countries, the markets rally. There is a nagging worry that a second wave of infections might occur once lockdowns are lifted or summer passes. But for anyone immersed in the financial markets there should be a further concern. Volatility created by the pandemic could itself cause a second wave of health problems. Volatility can make you sick, just as a virus can.
To get an inkling of what this other second wave might look like, it helps to recall what happened after the credit crisis. That event was both a financial and medical disaster. Various epidemiological studies suggest it may be responsible for 260,000 cancer deaths in OECD countries; a 17.8 per cent increase in the Greek mortality rate between 2010-16; and a spike in cardiovascular disease in London for the years 2008-09, with an additional 2,000 deaths due to heart attacks. The current economic crisis may be far worse than 2008-09, so the medical fallout could be as well.
Why do financial and medical crises go hand in hand? Many of the above studies focused on unemployment and reduced access to healthcare as causes of the adverse health outcomes. But research my colleagues and I have conducted on trading floors for the past 12 years suggest to me that uncertainty itself, regardless of outcome, can have independent and profound effects on physiology and health.
Our studies were designed initially to test a hunch I had while running a trading desk for Deutsche Bank, that the rollercoaster of physical sensations a person experiences while immersed in the markets alters their risk-taking. After retraining in neuroscience and physiology at Cambridge University, I set up shop on various hedge fund and asset manager trading floors, along with colleagues, mostly medical researchers. Using wearable tech and sampling biochemistry, we tracked the traders’ cardiovascular, endocrine and immune systems.
My goal was to demonstrate how these physiological changes altered trader performance. Increasingly, though, I came to see that a trading floor provides an elegant model for studying occupational health.
One remarkable thing we found was that traders’ bodies calibrated sensitively to market volatility. For humans, apparently, information is physical. You do not process information dispassionately, as a computer does; rather your brain quietly figures out what movement might ensue from the information, and prepares your body, altering heart rate, adrenaline levels, immune activation and so on.
Your brain did not evolve to support Platonic thought; it evolved to process movement. Our larger brain controls a more sophisticated set of muscles, giving us an ability to learn new movements unmatched by any other animal — or robot — on the planet. If you want to understand yourself, fellow humans, even the markets, put movement at the very core of what we are.
Essential to our exquisite motor control is an equally advanced system of fuel injection, one that has been misleadingly termed “the stress response”. Stress connotes something nasty but the stress response is nothing more sinister than a metabolic preparation for movement. Cortisol, the main stress molecule, inhibits bodily systems not needed during movement, such as digestion and reproduction, and marshals glucose and free fatty acids as fuel for our cells.
The stress response evolved to be short lived, acutely activated for only a few hours or days. Yet during a crisis such as the current one, you can activate the stress response for weeks and months at a time. Then an acute stress response morphs into a chronic one. Your digestive system is inhibited so you become susceptible to gastrointestinal disorders; blood pressure increases so you are prone to hypertension; fatty acids and glucose circulate in your blood but are not used, because you are stuck at home, so your risks increase for cardiovascular disease. Finally, by inhibiting parts of the immune system, stress impairs your ability to recover from diseases such as cancer, and Covid-19.
So why the connection with uncertainty? The stress response is largely predictive rather than reactive. Just as we try to predict the future location of a tennis ball, so too we predict our metabolic needs. When we encounter situations of novelty and uncertainty, we do not know what to expect, so we marshal a preparatory stress response. The stress response is comparable to revving your engine at a yellow light. Situations of novelty can be described, following Claude Shannon, inventor of information theory, as “information rich”. Conveniently, informational load in the financial markets can be measured by the level of volatility: the more Shannon information flowing into the markets, the higher the volatility.
In two of our studies we found that traders’ cortisol levels did in fact track bond volatility almost tick for tick. It did not even matter if the traders were making or losing money; just put a human in the presence of information and their metabolism calibrates to it. Take a moment to contemplate that curious result — there are molecules in your blood that track the amount of information you process.
Today, with historically elevated volatility, there is a good chance cortisol levels are trending higher. Immune systems could also be affected. When your body is attacked by a pathogen, your immune system coordinates a suite of changes known as “sickness behaviour”. You develop a fever, lose your appetite and withdraw socially. You also experience increased risk aversion.
Central to the immune response is inflammation, the process of eliminating pathogens and initiating tissue repair. However, inflammation can also occur in stressful situations, because cytokines, the molecules triggering inflammation, assist in the recruitment of metabolic reserves. If inflammation becomes systemic and chronic, it contributes to a wide range of health problems. We found that interleukin-1-beta, the first responder of inflammation, tracked volatility as closely as cortisol.
Recently we have focused on the cardiovascular system. Working with a large and sophisticated fund manager, we have used cutting-edge wearable tech that permits portfolio managers to track their cardiovascular data, physical activity and sleep. The cardiovascular system similarly tracks volatility and risk appetite.
In short, here we may have a mechanism connecting financial and health crises. On the one hand, fluctuating levels of stress and inflammation affect risk-taking. In a lab-based study, we found that chronically elevated cortisol caused a large decrease in risk appetite. Shifting risk presents tricky problems for risk management — and for central banks. Physiology-induced risk aversion can feed a bear market, morphing it into a crash so dangerous that the state has to step in with asset purchases. On the other hand, chronically elevated stress and inflammation are known to contribute to a wide range of health problems.
We are not accustomed to combining financial and medical data in this way. But corporate and state health programs should start.
The markets today are living through a period of volatility the likes of which I have never encountered. March was, to put it mildly, information rich. As a result, there is now the very real possibility of a second wave of disease. Viruses can make you sick, but so too can information.
Tuesday, 30 July 2019
Is Migration Inevitable?
By Girish Menon
In Mumbai, it appears that the taxis and autorickshaws are predominantly driven by migrants from Uttar Pradesh. In Kerala, as captured in the film Njan Prakashan, most of the physical labour is provided by migrants from the Bengal region. In the UK the nursing profession is dominated by migrants from Kerala and I don’t have to mention the Gulf where it is rumoured that one can get by with speaking Malayalam. These anecdotes do not adequately capture the migration of people all over the world.
This has led to resentment among the sons of the soil living in their ancestral lands. One of them speaking about Polish migrants felt ‘The Pole should get up every morning in Krakow, take a flight to the UK, pick fruit from the farms, collect the high wage and take a late flight back to Krakow’.
This shows that some sons of the soil admit that migrants fill a void in their labour markets and are a necessary evil to be tolerated.
On the other hand: the Brexit vote, the clampdown on the Mexican border, the identification of aliens in Assam show that political authorities are responding to their protests against uncontrolled migration.
So, why does this problem arise? Why do migrants leave their familiar surroundings to go to unfamiliar places and insist on working in increasingly hostile circumstances?
For starters, it could be that despite all the hardships faced in an alien land the migrant feels that his lot is still better than by continuing in his homeland. The film Peepli Live captures the distress in Indian agriculture, where despite all the government initiatives the protagonist finds himself leaving the village to work on a dangerous construction site in a big city. It is natural to assume that such a migrant would end up living in an illegal slum in that city.
Along with this group of desperate migrants there is also a group of economic migrants, this writer included, who seem to arbitrage the global shortage of skilled labour.
In the film Thackeray, Bal Thackeray the founder of the Shiv Sena alleged that South Indians, especially Malayalees, monopolised jobs in Mumbai and with their ‘clannish mentality’ would block opportunities for the sons of the soil. This sentiment has been echoed by similar politicians all over the world.
There is definitely some merit in their arguments too.
In the UK around 2004 Tony Blair allowed free labour market access to newly joined East European citizens. At the time there were no protests; the ruling Labour Party had ‘abolished boom and bust’ and the labour market was booming with wage hikes. The migrants were doing jobs that Britons did not want to do.
The feeling of anger only began following the 2008 financial crisis. The EU imposed strict austerity on the Euro member countries creating high levels of unemployment in their member states. The UK’s high minimum wage then acted as a magnet for migrants from the EU.
At the same time, in 2010 David Cameron’s UK government was ideologically committed to austerity and ‘balancing the budget’. They introduced severe funding cuts for schools, healthcare and welfare benefits. Thus, if you were an unemployed Briton living in Stevenage you suddenly discovered that the unemployment benefits were cut forcing you to look for a job while UK employers preferred foreigners for their higher productivity. This Stevenager’s family members also had to compete with Spaniards for reduced school places and Poles for access to the highly restricted health service.
Thus the revulsion to the foreigner may not have arisen without the deliberate and untimely austerity imposed by the Conservative-Liberal Democrat government.
So, is migration inevitable? Yes and no.
From a theoretical perspective, only having free movement of capital but not permitting free movement of labour goes against free market logic and globalisation. This is also a violation of Ricardo, because labour rich countries are being prevented from benefiting from their comparative advantage. So, if there is free movement of capital, goods and services then, unlike Boris Johnson’s argument, it is incumbent on labour rich countries to demand free movement of labour.
Nonetheless, there will always be some economic migrants who will arbitrage the wage differentials in the world. Also, there will be others who are fleeing political persecution in their respective countries.
However, some of the migration can be controlled. There could be a universal basic income available to all the inhabitants of a common market. This basic income could be determined on the basis of the minimum income required to live in the most prosperous province in a common market. Such an income will enable the prospective migrant to live a luxurious life in his depressed province and act as a deterrent to migration.
In the UK, some Conservative party members who colluded in imposing austerity and who lauded the growth of food banks have convinced Stevenagers that their economic woes are solely due to foreigners. This fear was fortified enough to win the Brexit referendum. Now the question remains if the EU elite will accept their demands for a free movement of goods and services and end the free movement of labour.
Since the interest of the EU elite are not the same as its peripheral members I will not be surprised if they collude with Johnson’s cohorts. Will this lead to peripheral members of the EU asking for an exit as well? I will not be surprised.
Thursday, 13 December 2018
How to create a leaderless revolution and win lasting political change
In an age of insurgency, from gilets jaunes to Extinction Rebellion, non-violence is key to harnessing the energy of protest writes Carne Ross in The Guardian
The gilets jaunes movement in France is a leaderless political uprising. It isn’t the first and it won’t be the last. Occupy, the Arab spring and #MeToo are other recent examples of this new politics. Some of it is good. Some of it is not: a leaderless movement, self-organised on Reddit, helped elect Donald Trump. But leaderless movements are spreading, and we need to understand where they come from, what is legitimate action and, if you want to start one, what works and what doesn’t.
Leaderless movements spring from frustration with conventional top-down politics, a frustration shared by many
The Arab spring began with the self-immolation of one despairing young man in Tunisia; the revolt rapidly spread across the region, just as protests have proliferated in France. In highly connected complex systems, such as the world today, the action of a single agent can suddenly trigger what complexity theorists call a “phase shift” across the entire system.
We cannot predict which agent or what event might be that trigger. But we already know that the multiplying connections of our world offer an unprecedented opportunity for the rise and spread of leaderless movements.
Leaderless movements spring from frustration with conventional top-down politics, a frustration shared by many, not only those on the streets. Polls suggest the gilets jaunes are supported by a large majority of the French public. Who believes that writing to your MP, or signing a petition to No 10 makes any difference to problems such as inequality, the chronic housing shortage or the emerging climate disaster? Even voting feels like a feeble response to these deep-seated problems that are functions not only of government policies but more of the economic system itself.
What such movements oppose is usually clear, but what they propose is inevitably less so: that is their nature. The serial popular uprisings of the Arab spring all rejected authoritarian rule, whether in Tunisia, Egypt or Syria. But in most places there was no agreement about what kind of government should replace the dictators. In Eygpt, the Tahrir Square protests failed to create an organised democratic political party that could win an election. Instead, the Muslim Brotherhood, long highly organised and thus prepared for such a moment, stepped into the political vacuum. In turn, this provoked further mass protest, which eventually brought to power another dictatorship as repressive as Hosni Mubarak’s.
When the demand is for change in social relations– norms more than laws – such as the end of sexual harassment, the results can be as rapid but also more enduring and positive. The #MeToo movement has provoked questioning of gender relations across the world. The British deputy prime minister, Damian Green, was forced to resign; in India, a cabinet minister. The effects are uneven, and far from universal, but sexual harassers have been outed and ousted from positions of power in the media, NGOs and governments.
Some mass action has required leadership. The race discrimination that confronted the US civil rights movement was deeply entrenched in both American society and its laws. Martin Luther King and other leaders paid exquisite attention to strategy, switching tactics according to what worked and what didn’t. King correctly judged, however, that real and lasting equality required the reform of capitalism – a change in the system itself. In a sense, his objective went from the singular to the plural. And that is where his campaign hit the rocks. Momentum dissipated when King started to talk about economic equality: there was no agreement on the diagnosis, or the solution.
The Occupy movement faced a similar problem. It succeeded in inserting inequality and economic injustice into the mainstream political conversation – politicians had avoided the topic before. But Occupy couldn’t articulate a specific political programme to reform the system. I was in Zuccotti Park in New York City, where the protest movement began, when the “general assembly” invited the participants to pin notes listing their demands on to trees. Ideas were soon plastered up, from petitioning Washington DC to replacing the dollar – many of which, of course, were irreconcilable with each other.
This is why a leaderless response to the climate change disaster is tricky. It’s striking that in Emmanuel Macron’s fuel tax rises the gilets jaunes opposed the very thing demanded by Extinction Rebellion, Britain’s newly minted leaderless movement: aggressive policies to reduce carbon emissions to net zero. Macron’s proposals would have hit the poorest hardest, illustrating that resolving the crises of the environment and inequality requires a more comprehensive, carefully wrought solution to both. But leaderless movements have largely proved incapable of such complicated decision-making, as anyone at Zuccotti Park will attest.
Conventional party politicians, reasserting their own claim to legitimacy, insist that such problems can only be arbitrated by imposing more top-down policy. But when most feel powerless about the things that matter, this may only provoke further protests.
Ultimately, to address profound systemic challenges, we shall need new participatory and inclusive decision-making structures to negotiate the difficult choices. An example of these forums has emerged in parts of Syria, of all places. Rightly, this is precisely what the Extinction Rebellion is also demanding.
Inevitably, leaderless movements face questions about their legitimacy. One answer lies in their methods. The Macron government has exploited the violence seen in Paris and elsewhere to claim that the gilets jaunes movement is illegitimate and anti-democratic. Mahatma Gandhi, and later King, realised that nonviolent action – such as the satyagraha salt march or the Montgomery bus boycott – denies the authorities this line of attack. On the contrary, the violence used by those authorities – the British colonial government or the police of the southern US states – against nonviolent protestors helped build their own legitimacy and attracted global attention.
Complexity science tells us something else important. System-wide shifts happen when the system is primed for change, at so-called criticality. In the Middle East there was almost universal anger at the existing political status quo, so it took only one match to light the fire of revolt. Meeting people in colleges and towns across the UK but also in the US (where I lived until recently) you can hear the mounting frustration with a political and economic system that is totally unresponsive to the needs of the 99%, and offers no credible answer to the climate emergency.
There will be more leaderless movements to express this frustration, just as there will be more rightwing demagogues, like Trump or Boris Johnson, who seek to exploit it to their own advantage. For the right ones to prevail, we must insist on nonviolence as well as commitment to dialogue with – and not denunciation of – those who disagree. Messily, a new form of politics is upon us, and we must ensure that it peacefully and democratically produces deep systematic reform, not the counter-reaction of the authoritarians. Get ready.
The gilets jaunes movement in France is a leaderless political uprising. It isn’t the first and it won’t be the last. Occupy, the Arab spring and #MeToo are other recent examples of this new politics. Some of it is good. Some of it is not: a leaderless movement, self-organised on Reddit, helped elect Donald Trump. But leaderless movements are spreading, and we need to understand where they come from, what is legitimate action and, if you want to start one, what works and what doesn’t.
Leaderless movements spring from frustration with conventional top-down politics, a frustration shared by many
The Arab spring began with the self-immolation of one despairing young man in Tunisia; the revolt rapidly spread across the region, just as protests have proliferated in France. In highly connected complex systems, such as the world today, the action of a single agent can suddenly trigger what complexity theorists call a “phase shift” across the entire system.
We cannot predict which agent or what event might be that trigger. But we already know that the multiplying connections of our world offer an unprecedented opportunity for the rise and spread of leaderless movements.
Leaderless movements spring from frustration with conventional top-down politics, a frustration shared by many, not only those on the streets. Polls suggest the gilets jaunes are supported by a large majority of the French public. Who believes that writing to your MP, or signing a petition to No 10 makes any difference to problems such as inequality, the chronic housing shortage or the emerging climate disaster? Even voting feels like a feeble response to these deep-seated problems that are functions not only of government policies but more of the economic system itself.
What such movements oppose is usually clear, but what they propose is inevitably less so: that is their nature. The serial popular uprisings of the Arab spring all rejected authoritarian rule, whether in Tunisia, Egypt or Syria. But in most places there was no agreement about what kind of government should replace the dictators. In Eygpt, the Tahrir Square protests failed to create an organised democratic political party that could win an election. Instead, the Muslim Brotherhood, long highly organised and thus prepared for such a moment, stepped into the political vacuum. In turn, this provoked further mass protest, which eventually brought to power another dictatorship as repressive as Hosni Mubarak’s.
When the demand is for change in social relations– norms more than laws – such as the end of sexual harassment, the results can be as rapid but also more enduring and positive. The #MeToo movement has provoked questioning of gender relations across the world. The British deputy prime minister, Damian Green, was forced to resign; in India, a cabinet minister. The effects are uneven, and far from universal, but sexual harassers have been outed and ousted from positions of power in the media, NGOs and governments.
Some mass action has required leadership. The race discrimination that confronted the US civil rights movement was deeply entrenched in both American society and its laws. Martin Luther King and other leaders paid exquisite attention to strategy, switching tactics according to what worked and what didn’t. King correctly judged, however, that real and lasting equality required the reform of capitalism – a change in the system itself. In a sense, his objective went from the singular to the plural. And that is where his campaign hit the rocks. Momentum dissipated when King started to talk about economic equality: there was no agreement on the diagnosis, or the solution.
The Occupy movement faced a similar problem. It succeeded in inserting inequality and economic injustice into the mainstream political conversation – politicians had avoided the topic before. But Occupy couldn’t articulate a specific political programme to reform the system. I was in Zuccotti Park in New York City, where the protest movement began, when the “general assembly” invited the participants to pin notes listing their demands on to trees. Ideas were soon plastered up, from petitioning Washington DC to replacing the dollar – many of which, of course, were irreconcilable with each other.
This is why a leaderless response to the climate change disaster is tricky. It’s striking that in Emmanuel Macron’s fuel tax rises the gilets jaunes opposed the very thing demanded by Extinction Rebellion, Britain’s newly minted leaderless movement: aggressive policies to reduce carbon emissions to net zero. Macron’s proposals would have hit the poorest hardest, illustrating that resolving the crises of the environment and inequality requires a more comprehensive, carefully wrought solution to both. But leaderless movements have largely proved incapable of such complicated decision-making, as anyone at Zuccotti Park will attest.
Conventional party politicians, reasserting their own claim to legitimacy, insist that such problems can only be arbitrated by imposing more top-down policy. But when most feel powerless about the things that matter, this may only provoke further protests.
Ultimately, to address profound systemic challenges, we shall need new participatory and inclusive decision-making structures to negotiate the difficult choices. An example of these forums has emerged in parts of Syria, of all places. Rightly, this is precisely what the Extinction Rebellion is also demanding.
Inevitably, leaderless movements face questions about their legitimacy. One answer lies in their methods. The Macron government has exploited the violence seen in Paris and elsewhere to claim that the gilets jaunes movement is illegitimate and anti-democratic. Mahatma Gandhi, and later King, realised that nonviolent action – such as the satyagraha salt march or the Montgomery bus boycott – denies the authorities this line of attack. On the contrary, the violence used by those authorities – the British colonial government or the police of the southern US states – against nonviolent protestors helped build their own legitimacy and attracted global attention.
Complexity science tells us something else important. System-wide shifts happen when the system is primed for change, at so-called criticality. In the Middle East there was almost universal anger at the existing political status quo, so it took only one match to light the fire of revolt. Meeting people in colleges and towns across the UK but also in the US (where I lived until recently) you can hear the mounting frustration with a political and economic system that is totally unresponsive to the needs of the 99%, and offers no credible answer to the climate emergency.
There will be more leaderless movements to express this frustration, just as there will be more rightwing demagogues, like Trump or Boris Johnson, who seek to exploit it to their own advantage. For the right ones to prevail, we must insist on nonviolence as well as commitment to dialogue with – and not denunciation of – those who disagree. Messily, a new form of politics is upon us, and we must ensure that it peacefully and democratically produces deep systematic reform, not the counter-reaction of the authoritarians. Get ready.
Monday, 13 November 2017
For many, free movement causes more pain – and Brexit seems to be the cure
Deborah Orr in The Guardian
The last 16 months have made one thing clear: it’s much easier to vote to leave the EU than it is to actually leave. Remainers such as myself now find it tempting to say: “I told you so.” This, broadly speaking, is because we’re a bunch of smug know-it-alls, who haven’t even properly asked ourselves why we failed so badly to get our point across last June.
The answer, of course, is that we were and are too busy being smug know-it-alls: certain before the referendum that the idealism of the EU was plain for everyone except the terminally thick and racist to see; and certain afterwards that surely at some point even the terminally thick and racist will start having buyers’ remorse.
The sheer tragicomedy of EU-UK negotiations is indeed getting some people so fed up with the whole farrago that a few Brexiteers are crossing the floor. But, mostly, people view the difficulty of leaving the EU as yet more proof that it’s a money-grabbing, navel-gazing, inert and self-serving bureaucracy, as respectful of democracy as Kim Jong-un and as responsive to the needs of actual people as a gigantic mudslide. An in-depth survey of Brexiteers in Wales last month confirmed pretty much exactly that.
Politicians do understand, on the whole, that the factor above all others that motivates white working-class Brexit voters is free movement, as again the Welsh survey attests. This is why Labour in particular is hamstrung. Backing remain would please its Guardian-reading supporters. But that would alienate many of its core voters. Whatever Jeremy Corbyn’s own views about the EU, the sensible strategy for the short-term is not to seem at all remain-oriented.
Short-term being the operative word. The big trouble with the idealism of free movement is that its intellectual underpinnings demand pain now for future gain. The idea is that people will crisscross the various member countries, working where there’s work to create economic growth, returning home with money, experience and ideas, to start businesses that will attract others in turn, until every country is as prosperous as its neighbour.
This transformation, if it happens, will take generations. But the architects of this grand plan – the experts, the economists, the “elite” – are not the people who feel any short-term pain.
It’s completely unrealistic to ask people to spend their lives wondering where the money is coming from to pay the next electricity bill, whether their children will ever get out of their expensive private accommodation, and whether their grandchildren will be on zero-hours contracts forever, all so that maybe 80 years from now the average living standard of a Lithuanian will be similar to that of a Welshman.
People need their lives to improve now, not to live in stress and worry because things might work out in the future. The theoretical utopians who support the EU are not those who are expected to feel solidarity with their Polish colleagues in the salad-bagging factory. Especially when those colleagues are working towards a different goal. It’s easier to work for low wages if these wages are higher than you would be getting back home; easier to save when you know that a deposit on a house back home with your family is an achievable goal; easier to go without when you know that it’s for a finite time.
Where in the EU do young, unskilled British people head to get such a start in life? Reciprocity doesn’t exist.
In the 1980s, builders went to Germany, as dramatised in Auf Wiedersehen, Pet. In Germany today, builders come from eastern Europe. Wealthy countries in the EU are rightly expected to be generous. But when your own country has not generously shared its wealth with you, it’s hard to accept that you’re the ones expected to carry the burden in this grand new wealth-sharing concept.
In his book Austerity Britain, historian David Kynaston quoted evidence from the Mass Observation project that the people who lived in the areas most devastated by the war were far less likely to be optimistic about the future than those who had got off lightly. Part of their ennui was the knowledge that change had been promised after the first world war, yet hadn’t come about.
The same goes for the areas that were economically devastated in the early stages of globalisation. The EU didn’t save them then; it isn’t saving them now. No amount of promises that the EU is the best hope of shelter from economic change in the future will persuade enough of the hard-up Brexiteers in that 52% vote.
If progressives want to change the minds of Brexiteers, waiting for them to see the error of their ways isn’t going to work. What people need is a quid pro quo that offers them tangible improvements in their lives right now. That, and only that, will keep Britain in the EU.
The last 16 months have made one thing clear: it’s much easier to vote to leave the EU than it is to actually leave. Remainers such as myself now find it tempting to say: “I told you so.” This, broadly speaking, is because we’re a bunch of smug know-it-alls, who haven’t even properly asked ourselves why we failed so badly to get our point across last June.
The answer, of course, is that we were and are too busy being smug know-it-alls: certain before the referendum that the idealism of the EU was plain for everyone except the terminally thick and racist to see; and certain afterwards that surely at some point even the terminally thick and racist will start having buyers’ remorse.
The sheer tragicomedy of EU-UK negotiations is indeed getting some people so fed up with the whole farrago that a few Brexiteers are crossing the floor. But, mostly, people view the difficulty of leaving the EU as yet more proof that it’s a money-grabbing, navel-gazing, inert and self-serving bureaucracy, as respectful of democracy as Kim Jong-un and as responsive to the needs of actual people as a gigantic mudslide. An in-depth survey of Brexiteers in Wales last month confirmed pretty much exactly that.
Politicians do understand, on the whole, that the factor above all others that motivates white working-class Brexit voters is free movement, as again the Welsh survey attests. This is why Labour in particular is hamstrung. Backing remain would please its Guardian-reading supporters. But that would alienate many of its core voters. Whatever Jeremy Corbyn’s own views about the EU, the sensible strategy for the short-term is not to seem at all remain-oriented.
Short-term being the operative word. The big trouble with the idealism of free movement is that its intellectual underpinnings demand pain now for future gain. The idea is that people will crisscross the various member countries, working where there’s work to create economic growth, returning home with money, experience and ideas, to start businesses that will attract others in turn, until every country is as prosperous as its neighbour.
This transformation, if it happens, will take generations. But the architects of this grand plan – the experts, the economists, the “elite” – are not the people who feel any short-term pain.
It’s completely unrealistic to ask people to spend their lives wondering where the money is coming from to pay the next electricity bill, whether their children will ever get out of their expensive private accommodation, and whether their grandchildren will be on zero-hours contracts forever, all so that maybe 80 years from now the average living standard of a Lithuanian will be similar to that of a Welshman.
People need their lives to improve now, not to live in stress and worry because things might work out in the future. The theoretical utopians who support the EU are not those who are expected to feel solidarity with their Polish colleagues in the salad-bagging factory. Especially when those colleagues are working towards a different goal. It’s easier to work for low wages if these wages are higher than you would be getting back home; easier to save when you know that a deposit on a house back home with your family is an achievable goal; easier to go without when you know that it’s for a finite time.
Where in the EU do young, unskilled British people head to get such a start in life? Reciprocity doesn’t exist.
In the 1980s, builders went to Germany, as dramatised in Auf Wiedersehen, Pet. In Germany today, builders come from eastern Europe. Wealthy countries in the EU are rightly expected to be generous. But when your own country has not generously shared its wealth with you, it’s hard to accept that you’re the ones expected to carry the burden in this grand new wealth-sharing concept.
In his book Austerity Britain, historian David Kynaston quoted evidence from the Mass Observation project that the people who lived in the areas most devastated by the war were far less likely to be optimistic about the future than those who had got off lightly. Part of their ennui was the knowledge that change had been promised after the first world war, yet hadn’t come about.
The same goes for the areas that were economically devastated in the early stages of globalisation. The EU didn’t save them then; it isn’t saving them now. No amount of promises that the EU is the best hope of shelter from economic change in the future will persuade enough of the hard-up Brexiteers in that 52% vote.
If progressives want to change the minds of Brexiteers, waiting for them to see the error of their ways isn’t going to work. What people need is a quid pro quo that offers them tangible improvements in their lives right now. That, and only that, will keep Britain in the EU.
Tuesday, 20 December 2016
The Problem is Free Trade not Free Movement
Ian Allinson in The Guardian
While freedom of movement has been a hot topic since the debates around Brexit began, few would have predicted it would become such a focus in the Unite general secretary election, in which I’m standing.
Anger around jobs and conditions is justified, but often misdirected. Neoliberal capitalism has been disastrous. Free trade deals enshrine the rights of capital while ignoring the needs of humans and our warming planet. Workers have been dumped out of jobs by the million, work has intensified, workers feel more vulnerable to managerial whim, the share of wealth going to wages has fallen, welfare systems have been slashed and huge areas of life – including education, health and housing – are increasingly commoditised, all while our limited democracy is increasingly hollowed out.
Migrants are prime scapegoats for many politicians and media. Some employers provide fertile material for racists and nationalists. Fujitsu, my own employer, proposes to cut 1,800 UK jobs, hoping to boost profits by offshoring jobs to low-paid countries. Fujitsu is even asking some workers to train their replacements, brought to the UK to learn the job. Workers are being asked to dig their own graves.
When our livelihoods are threatened, workers sometimes respond by claiming privileged access to jobs, housing, and so on, and excluding others on the basis of gender, race or nationality. This is tempting because it sometimes “works” for some people for a short time. But it is misguided. If some workers try to protect their interests at the expense of others, the unity we need to win is undermined and we all lose.
Gerard Coyne is also standing for the general secretary post and his silence on this question, as on so many others, is deafening; meanwhile his relationships with the Labour right are worrying.
Len McCluskey, the present general secretary, though anti-racist, has fudged on workers’ freedom of movement, wrongly conceding ground to racists and nationalists. Just before the EU referendum McCluskey referred to it as an experiment at UK workers’ expense. As a delegate to the Unite conference shortly after the referendum, I moved a motion defending freedom of movement. Unite’s leadership opposed it, with their own motion calling for debate on the question. McCluskey now boasts that he has led this debate “demanding safeguards for workers, communities and industries affected by migration policy driven by greedy bosses”. Beyond dog-whistle politics, what does this mean?
McCluskey explained in a speech for the thinktank Class (Centre for Labour and Social Studies) that his “proposal is that any employer wishing to recruit labour abroad can only do so if they are either covered by a proper trade union agreement, or by sectoral collective bargaining”. All jobs should be covered by union agreements, but union weakness means most are not, and this applies especially to industries in which migrants have to work.
What would McCluskey’s proposal mean in practice? What would count as recruiting abroad? How long would a worker have to be in the UK before they could apply for an un-unionised job?
Giving different rights to different workers based on their nationality is discriminatory and divisive. It undermines solidarity. Blocking employers hiring on the basis of nationality would repeat the mistake of some trade unionists of a previous generation who sought to control the labour supply by excluding women from some jobs, fearing “they” would push down “our” wages. We, Unite’s membership, like the working class as a whole, come from all over the world. This is a strength, not a weakness.
It is free trade, not free movement of people, that has been a disaster for working-class people. Manufacturing has seen colossal job losses in recent decades as production has moved to countries in the south and east. Too often unions have responded by making common cause with the very employers sacking their members, against the foreign competition.
This approach has failed to protect jobs. Whether it is an employer threatening to dismiss and re-engage the same workers on lower pay (like the Durham teaching assistants), replacing workers with cheaper ones in the same workplace, or moving the jobs halfway round the world, workers are right to fight the degradation of employment. You can’t do that in partnership with the employer who is sacking you.
Thankfully workers are not always paralysed by the confusion of their leaders. Unite members at Capita and Prudential won important victories against offshoring. Members at the Fawley oil refinery spurned British Jobs For British Workers slogans and built solidarity to win equal pay for workers of all nationalities instead of trying to restrict the employment of migrants. Inspired by the Prudential win, industrial action in my own workplace currently includes refusal to cooperate with projects to move work offshore.
Unions should be following Fawley workers in demanding everyone is paid the rate for the job, regardless of employer, employment status, or nationality. We should be demanding full pay transparency, monitored by the unions. We should be calling for all jobs to be openly advertised, with no discrimination in hiring based on nationality. And existing workers should refuse to cooperate with handing over work unless their employment is assured.
The labour movement needs to regain the confidence to demand solutions that meet human needs, even when that upsets big business. We won’t do that by turning workers against each other on nationalist grounds, or by fudging the issue.
No general secretary candidate should chase votes by undermining the unity members need to defend their jobs. I am calling on Len McCluskey and Gerard Coyne to join me in championing workers’ rights to move freely (not just within the EU) and opposing any employment restrictions based on nationality.
While freedom of movement has been a hot topic since the debates around Brexit began, few would have predicted it would become such a focus in the Unite general secretary election, in which I’m standing.
Anger around jobs and conditions is justified, but often misdirected. Neoliberal capitalism has been disastrous. Free trade deals enshrine the rights of capital while ignoring the needs of humans and our warming planet. Workers have been dumped out of jobs by the million, work has intensified, workers feel more vulnerable to managerial whim, the share of wealth going to wages has fallen, welfare systems have been slashed and huge areas of life – including education, health and housing – are increasingly commoditised, all while our limited democracy is increasingly hollowed out.
Migrants are prime scapegoats for many politicians and media. Some employers provide fertile material for racists and nationalists. Fujitsu, my own employer, proposes to cut 1,800 UK jobs, hoping to boost profits by offshoring jobs to low-paid countries. Fujitsu is even asking some workers to train their replacements, brought to the UK to learn the job. Workers are being asked to dig their own graves.
When our livelihoods are threatened, workers sometimes respond by claiming privileged access to jobs, housing, and so on, and excluding others on the basis of gender, race or nationality. This is tempting because it sometimes “works” for some people for a short time. But it is misguided. If some workers try to protect their interests at the expense of others, the unity we need to win is undermined and we all lose.
Gerard Coyne is also standing for the general secretary post and his silence on this question, as on so many others, is deafening; meanwhile his relationships with the Labour right are worrying.
Len McCluskey, the present general secretary, though anti-racist, has fudged on workers’ freedom of movement, wrongly conceding ground to racists and nationalists. Just before the EU referendum McCluskey referred to it as an experiment at UK workers’ expense. As a delegate to the Unite conference shortly after the referendum, I moved a motion defending freedom of movement. Unite’s leadership opposed it, with their own motion calling for debate on the question. McCluskey now boasts that he has led this debate “demanding safeguards for workers, communities and industries affected by migration policy driven by greedy bosses”. Beyond dog-whistle politics, what does this mean?
McCluskey explained in a speech for the thinktank Class (Centre for Labour and Social Studies) that his “proposal is that any employer wishing to recruit labour abroad can only do so if they are either covered by a proper trade union agreement, or by sectoral collective bargaining”. All jobs should be covered by union agreements, but union weakness means most are not, and this applies especially to industries in which migrants have to work.
What would McCluskey’s proposal mean in practice? What would count as recruiting abroad? How long would a worker have to be in the UK before they could apply for an un-unionised job?
Giving different rights to different workers based on their nationality is discriminatory and divisive. It undermines solidarity. Blocking employers hiring on the basis of nationality would repeat the mistake of some trade unionists of a previous generation who sought to control the labour supply by excluding women from some jobs, fearing “they” would push down “our” wages. We, Unite’s membership, like the working class as a whole, come from all over the world. This is a strength, not a weakness.
It is free trade, not free movement of people, that has been a disaster for working-class people. Manufacturing has seen colossal job losses in recent decades as production has moved to countries in the south and east. Too often unions have responded by making common cause with the very employers sacking their members, against the foreign competition.
This approach has failed to protect jobs. Whether it is an employer threatening to dismiss and re-engage the same workers on lower pay (like the Durham teaching assistants), replacing workers with cheaper ones in the same workplace, or moving the jobs halfway round the world, workers are right to fight the degradation of employment. You can’t do that in partnership with the employer who is sacking you.
Thankfully workers are not always paralysed by the confusion of their leaders. Unite members at Capita and Prudential won important victories against offshoring. Members at the Fawley oil refinery spurned British Jobs For British Workers slogans and built solidarity to win equal pay for workers of all nationalities instead of trying to restrict the employment of migrants. Inspired by the Prudential win, industrial action in my own workplace currently includes refusal to cooperate with projects to move work offshore.
Unions should be following Fawley workers in demanding everyone is paid the rate for the job, regardless of employer, employment status, or nationality. We should be demanding full pay transparency, monitored by the unions. We should be calling for all jobs to be openly advertised, with no discrimination in hiring based on nationality. And existing workers should refuse to cooperate with handing over work unless their employment is assured.
The labour movement needs to regain the confidence to demand solutions that meet human needs, even when that upsets big business. We won’t do that by turning workers against each other on nationalist grounds, or by fudging the issue.
No general secretary candidate should chase votes by undermining the unity members need to defend their jobs. I am calling on Len McCluskey and Gerard Coyne to join me in championing workers’ rights to move freely (not just within the EU) and opposing any employment restrictions based on nationality.
Saturday, 1 October 2016
Is globalisation no longer a good thing?
John O'Sullivan in The Economist
THERE IS NOTHING dark, still less satanic, about the Revolution Mill in Greensboro, North Carolina. The tall yellow-brick chimney stack, with red bricks spelling “Revolution” down its length, was built a few years after the mill was established in 1900. It was a booming time for local enterprise. America’s cotton industry was moving south from New England to take advantage of lower wages. The number of mills in the South more than doubled between 1890 and 1900, to 542. By 1938 Revolution Mill was the world’s largest factory exclusively making flannel, producing 50m yards of cloth a year.
The main mill building still has the springy hardwood floors and original wooden joists installed in its heyday, but no clacking of looms has been heard here for over three decades. The mill ceased production in 1982, an early warning of another revolution on a global scale. The textile industry was starting a fresh migration in search of cheaper labour, this time in Latin America and Asia. Revolution Mill is a monument to an industry that lost out to globalisation.
In nearby Thomasville, there is another landmark to past industrial glory: a 30-foot (9-metre) replica of an upholstered chair. The Big Chair was erected in 1950 to mark the town’s prowess in furniture-making, in which North Carolina was once America’s leading state. But the success did not last. “In the 2000s half of Thomasville went to China,” says T.J. Stout, boss of Carsons Hospitality, a local furniture-maker. Local makers of cabinets, dressers and the like lost sales to Asia, where labour-intensive production was cheaper.
The state is now finding new ways to do well. An hour’s drive east from Greensboro is Durham, a city that is bursting with new firms. One is Bright View Technologies, with a modern headquarters on the city’s outskirts, which makes film and reflectors to vary the pattern and diffusion of LED lights. The Liggett and Myers building in the city centre was once the home of the Chesterfield cigarette. The handsome building is now filling up with newer businesses, says Ted Conner of the Durham Chamber of Commerce. Duke University, the centre of much of the city’s innovation, is taking some of the space for labs.
North Carolina exemplifies both the promise and the casualties of today’s open economy. Yet even thriving local businesses there grumble that America gets the raw end of trade deals, and that foreign rivals benefit from unfair subsidies and lax regulation. In places that have found it harder to adapt to changing times, the rumblings tend to be louder. Across the Western world there is growing unease about globalisation and the lopsided, unstable sort of capitalism it is believed to have wrought.
A backlash against freer trade is reshaping politics. Donald Trump has clinched an unlikely nomination as the Republican Party’s candidate in November’s presidential elections with the support of blue-collar men in America’s South and its rustbelt. These are places that lost lots of manufacturing jobs in the decade after 2001, when America was hit by a surge of imports from China (which Mr Trump says he will keep out with punitive tariffs). Free trade now causes so much hostility that Hillary Clinton, the Democratic Party’s presidential candidate, was forced to disown the Trans-Pacific Partnership (TPP), a trade deal with Asia that she herself helped to negotiate. Talks on a new trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP), have stalled. Senior politicians in Germany and France have turned against it in response to popular opposition to the pact, which is meant to lower investment and regulatory barriers between Europe and America.
Keep-out signs
The commitment to free movement of people within the EU has also come under strain. In June Britain, one of Europe’s stronger economies, voted in a referendum to leave the EU after 43 years as a member. Support for Brexit was strong in the north of England and Wales, where much of Britain’s manufacturing used to be; but it was firmest in places that had seen big increases in migrant populations in recent years. Since Britain’s vote to leave, anti-establishment parties in France, the Netherlands, Germany, Italy and Austria have called for referendums on EU membership in their countries too. Such parties favour closed borders, caps on migration and barriers to trade. They are gaining in popularity and now hold sway in governments in eight EU countries. Mr Trump, for his part, has promised to build a wall along the border with Mexico to keep out immigrants.
There is growing disquiet, too, about the unfettered movement of capital. More of the value created by companies is intangible, and businesses that rely on selling ideas find it easier to set up shop where taxes are low. America has clamped down on so-called tax inversions, in which a big company moves to a low-tax country after agreeing to be bought by a smaller firm based there. Europeans grumble that American firms engage in too many clever tricks to avoid tax. In August the European Commission told Ireland to recoup up to €13 billion ($14.5 billion) in unpaid taxes from Apple, ruling that the company’s low tax bill was a source of unfair competition.
Free movement of debt capital has meant that trouble in one part of the world (say, America’s subprime crisis) quickly spreads to other parts. The fickleness of capital flows is one reason why the EU’s most ambitious cross-border initiative, the euro, which has joined 19 of its 28 members in a currency union, is in trouble. In the euro’s early years, countries such as Greece, Italy, Ireland, Portugal and Spain enjoyed ample credit and low borrowing costs, thanks to floods of private short-term capital from other EU countries. When crisis struck, that credit dried up and had to be replaced with massive official loans, from the ECB and from bail-out funds. The conditions attached to such support have caused relations between creditor countries such as Germany and debtors such as Greece to sour.
Some claim that the growing discontent in the rich world is not really about economics. After all, Britain and America, at least, have enjoyed reasonable GDP growth recently, and unemployment in both countries has dropped to around 5%. Instead, the argument goes, the revolt against economic openness reflects deeper anxieties about lost relative status. Some arise from the emergence of China as a global power; others are rooted within individual societies. For example, in parts of Europe opposition to migrants was prompted by the Syrian refugee crisis. It stems less from worries about the effect of immigration on wages or jobs than from a perceived threat to social cohesion.
But there is a material basis for discontent nevertheless, because a sluggish economic recovery has bypassed large groups of people. In America one in six working-age men without a college degree is not part of the workforce, according to an analysis by the Council of Economic Advisers, a White House think-tank. In Britain, though more people than ever are in work, wage rises have not kept up with inflation. Only in London and its hinterland in the south-east has real income per person risen above its level before the 2007-08 financial crisis. Most other rich countries are in the same boat. A report by the McKinsey Global Institute, a think-tank, found that the real incomes of two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014, compared with 2% in the previous decade. The few gains in a sluggish economy have gone to a salaried gentry.
This has fed a widespread sense that an open economy is good for a small elite but does nothing for the broad mass of people. Even academics and policymakers who used to welcome openness unreservedly are having second thoughts. They had always understood that free trade creates losers as well as winners, but thought that the disruption was transitory and the gains were big enough to compensate those who lose out. However, a body of new research suggests that China’s integration into global trade caused more lasting damage than expected to some rich-world workers. Those displaced by a surge in imports from China were concentrated in pockets of distress where alternative jobs were hard to come by.
It is not easy to establish a direct link between openness and wage inequality, but recent studies suggest that trade plays a bigger role than previously thought. Large-scale migration is increasingly understood to conflict with the welfare policy needed to shield workers from the disruptions of trade and technology.
The consensus in favour of unfettered capital mobility began to weaken after the East Asian crises of 1997-98. As the scale of capital flows grew, the doubts increased. A recent article by economists at the IMF entitled “Neoliberalism: Oversold?” argued that in certain cases the costs to economies of opening up to capital flows exceed the benefits.
Multiple hits
This special report will ask how far globalisation, defined as the freer flow of trade, people and capital around the world, is responsible for the world’s economic ills and whether it is still, on balance, a good thing. A true reckoning is trickier than it might appear, and not just because the main elements of economic openness have different repercussions. Several other big upheavals have hit the world economy in recent decades, and the effects are hard to disentangle.
First, jobs and pay have been greatly affected by technological change. Much of the increase in wage inequality in rich countries stems from new technologies that make college-educated workers more valuable. At the same time companies’ profitability has increasingly diverged. Online platforms such as Amazon, Google and Uber that act as matchmakers between consumers and producers or advertisers rely on network effects: the more users they have, the more useful they become. The firms that come to dominate such markets make spectacular returns compared with the also-rans. That has sometimes produced windfalls at the very top of the income distribution. At the same time the rapid decline in the cost of automation has left the low- and mid-skilled at risk of losing their jobs. All these changes have been amplified by globalisation, but would have been highly disruptive in any event.
The second source of turmoil was the financial crisis and the long, slow recovery that typically follows banking blow-ups. The credit boom before the crisis had helped to mask the problem of income inequality by boosting the price of homes and increasing the spending power of the low-paid. The subsequent bust destroyed both jobs and wealth, but the college-educated bounced back more quickly than others. The free flow of debt capital played a role in the build-up to the crisis, but much of the blame for it lies with lax bank regulation. Banking busts happened long before globalisation.
Superimposed on all this was a unique event: the rapid emergence of China as an economic power. Export-led growth has transformed China from a poor to a middle-income country, taking hundreds of millions of people out of poverty. This achievement is probably unrepeatable. As the price of capital goods continues to fall sharply, places with large pools of cheap labour, such as India or Africa, will find it harder to break into global supply chains, as China did so speedily and successfully.
This special report will disentangle these myriad influences to assess the impact of the free movement of goods, capital and people. It will conclude that some of the concerns about economic openness are valid. The strains inflicted by a more integrated global economy were underestimated, and too little effort went into helping those who lost out. But much of the criticism of openness is misguided, underplaying its benefits and blaming it for problems that have other causes. Rolling it back would leave everyone worse off.
THERE IS NOTHING dark, still less satanic, about the Revolution Mill in Greensboro, North Carolina. The tall yellow-brick chimney stack, with red bricks spelling “Revolution” down its length, was built a few years after the mill was established in 1900. It was a booming time for local enterprise. America’s cotton industry was moving south from New England to take advantage of lower wages. The number of mills in the South more than doubled between 1890 and 1900, to 542. By 1938 Revolution Mill was the world’s largest factory exclusively making flannel, producing 50m yards of cloth a year.
The main mill building still has the springy hardwood floors and original wooden joists installed in its heyday, but no clacking of looms has been heard here for over three decades. The mill ceased production in 1982, an early warning of another revolution on a global scale. The textile industry was starting a fresh migration in search of cheaper labour, this time in Latin America and Asia. Revolution Mill is a monument to an industry that lost out to globalisation.
In nearby Thomasville, there is another landmark to past industrial glory: a 30-foot (9-metre) replica of an upholstered chair. The Big Chair was erected in 1950 to mark the town’s prowess in furniture-making, in which North Carolina was once America’s leading state. But the success did not last. “In the 2000s half of Thomasville went to China,” says T.J. Stout, boss of Carsons Hospitality, a local furniture-maker. Local makers of cabinets, dressers and the like lost sales to Asia, where labour-intensive production was cheaper.
The state is now finding new ways to do well. An hour’s drive east from Greensboro is Durham, a city that is bursting with new firms. One is Bright View Technologies, with a modern headquarters on the city’s outskirts, which makes film and reflectors to vary the pattern and diffusion of LED lights. The Liggett and Myers building in the city centre was once the home of the Chesterfield cigarette. The handsome building is now filling up with newer businesses, says Ted Conner of the Durham Chamber of Commerce. Duke University, the centre of much of the city’s innovation, is taking some of the space for labs.
North Carolina exemplifies both the promise and the casualties of today’s open economy. Yet even thriving local businesses there grumble that America gets the raw end of trade deals, and that foreign rivals benefit from unfair subsidies and lax regulation. In places that have found it harder to adapt to changing times, the rumblings tend to be louder. Across the Western world there is growing unease about globalisation and the lopsided, unstable sort of capitalism it is believed to have wrought.
A backlash against freer trade is reshaping politics. Donald Trump has clinched an unlikely nomination as the Republican Party’s candidate in November’s presidential elections with the support of blue-collar men in America’s South and its rustbelt. These are places that lost lots of manufacturing jobs in the decade after 2001, when America was hit by a surge of imports from China (which Mr Trump says he will keep out with punitive tariffs). Free trade now causes so much hostility that Hillary Clinton, the Democratic Party’s presidential candidate, was forced to disown the Trans-Pacific Partnership (TPP), a trade deal with Asia that she herself helped to negotiate. Talks on a new trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP), have stalled. Senior politicians in Germany and France have turned against it in response to popular opposition to the pact, which is meant to lower investment and regulatory barriers between Europe and America.
Keep-out signs
The commitment to free movement of people within the EU has also come under strain. In June Britain, one of Europe’s stronger economies, voted in a referendum to leave the EU after 43 years as a member. Support for Brexit was strong in the north of England and Wales, where much of Britain’s manufacturing used to be; but it was firmest in places that had seen big increases in migrant populations in recent years. Since Britain’s vote to leave, anti-establishment parties in France, the Netherlands, Germany, Italy and Austria have called for referendums on EU membership in their countries too. Such parties favour closed borders, caps on migration and barriers to trade. They are gaining in popularity and now hold sway in governments in eight EU countries. Mr Trump, for his part, has promised to build a wall along the border with Mexico to keep out immigrants.
There is growing disquiet, too, about the unfettered movement of capital. More of the value created by companies is intangible, and businesses that rely on selling ideas find it easier to set up shop where taxes are low. America has clamped down on so-called tax inversions, in which a big company moves to a low-tax country after agreeing to be bought by a smaller firm based there. Europeans grumble that American firms engage in too many clever tricks to avoid tax. In August the European Commission told Ireland to recoup up to €13 billion ($14.5 billion) in unpaid taxes from Apple, ruling that the company’s low tax bill was a source of unfair competition.
Free movement of debt capital has meant that trouble in one part of the world (say, America’s subprime crisis) quickly spreads to other parts. The fickleness of capital flows is one reason why the EU’s most ambitious cross-border initiative, the euro, which has joined 19 of its 28 members in a currency union, is in trouble. In the euro’s early years, countries such as Greece, Italy, Ireland, Portugal and Spain enjoyed ample credit and low borrowing costs, thanks to floods of private short-term capital from other EU countries. When crisis struck, that credit dried up and had to be replaced with massive official loans, from the ECB and from bail-out funds. The conditions attached to such support have caused relations between creditor countries such as Germany and debtors such as Greece to sour.
Some claim that the growing discontent in the rich world is not really about economics. After all, Britain and America, at least, have enjoyed reasonable GDP growth recently, and unemployment in both countries has dropped to around 5%. Instead, the argument goes, the revolt against economic openness reflects deeper anxieties about lost relative status. Some arise from the emergence of China as a global power; others are rooted within individual societies. For example, in parts of Europe opposition to migrants was prompted by the Syrian refugee crisis. It stems less from worries about the effect of immigration on wages or jobs than from a perceived threat to social cohesion.
But there is a material basis for discontent nevertheless, because a sluggish economic recovery has bypassed large groups of people. In America one in six working-age men without a college degree is not part of the workforce, according to an analysis by the Council of Economic Advisers, a White House think-tank. In Britain, though more people than ever are in work, wage rises have not kept up with inflation. Only in London and its hinterland in the south-east has real income per person risen above its level before the 2007-08 financial crisis. Most other rich countries are in the same boat. A report by the McKinsey Global Institute, a think-tank, found that the real incomes of two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014, compared with 2% in the previous decade. The few gains in a sluggish economy have gone to a salaried gentry.
This has fed a widespread sense that an open economy is good for a small elite but does nothing for the broad mass of people. Even academics and policymakers who used to welcome openness unreservedly are having second thoughts. They had always understood that free trade creates losers as well as winners, but thought that the disruption was transitory and the gains were big enough to compensate those who lose out. However, a body of new research suggests that China’s integration into global trade caused more lasting damage than expected to some rich-world workers. Those displaced by a surge in imports from China were concentrated in pockets of distress where alternative jobs were hard to come by.
It is not easy to establish a direct link between openness and wage inequality, but recent studies suggest that trade plays a bigger role than previously thought. Large-scale migration is increasingly understood to conflict with the welfare policy needed to shield workers from the disruptions of trade and technology.
The consensus in favour of unfettered capital mobility began to weaken after the East Asian crises of 1997-98. As the scale of capital flows grew, the doubts increased. A recent article by economists at the IMF entitled “Neoliberalism: Oversold?” argued that in certain cases the costs to economies of opening up to capital flows exceed the benefits.
Multiple hits
This special report will ask how far globalisation, defined as the freer flow of trade, people and capital around the world, is responsible for the world’s economic ills and whether it is still, on balance, a good thing. A true reckoning is trickier than it might appear, and not just because the main elements of economic openness have different repercussions. Several other big upheavals have hit the world economy in recent decades, and the effects are hard to disentangle.
First, jobs and pay have been greatly affected by technological change. Much of the increase in wage inequality in rich countries stems from new technologies that make college-educated workers more valuable. At the same time companies’ profitability has increasingly diverged. Online platforms such as Amazon, Google and Uber that act as matchmakers between consumers and producers or advertisers rely on network effects: the more users they have, the more useful they become. The firms that come to dominate such markets make spectacular returns compared with the also-rans. That has sometimes produced windfalls at the very top of the income distribution. At the same time the rapid decline in the cost of automation has left the low- and mid-skilled at risk of losing their jobs. All these changes have been amplified by globalisation, but would have been highly disruptive in any event.
The second source of turmoil was the financial crisis and the long, slow recovery that typically follows banking blow-ups. The credit boom before the crisis had helped to mask the problem of income inequality by boosting the price of homes and increasing the spending power of the low-paid. The subsequent bust destroyed both jobs and wealth, but the college-educated bounced back more quickly than others. The free flow of debt capital played a role in the build-up to the crisis, but much of the blame for it lies with lax bank regulation. Banking busts happened long before globalisation.
Superimposed on all this was a unique event: the rapid emergence of China as an economic power. Export-led growth has transformed China from a poor to a middle-income country, taking hundreds of millions of people out of poverty. This achievement is probably unrepeatable. As the price of capital goods continues to fall sharply, places with large pools of cheap labour, such as India or Africa, will find it harder to break into global supply chains, as China did so speedily and successfully.
This special report will disentangle these myriad influences to assess the impact of the free movement of goods, capital and people. It will conclude that some of the concerns about economic openness are valid. The strains inflicted by a more integrated global economy were underestimated, and too little effort went into helping those who lost out. But much of the criticism of openness is misguided, underplaying its benefits and blaming it for problems that have other causes. Rolling it back would leave everyone worse off.
Wednesday, 20 July 2016
There could still be a second referendum in Britain – if EU leaders listen
Vernon Bogdanor in The Guardian
A change to free movement could persuade the British public to vote again. And it can be done: treaties that stand in the way of reality have been changed before.
Despite the rhetoric of ever closer union, the member states are no longer prepared to sacrifice more of their sovereignty. Germany has no appetite for fiscal union, and Wolfgang Schäuble, Germany’s finance minister, has said that integration has gone “too far”. Poland has no wish to adopt the euro; there is clearly little desire for a common migration policy; and anti-EU feeling is growing throughout the continent. The EU has become economically, politically and culturally too diverse for any drive towards ever closer union to be successful.
More often than not, a political union of separate states requires an act of will brought about by force or an external threat – as with the United States in the 18th century and Germany in the 19th. The EU is in no position to produce such strength of feeling, so it seems certain to remain an association of states committed, as the European federalist Andrew Duff has lamented, to “never closer union”. The trend towards intergovernmentalism rather than supranationalism – where a power greater than the states takes control – was vividly illustrated when the eurozone crisis was handled largely by the council, made up of EU heads of governments, rather than the commission, which has the sole power to initiate laws.
The EU must now face reality. That means formally recognising the council as the supreme executive of the union, downgrading the commission so that it becomes, as the Gaullists have long wanted, a secretariat of the council without the power to initiate legislation. That would undermine the arguments of Eurosceptics, who thrive on the anathema of an unelected and unaccountable legislative body, something that Britain found particularly difficult to accept.
Further, so long as the idea of “ever closer union” remains enshrined in the EU, it will give eurosceptics a handle for criticism; and it allows the European court of justice to extend its remit too widely. The court should be an arbiter, not a missionary to eliminate states’ rights. So the EU must state clearly that ever closer union is unlikely to occur in the foreseeable future.
The EU must also face reality on freedom of movement. That principle was first outlined in the 1950s in conditions very different from those of today, by six member states at a similar stage of economic development and before the era of inexpensive mass transit. It is no longer suitable when Europe consists of 27 member states at very different stages of economic development. It not only imposes strains on the more affluent countries, stimulating the growth of the radical right, but also deprives the less affluent members of their most able and energetic citizens. Modifying this principle would also help Britain to negotiate continued access to the internal market.
It is said that the treaties preclude any interference with freedom of movement. Yet treaties intended to enforce the stability and growth pact, designed to limit the power of national governments, have been disregarded when necessity required. Adoption of the euro was supposed to be irreversible; yet, it is claimed Schauble urged Greece to abandon the euro and leave the Eurozone. Treaties, after all, are human constructs. If they stand in the way of reality, members can and should agree to revise them.
The EU needs not only long-term reform but also immediate measures to prove its value to the ordinary citizen. Tusk has rightly said that Europeans want not more Europe, but better Europe. Many Europeans have benefited from the single market, most obviously in cheap airfares – now, as the banker Sir Martin Jacomb has argued, is surely the time for a radical extension of free market rules into the energy and digital areas, and an effort to ensure that professional qualifications are genuinely transferable across Europe. This would provide citizens with concrete benefits, which would do more than a host of declarations or institutional reforms to prove the value of the European project.
Frankfurt tries to tempt the bankers fleeing a post-Brexit Britain
The British contribution to Europe was always to insist that rhetoric is subordinated to reality. Realism is now desperately needed if the European project is to be rescued from the elitist and technocratic establishment which currently dominates it, and which is losing it the support of its people. Perhaps if EU leaders listen to what citizens are saying, it might even be possible to persuade the British public to have second thoughts in a second referendum.
A change to free movement could persuade the British public to vote again. And it can be done: treaties that stand in the way of reality have been changed before.
EU flags flying at half mast at the European commission to mark the Bastille Day attack. ‘As Donald Tusk declared before the referendum, the EU needs to take a “long hard look at itself and listen to the British warning signal”.’ Photograph: Darko Vojinovic/AP
How should Britain leave the European Union? The question hangs over Theresa May’s new administration as it considers when to invoke article 50, which will lay out the procedure for a withdrawal agreement, and indicate what sort of future relationship Britain wants with the EU.
Will it be membership of the European Economic Area, like Norway? A trade agreement with the EU, or reliance on World Trade Organisation rules? Yet the future relationship depends not only on the conditions in Britain but also on developments in the EU. And in that respect there are encouraging signs that European leaders are, at long last, listening to what their peoples have been telling them.
As Donald Tusk, president of the European council, declared before the referendum, the EU needs to take a “long hard look at itself and listen to the British warning signal”. After the vote for Brexit, that is needed more than ever. During the campaign much was made of the dangers of an overweening Europe, aiming to become a federal superstate. Yet things have changed following theeurozone and migration crises.
How should Britain leave the European Union? The question hangs over Theresa May’s new administration as it considers when to invoke article 50, which will lay out the procedure for a withdrawal agreement, and indicate what sort of future relationship Britain wants with the EU.
Will it be membership of the European Economic Area, like Norway? A trade agreement with the EU, or reliance on World Trade Organisation rules? Yet the future relationship depends not only on the conditions in Britain but also on developments in the EU. And in that respect there are encouraging signs that European leaders are, at long last, listening to what their peoples have been telling them.
As Donald Tusk, president of the European council, declared before the referendum, the EU needs to take a “long hard look at itself and listen to the British warning signal”. After the vote for Brexit, that is needed more than ever. During the campaign much was made of the dangers of an overweening Europe, aiming to become a federal superstate. Yet things have changed following theeurozone and migration crises.
Despite the rhetoric of ever closer union, the member states are no longer prepared to sacrifice more of their sovereignty. Germany has no appetite for fiscal union, and Wolfgang Schäuble, Germany’s finance minister, has said that integration has gone “too far”. Poland has no wish to adopt the euro; there is clearly little desire for a common migration policy; and anti-EU feeling is growing throughout the continent. The EU has become economically, politically and culturally too diverse for any drive towards ever closer union to be successful.
More often than not, a political union of separate states requires an act of will brought about by force or an external threat – as with the United States in the 18th century and Germany in the 19th. The EU is in no position to produce such strength of feeling, so it seems certain to remain an association of states committed, as the European federalist Andrew Duff has lamented, to “never closer union”. The trend towards intergovernmentalism rather than supranationalism – where a power greater than the states takes control – was vividly illustrated when the eurozone crisis was handled largely by the council, made up of EU heads of governments, rather than the commission, which has the sole power to initiate laws.
The EU must now face reality. That means formally recognising the council as the supreme executive of the union, downgrading the commission so that it becomes, as the Gaullists have long wanted, a secretariat of the council without the power to initiate legislation. That would undermine the arguments of Eurosceptics, who thrive on the anathema of an unelected and unaccountable legislative body, something that Britain found particularly difficult to accept.
Further, so long as the idea of “ever closer union” remains enshrined in the EU, it will give eurosceptics a handle for criticism; and it allows the European court of justice to extend its remit too widely. The court should be an arbiter, not a missionary to eliminate states’ rights. So the EU must state clearly that ever closer union is unlikely to occur in the foreseeable future.
The EU must also face reality on freedom of movement. That principle was first outlined in the 1950s in conditions very different from those of today, by six member states at a similar stage of economic development and before the era of inexpensive mass transit. It is no longer suitable when Europe consists of 27 member states at very different stages of economic development. It not only imposes strains on the more affluent countries, stimulating the growth of the radical right, but also deprives the less affluent members of their most able and energetic citizens. Modifying this principle would also help Britain to negotiate continued access to the internal market.
It is said that the treaties preclude any interference with freedom of movement. Yet treaties intended to enforce the stability and growth pact, designed to limit the power of national governments, have been disregarded when necessity required. Adoption of the euro was supposed to be irreversible; yet, it is claimed Schauble urged Greece to abandon the euro and leave the Eurozone. Treaties, after all, are human constructs. If they stand in the way of reality, members can and should agree to revise them.
The EU needs not only long-term reform but also immediate measures to prove its value to the ordinary citizen. Tusk has rightly said that Europeans want not more Europe, but better Europe. Many Europeans have benefited from the single market, most obviously in cheap airfares – now, as the banker Sir Martin Jacomb has argued, is surely the time for a radical extension of free market rules into the energy and digital areas, and an effort to ensure that professional qualifications are genuinely transferable across Europe. This would provide citizens with concrete benefits, which would do more than a host of declarations or institutional reforms to prove the value of the European project.
Frankfurt tries to tempt the bankers fleeing a post-Brexit Britain
The British contribution to Europe was always to insist that rhetoric is subordinated to reality. Realism is now desperately needed if the European project is to be rescued from the elitist and technocratic establishment which currently dominates it, and which is losing it the support of its people. Perhaps if EU leaders listen to what citizens are saying, it might even be possible to persuade the British public to have second thoughts in a second referendum.
Wednesday, 3 February 2016
David Cameron's ever-shifting view of Britain's place in EU
Long before current renegotiations, PM made series of half promises and pledges that never materialised. Here is a selection
David Cameron speaks to factory staff at the Siemens manufacturing plant in Chippenham on Tuesday. Photograph: Ben Pruchnie/AFP/Getty Images
Alberto Nardelli in The Guardian
David Cameron has come a long way in how he views Britain’s place in the European Union. Over the years, long before the current renegotiations even started, the prime minister has made a series of bold comments, half promises and pledges.
Tuesday’s draft agreement demonstrates that only a handful of his commitments have been delivered. Here is a selection of some of them:
• In 2009, he promised that a Tory government would stop the European court of justice overruling UK criminal law by limiting its jurisdiction. The government has since opted back in to 35 justice and home affairs measures, including the European arrest warrant.
• In 2012, Cameron said that the government was “committed to revising the working time directive”, a set of EU-wide working standards. However, last December, George Osborne, told the Treasury select committee that this formed no part of the negotiation. Back in 2007, before becoming prime minister, Cameron had even pledged to pull Britain out of Europe’s social chapter on workers’ rights.
• The prime minister also promised in the Conservative manifesto last May to push for further reform of the EU’s common agricultural policy. This promise was not part of the renegotiation as it was likely to face fierce opposition from some member states.
• Cameron said in early 2014 that he would put in place treaty change before the referendum. Tuesday’s documents make it clear that there will be no changes to the EU’s governing treaties – including its headline principle of “ever closer union” – ahead of the vote because this would not be feasible in the referendum’s timeframe.
In any event, Tusk said in Tuesday’s letter that the principle of ever closer union is already not equivalent to an objective of political integration, and the substance of this will be incorporated into the treaties when they are next revised.
• Last year Cameron said that he wanted EU jobseekers to have a job before they come to Britain. Such a measure is contrary to the principle of free movement and as such was also not part of the negotiations.
• When the renegotiations formally began Cameron started by asking for a cap in the number of EU migrants allowed into the UK. That idea lasted the length of a phonecall to the German chancellor, Angela Merkel, in 2014. She was not very impressed.
• The prime minister had to think of a new idea and proposed – in writing this time – that people coming to Britain from the EU must live in the UK and contribute for four years before they qualify for in-work benefits or social housing. It has proven to be the most controversial – albeit the most precise – of Cameron’s demands.
What he is set to get is the dilution of an already diluted idea: an “emergency brake” on in-work benefits for up to four years. The one-off restriction would not amount to an outright ban on benefits either but would be graduated. That means that EU migrants would receive no benefits upon arrival but would get an increasing proportion each year – another piece of complexity for an already over-complex benefit system.
When it came to the formal negotiations, Cameron’s other requests included:
• Ending the practice of sending child benefit overseas. This was also watered down. The UK will be allowed to index the payments to the country where the child is based.
• On measures to crack down on the abuse of free movement, members states will be able to take action against fraudulent claims and sham marriages, as well as against individuals who pose a threat to national security. None of these measures would appear to be new, but are simply based on the interpretation of current rules.
• On “economic governance”, Cameron had asked for a series of principles to be recognised ranging from a simple recognition of the idea that the EU has more than one currency, and that taxpayers in non-euro countries should never be financially liable for operations to support the eurozone as a currency.
Here Cameron did better, although only because Tusk clarified, in effect, that all these things are already covered by existing rules and principles.
• As part of the competitiveness basket, Cameron had said he wanted the EU to be more competitive. In response, Tusk has committed the EU to increasing efforts to enhance competitiveness. It is probably not surprising that the contents of this basket proved the easiest to agree on.
Nevertheless, however much has been negotiated away, Cameron has still won some important concessions. Take the emergency brake: just a month ago the measure seemed to be off the table but now it is a centre piece of his pitch to the British people. The European commission has accepted that the UK is facing exceptional circumstances due to high levels of immigration and must be allowed to do something about it – assuming the British people vote to stay in the EU.
However, the vast majority of the words in the draft agreement are dedicated to clarifying how existing rules and principles can be applied to ease British fears. The achievement is somewhat distant from the grander aspirations set out by Cameron over the past five years, but in the end it may be enough.
Alberto Nardelli in The Guardian
David Cameron has come a long way in how he views Britain’s place in the European Union. Over the years, long before the current renegotiations even started, the prime minister has made a series of bold comments, half promises and pledges.
Tuesday’s draft agreement demonstrates that only a handful of his commitments have been delivered. Here is a selection of some of them:
• In 2009, he promised that a Tory government would stop the European court of justice overruling UK criminal law by limiting its jurisdiction. The government has since opted back in to 35 justice and home affairs measures, including the European arrest warrant.
• In 2012, Cameron said that the government was “committed to revising the working time directive”, a set of EU-wide working standards. However, last December, George Osborne, told the Treasury select committee that this formed no part of the negotiation. Back in 2007, before becoming prime minister, Cameron had even pledged to pull Britain out of Europe’s social chapter on workers’ rights.
• The prime minister also promised in the Conservative manifesto last May to push for further reform of the EU’s common agricultural policy. This promise was not part of the renegotiation as it was likely to face fierce opposition from some member states.
• Cameron said in early 2014 that he would put in place treaty change before the referendum. Tuesday’s documents make it clear that there will be no changes to the EU’s governing treaties – including its headline principle of “ever closer union” – ahead of the vote because this would not be feasible in the referendum’s timeframe.
In any event, Tusk said in Tuesday’s letter that the principle of ever closer union is already not equivalent to an objective of political integration, and the substance of this will be incorporated into the treaties when they are next revised.
• Last year Cameron said that he wanted EU jobseekers to have a job before they come to Britain. Such a measure is contrary to the principle of free movement and as such was also not part of the negotiations.
• When the renegotiations formally began Cameron started by asking for a cap in the number of EU migrants allowed into the UK. That idea lasted the length of a phonecall to the German chancellor, Angela Merkel, in 2014. She was not very impressed.
• The prime minister had to think of a new idea and proposed – in writing this time – that people coming to Britain from the EU must live in the UK and contribute for four years before they qualify for in-work benefits or social housing. It has proven to be the most controversial – albeit the most precise – of Cameron’s demands.
What he is set to get is the dilution of an already diluted idea: an “emergency brake” on in-work benefits for up to four years. The one-off restriction would not amount to an outright ban on benefits either but would be graduated. That means that EU migrants would receive no benefits upon arrival but would get an increasing proportion each year – another piece of complexity for an already over-complex benefit system.
When it came to the formal negotiations, Cameron’s other requests included:
• Ending the practice of sending child benefit overseas. This was also watered down. The UK will be allowed to index the payments to the country where the child is based.
• On measures to crack down on the abuse of free movement, members states will be able to take action against fraudulent claims and sham marriages, as well as against individuals who pose a threat to national security. None of these measures would appear to be new, but are simply based on the interpretation of current rules.
• On “economic governance”, Cameron had asked for a series of principles to be recognised ranging from a simple recognition of the idea that the EU has more than one currency, and that taxpayers in non-euro countries should never be financially liable for operations to support the eurozone as a currency.
Here Cameron did better, although only because Tusk clarified, in effect, that all these things are already covered by existing rules and principles.
• As part of the competitiveness basket, Cameron had said he wanted the EU to be more competitive. In response, Tusk has committed the EU to increasing efforts to enhance competitiveness. It is probably not surprising that the contents of this basket proved the easiest to agree on.
Nevertheless, however much has been negotiated away, Cameron has still won some important concessions. Take the emergency brake: just a month ago the measure seemed to be off the table but now it is a centre piece of his pitch to the British people. The European commission has accepted that the UK is facing exceptional circumstances due to high levels of immigration and must be allowed to do something about it – assuming the British people vote to stay in the EU.
However, the vast majority of the words in the draft agreement are dedicated to clarifying how existing rules and principles can be applied to ease British fears. The achievement is somewhat distant from the grander aspirations set out by Cameron over the past five years, but in the end it may be enough.
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