Tax is all they need

 

                Last week I went to a working lunch with experts from France and the UK on the Euro. I am telling you this so UKIP supporters can add me to their list of apostates who sup with the other side!

                The view from the continent is very different. They see the Euro as the central political project, the core of their plan for full European integration. They relish the thought of using this crisis to strengthen common economic governance. The rows with Germany are not over whether  to have more integration, but over how and to what end they should do this.

                I asked them how they thought the Greek deficit could be brought down, given the sluggish performance of that economy and the squeeze being administered both fiscally and through the common money policy. Their reply was simple. They told me that Greece has a huge black economy. All that was needed, they opined, were much higher degrees of financial surveillance over all resident individuals and businesses. Hey presto, the tax revenue would roll in and the defcit would tumble. France also last week reminded Ireland that it needed to raise its corporation tax rate, mistakenly thinking this would increase revenues.

                      They are doubtless right that there are rich Greek individuals and corporates who are shy about sharing all their success with the tax authorities. Whether more intrusive surveillance will turn them all into law abiding high taxpayers, or whether it will push more of them offshore, remains to be seen. It is the EU mindset that the crisis of the Euro can be solved by higher taxes, and that these higher taxes can largely fall on those with the broadest shoulders.

                          Meanwhile 13,000 Non Doms left the UK in 2009. I wonder how many rich and tax shy will be leaving Euroland as the Inspector comes to call? Many European governments would like the popularity of Robin Hood as they take from the rich and give to the poor. Unfortunately for them, EU governments also employ the Sheriff of Nottingham, so they may find it more difficult to pull off what my French contacts thought was inevitable, obvious and desirable. Meanwhile, the markets stalk the weaker currencies, forcing last week the ECB into buying  bonds  itself. How long will its purse prove to be? Will the Germans turn a blind eye to the build up of risky assets  at their common Central Bank?

               These democracies seem intent on testing the proposition that there is  no limit to how much tax revenue they can extract from their populations. They see no threat to the revenue from higher rates and tougher enforcement. They see no political challenge coming from a tax led squeeze. The Euro comes with  large economic costs attached. To my contacts it was right and inevitable, worth every cent. I guess the people I was talking to thought it would be others picking up the bill.

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61 Comments

  1. Javelin
    Posted January 18, 2011 at 6:21 am | Permalink

    With German bonds at 3% and Irish at 9% and Greeks at 12% traders calculate 66% and 75% haircuts because the Greeks and Irish can’t pay. The debate had move on from if, to why so long.

    The answer is that the EU leaders are trying to coerce Germany, UK and France into closer union through fear and guilt. Traders are happy to take the higher returns before the haircut happens.

    When Greece and Ireland haircut (and that is the only option) then I don’t see anymore defaults. I do see much tighter fiscal spending. I also see the power the EU has exercised as diminishing once reality comes back.

    Having said that I see stress tests causing an Italian banking crisis.

    • Javelin
      Posted January 18, 2011 at 9:38 am | Permalink

      Just had coffee with bond trader who agrees entiry with my view. He was “happy to take the extra interest until the haircut comes along … ironically funded by the European tax payer who want to cut our bonuses [but are increasing our bonus]”

    • EJT
      Posted January 18, 2011 at 10:29 am | Permalink

      Could you just clarify ? A 75% haircut is a 75% loss to the bondholder, or a 25% loss, leaving 75% “intact” ? Thanks.

    • Gary
      Posted January 18, 2011 at 12:12 pm | Permalink

      Javelin

      “After Ireland and Greece, no more defaults.”

      How can we know ? eg. It was recently made plain by the Austrian Central Bank that they don’t even know the extent of the solvency of one of their own banks and that is probaby true throughout.

      Not least, because the banks were given carte blanche to (account -ed) their books and mark their “assets” to their computer models, and not to market. The crash in 2008 was precipitated by a stress test where the derivatives were marked to market and found to be worth as little as 6c in the dollar. They quickly backtracked from that and basically said “mark them at whatever you like, and we will look away”

      Truth is, this system was geared at up to 80:1 and more, so a decrease of 1.25% in the portfolio wipes out all the equity. Meanwhile the Central banks are frantically buying up these deep underwater derivatives (at full face value?), using QE and effectively charge the loss to us via a tax called inflation. Add to this we get the insult that we are not allowed to see the books of the Central Bank, even though we pick up the tab ! The Bank dare not raise rates, because most of these member bank portfolios are built on the property market.

      Reply: Most banks were far less geared than you suggest, and the losses less extreme. However, as you say some banks were overgreared and some instruments and loans did lose them a lot of money.

      • Gary
        Posted January 18, 2011 at 12:55 pm | Permalink

        I might add, there is strong suspicion that much of the commodity rises are being fueled by these banks and their hedge funds speculating on the prices. eg. Sheik Yamani , there is a blast from the OPEC past, said on CNN quite recently that the oil market is now essentially driven by hot money speculation.

        http://www.bi-me.com/main.php?c=3&cg=2&t=1&id=48966

        If the Central Banks are throwing money at their member banks (as I said, we can’t know for sure because we cannot see the books), and we know that the member banks are not lending, there must be an overwhelming urge to put that freshly printed money to work on commodity speculation and huge bonuses.

        This brazen (speculation-ed) of this system would truly make the former USSR blush. Not even they could develop central planning to this fine point.

    • Lindsay McDougall
      Posted January 18, 2011 at 12:35 pm | Permalink

      That is not the only option. The five PIIGS could leave the Euro zone and reinstate the ecudo, punt, lira, drachma and peseta. They could then begin a period of loose monetary policy, leading to inflation, and repay their debts in clipped coinage (as we did in 1989 & 1990). The debt repayments would be “haircut” by the back door, via inflation.

      British policy should be aimed at persuading the PIIGS to leave the Euro zone and we should not finance bail outs of Euro zone members.

      UKIP have it entirely wrong. We should not leave the EU but rather remain in the embryonic European Federation and wreck it from the inside. Eventually France and Germany would accept a two ring Europe, with Federal Euro based members and non-Federal members.

      • EJT
        Posted January 18, 2011 at 3:41 pm | Permalink

        So far, they are doing a far better job of wrecking us, than we are of wrecking The Project, Lindsay.

        • Lindsay McDougall
          Posted January 19, 2011 at 3:27 pm | Permalink

          Yes, indeed, but that is mainly because of the way we conduct ourselves. If our Prime Minister and the leader of our MEPs were both to say that there is nothing in EU integration that is irreversible, then other European countries would take note.

          Fundamentally, if you invite Euro fanatics to walk all over you, that is exactly what they will do.

      • Denis Cooper
        Posted January 18, 2011 at 4:42 pm | Permalink

        But it’s clear that British policy is actually to use British resources to help preserve the present eurozone intact; to allow treaty changes so that EU economic government can be intensified and the eurozone can be strengthened; to help ensure that none of the present eurozone states will ever be granted the treaty option of making an orderly withdrawal from it; to allow all other present and future EU member states not yet in the eurozone to be coerced into joining it; and to eventually discover that it is no longer feasible for the UK to remain outside of it.

      • Alan Wheatley
        Posted January 19, 2011 at 5:13 pm | Permalink

        The problem with your approach, Lyndsay, is that it is a power play by the elite. The fundamental reason to leave the EU is that it is inherently undemocratic.

  2. lifelogic
    Posted January 18, 2011 at 6:58 am | Permalink

    13000 Non Doms left the UK 2009 and probably about 50 times that in wealthy others. When wealthy business owners leave they usually take their businesses, their spending and their investments with them. Generally they do this not so they can buy a new Rolls or a Ferrari (after all these people already have nice houses and cars and all they can eat and drink).

    They do it so they can escape mad regulations, over complex tax and expensive legal systems and huge over taxation. This leaves with them more funds to reinvest the funds in their businesses which benefits their workers and the country and future tax revenues. This is something they are usually rather good at doing (hence their wealth in the first place).

    The alternative is the government grabs it off them and spends it badly or gives it to the feckless (after large admin costs) or spends it on pointless nonsense like renewable energy and HS2. Thus in the long run we all loose out.

    • lifelogic
      Posted January 18, 2011 at 7:08 am | Permalink

      And of course the EU will use the financial stresses to exert more central control and extinguish any last traces of local democracy.

    • lifelogic
      Posted January 18, 2011 at 3:01 pm | Permalink

      A bit of typical BBC speak I just heard on radio 4. Jonathan Dimbleby on any answers “Let me reassure you that people that come on to the panel (of any questions) are chosen on merit, we try to get a balance across race, across gender, across age ….”.

      Please could someone explain to him and indeed all the BBC that you cannot do both at the same time. You either choose the best (perhaps a football, bridge or chess) team on merit or you try to choose one with a balance of race, gender and age. The first is on merit the second must by definition discriminate against some people who have more merit that some of those actually selected.

      Also if for example you decide to balance say female and male engineers/scientists on TV 50/50 you make it over 10 times as likely for a female engineer/scientist to get on TV as a male one. (as there are so many more top men in these areas). Should you watch the BBC too much however you rapidly get the (totally wrong) impression that nearly all scientists/engineers are in fact actually women (and strangely they all seem to believe in man made global warming too).

      If you further listen to woman’s hour you might get the impression that the BBC had decided its main role is to resolve this deplorable gender imbalance in physics and engineering and pay.

      I assume by some sort of sinister “re-education” or even genetic engineering perhaps. I don’t know as they were not very scientific in approach and failed to elaborate on method – just their aspirations?

      • Bazman
        Posted January 18, 2011 at 6:53 pm | Permalink

        Don’t suppose you would have the same views on Fox, or SKY for that matter?

        • lifelogic
          Posted January 18, 2011 at 8:58 pm | Permalink

          Don’t know I don’t get time to watch Sky/Fox much.

  3. Mick Anderson
    Posted January 18, 2011 at 7:09 am | Permalink

    Perhaps this explains the suggestion that the EU wants to extend VAT into new areas (travel). It’s supposed to be much harder to avoid VAT if you want to receive the service it’s attached to, although I’m there are methods…. More VAT certainly seems to fit in with the Chancellors current plans.

    Has anybody explained to Mr Osborne how reducing spending works? He should try it, just in case it’s popular.

    Reorganising the NHS feels a little like rearraging the deckchairs on the UK Titanic when compared with the entity of Government waste.

  4. alan jutson
    Posted January 18, 2011 at 8:43 am | Permalink

    John

    The writing has been on the wall for some time now, as to what the intention of our friends in Europe has been.

    Forget fighting traditional Wars, when you can achieve the same result with control by finance, regulation, laws and Political power.

    It is modern day Communism in everything but name, with micro managed control by the State, increasing with every year that passes.

    Unfortunately the majority do not see it yet, least of all those MP’s who walked like sheep under instruction, through the lobbies last week.

    Keep up the good work, and keep up the information.

    • Norman Dee
      Posted January 18, 2011 at 11:45 am | Permalink

      Interesting Alan, you see communism, I see facism. They don’t want to own everything (at the moment), they just want the taxes. They are happy to have elections etc. just not for the important jobs which we are not capable of making the right judgement for, and so far they the church on side.

      • Mike Stallard
        Posted January 18, 2011 at 7:50 pm | Permalink

        The real question is surely this: why does a cultured, natural leader like Mr Cameron and his excellent team of relaly good, tried ministers go along with the EU.
        Why for heaven’s sake?
        Does anyone have any good ideas?

        • alan jutson
          Posted January 19, 2011 at 9:01 am | Permalink

          Mike

          I can only guess that its an easier life to go along with everything.

          Like you I would really like an explanation as to why they continue to vote for something, which eventually will make their position redundant.

          They really are turkeys voting for Christmas.

        • Alan Wheatley
          Posted January 19, 2011 at 5:19 pm | Permalink

          Follow the (Conservative Party) money!

  5. waramess
    Posted January 18, 2011 at 8:55 am | Permalink

    The bigger the state gets the more we will depend on it. Can you imagine the state collecting seventyfive percent of GDP in taxes and our economy being dependent upon the product of an ever declining private sector? That is exactly the direction in which we are moving, with or without the EU. It’s a bit like having a slow wasting disease; you notice nothing until it is too late.

    We are moving slowly towards a totalitarian socialist state. as if sleepwalking, and there is nobody there to stop the process. Right wingers are ineffective through a lack of cohesion whilst the socialists and the spenders are activists who group together in a common cause.

    Imagine, in my lifetime we have had but one half decent non-socialist regime whilst the rest, from Eden and Macmillan through Heath and Major have worn socialist clothes.

    But, it doesn’t really matter all that much; if it’s not raining then it’s cold and we are constantly confounded by multiculturalism, petrol prices are going up and in the end there are places other than Britain for us to earn from our labours so, yet another bunch of thieves want to screw a bit more money from us? Go ahead, we have options

    • lifelogic
      Posted January 18, 2011 at 8:10 pm | Permalink

      The UK is already at 50% + slavery should the state gets to 75+% I assume it will be like living as an animal in a zoo/work house with such food, drink, health care and entertainment as the state thinks fit pushed through the bars each day. We might be allowed to keep the 25% and perhaps use it pay for a few additional food options with it – if we are lucky. I assume they will have to lock us in to prevent mass emigration.

  6. Brian Tomkinson
    Posted January 18, 2011 at 9:07 am | Permalink

    “Tax is all they need” – Sound as though they are in accord with our coalition government!

  7. lola
    Posted January 18, 2011 at 9:50 am | Permalink

    Better on R Hood and The Sheriff. R Hood stood against arbitrary tax confisaction by coercion by a over- pwerful (and largely illegitimate) state. he also acted against those who collected private taxes, e.g. rent. The EU is all that was worst about the The Sheriff.

    P.S. If it was not for m wife and children – actually thinking about it – only my wife, I’d sell up and emigrate today. I’d take my business elsewhere. And the jobs that I have created. And my wealth. You wait, next they’ll try and ban emigration or limit the assets you can take with you.

  8. fake
    Posted January 18, 2011 at 9:56 am | Permalink

    From talking to others the issue with greece isnt rich people avoiding tax, but that it is a problem with their whole population from taxi drivers to bankers.

    (and looking at a comparison on estimated tax avoidence vs gdp compared to other countries, i’m inclined to belive this).

    Like how so many of their buildings have no roofs because it means they can avoid paying building tax.

    • lola
      Posted January 18, 2011 at 12:04 pm | Permalink

      Support the black economy! It’s the only growth area we’ve got.

      Actually the ‘black economy’ isn’t ‘black’ at all. It’s just the ‘less tax economy’ – you can’t easily avoid property and some bits of the sales taxes. Other than that is promtes excellent economic ativity and growth for all of us.

      I’ve got a good idea! let’s scrap all taxes on income and capital and tax only land values plus some ‘land duties’ (e.g. petrol). Then the avoidance / evasion problem would go away.

    • Bazman
      Posted January 18, 2011 at 6:50 pm | Permalink

      I still remember all the roofs off of closed down factories in the north under Thatcher, so the owners did not have to pay rates, destroying the interiors.

  9. Norman Dee
    Posted January 18, 2011 at 10:03 am | Permalink

    The reality show of our age.
    Just to the left of the upcoming waterfall is a quiet channel that gives a moment of peace before releasing you back onto the river, now you can avoid the waterfall if you are lucky, but everytime you do the entrance to the quiet channel gets smaller, and eventually you will go over the waterfall, the idea of the game is to stay on board the boat for as long as possible before escaping to the shore. Those still on board when the inevitable happens lose all their points and have to go back to the source of the river and start again.
    The boat driver and his crew will support and encourage you to remain on board for as long as possible, but don’t worry, when the boat eventually goes over the edge, the driver and his crew have golden parachutes that will drop them safely on a huge pile of money to soften their landing. So they come to no harm, and a new crew is waiting to take the next contestants at the top of the falls.

  10. Nick
    Posted January 18, 2011 at 10:09 am | Permalink

    It is the EU mindset that the crisis of the Euro can be solved by higher taxes, and that these higher taxes can largely fall on those with the broadest shoulders.

    ===========

    It’s the Tory and Lib dem policy too.

    That’s why you’ve just increased VAT. Increase/new tax solves everything.

    We even have it this morning. A new ‘tax’ – or forced price increase the effect is the same – on alcohol.

    Meanwhile the spending goes up, the deficit carries on.

    To put a size on it.

    You need to create one Richard Branson every two days, and then confiscate all their assets just to feed the beast.

    The beast is your spending incontinence.

  11. English Pensioner
    Posted January 18, 2011 at 10:10 am | Permalink

    What these so-called experts don’t realise is that sooner or later, the people say “enough is enough” and you end up with riots or rebellions. We’ve seen the “tip of the iceberg” in Greece and there is no reason to believe that other countries won’t follow.
    I know Tunisia may be different in that it had a dictatorship, (although many would say that is what we now have) but when I was there a couple of years ago there was no sign whatsoever of any unrest, nor indeed have I heard any suggestions in recent months that revolution was imminent. Then suddenly, with very little warning the whole edifice is overthrown.
    This could happen in any of the European countries – certainly the French aren’t known for their aversion to riots and have regularly overthrown their government by force every half century or so. The threshold for action in this country might be somewhat higher, but most people who want to get on in the world, or even just lead a quiet family life, are becoming fed-up with government policies and diktats they never sought (regardless of the party in power), increased taxation, more surveillance and interference in their day-to-day lives and a new elite who seem to have taken over behind the scenes. Maybe I won’t see riots and revolution in my lifetime, but I’m reasonably sure my children will and I fear for their future.

    • EJT
      Posted January 18, 2011 at 3:37 pm | Permalink

      Franc is an interesting example. Civil unrest and forced constitutional change ( note the ” 5th. Republic” ) is the way they periodically bring their political class (the enarque monoculture) back to reality. And the EU’s political and administrative systems are effectively the French ones instituted at the continental level.

    • Tom
      Posted January 19, 2011 at 10:20 am | Permalink

      I am another pensioner and I stood for the Referendum Party in 1997. It was not difficult to foresee exactly what has happened to the eurozone (albeit at that time no one forsesaw the incompetence/greed of the banking sector) but I wrote in my mini-manifesto that one reason I was standing to try and prevent the turmoil, or even violence, which my children and grandchildren would face in twenty years or so. It is happening a few years earlier than expected.

      I well remember the days when you could not take more than £50 out of the country. Many countries impose restrictions on currency export, especially those with weak economies. We already have a form of control because of money-laundering, which complicates life for the innocent but rarely, if ever, catches the serious criminals. It would be very easy to tighten these controls “in the national interest”.

  12. Stuart Fairney
    Posted January 18, 2011 at 10:31 am | Permalink

    The people who seriously think that the only problem with Greece is a lack of tax and regulation are the same ones who now make our laws for us. (I thought it was a serious lack of economic output of goods people want to buy combined with way too big a state sector.)

    A more cogent argument for saying ‘Hasta la Vista’ to the whole bureaucratic, centralist, statist, (unaudited-ed) Euro project I know not

  13. Sally C.
    Posted January 18, 2011 at 10:34 am | Permalink

    The ECB has been buying peripheral Eurozone government bonds for a while and according to the FT Alphaville blogsite the ECB now owns outright close to 20% of the outstanding government bonds of Greece, Ireland and Portugal via its Securities Markets Programme. This is the link to the article for anyone interested:
    http://ftalphaville.ft.com/blog/2011/01/17/460751/what-fresh-basis-the-ecb-hath-wrought-yet-again/
    The comment attached to this FT Alphaville article also has an interesting link to the Irish Independent newspaper regarding the Central Bank of Ireland printing its own Euros.
    In the meantime, UK CPI has jumped to 3.7%, and RPI is at 4.8%. Where are those public sector trade unions when you need them?

  14. EJT
    Posted January 18, 2011 at 10:40 am | Permalink

    Greece.

    Up to date, anecdotal views from personal Greek contacts. ” Beyond bad”. “Resembling the former Soviet Union”, i.e. you can’t buy certain things, even if you have disposable cash, as the economy is no longer sustaining parts of the supply system. So, I suggest Mr. Redwood’s lunch contacts inhabit a somewhat rarified world, not that of ” normal” professional level people.

    PS – I wonder if this inability to purchase is the start of a very slippery slope for a fiat currency ?

    • Stuart Fairney
      Posted January 19, 2011 at 5:29 am | Permalink

      Wow, if this isn’t just a localised supply shortage, then ‘Atlas’ really is coming to life

      • EJT
        Posted January 19, 2011 at 12:48 pm | Permalink

        Localised ? I can’t say either way, as information from contacts is inevitably point sampling. “Atlas” – I suspect more practical than ideological. Other than by forced labour (and the emergency edit on truckers amounted to an attempt at that), why work for a loss ?

        • EJT
          Posted January 19, 2011 at 12:49 pm | Permalink

          edict

  15. William
    Posted January 18, 2011 at 10:50 am | Permalink

    The Greek people are doing what they feel is right. The French and Germans are doing the same. They will never come to common ground as the French and Germans assume superiority and the Greek people take no notice, rightly so in my humble.

    The question is why does almost every politician in this country believe that the British people gain anything from being part of this enormous social engineering experiment?

  16. Publius
    Posted January 18, 2011 at 11:21 am | Permalink

    The trouble with these coercive tyrannies that that they constantly have to extend their control, meddling and surveillance. The more they control, the more they find they need to control.

    If enough people went, say, to Switzerland, in order to escape the bullying, then the EU would just start bullying Switzerland (even more than it already does).

  17. John Bowman
    Posted January 18, 2011 at 11:29 am | Permalink

    “They see no political challenge coming from a tax led squeeze.”

    And who will lead?

    How can democratic change occur when the institutions of democracy are monopolised by those of like-mind, increasingly putting themselves beyond public accountability?

    When those politicians who do oppose the consensus support it in the name of party loyalty and say better this than the alternative, around whom can the People rally?

    When an increasing proportion of the people are reliant on the State for their income and well-being, and mass immigration is used to swell their ranks, who surely will vote for more of the same, how can the democratic process function amid such bribery and social corruption?

    That is why they see no political challenge because there are no political challengers, nor can there be because the system prevents it.

    The alternative, as history shows, is war.

  18. Richard
    Posted January 18, 2011 at 11:31 am | Permalink

    I’m not by nature a conspiracy theorist, but it does occur to me that the EU like many previous examples in history of centralist and socialist minded organisations, finds it much easier to exert control its regions when they are in need of financial help than when these regions are doing well on their own.

    The fact that countries like Greece and Ireland are in desperate need of assistance doesn’t make it a worrying time for the EU, more a time of great opportunity for them to increase their power and to move their project forward without dissent.

  19. Robert George
    Posted January 18, 2011 at 11:35 am | Permalink

    I am one of those Non Doms who has left the UK. It was the origin and heart of my business, with sales offices in US. Australia and HK. Now the UK is the sales office. Tax and intrusive regulation are the drivers to the exit. I risked everything I had for my business and don’t mind paying fair taxes but Labour and now the Coalition and EU are way beyond fair.

    Frankly I cannot see it changing, because there is no chance of a ‘small government’ party ever ruling in UK again.

    My only hope is that the Euro crisis, which I anticipate will grow like a slow moving snowball will eventually bring down the whole EU project. It might take a few years but when it does collapse the EU will fall fast.

    • Robert Eve
      Posted January 18, 2011 at 5:23 pm | Permalink

      Bring it on!!

    • Mike Stallard
      Posted January 18, 2011 at 7:43 pm | Permalink

      Thank you for that extremely frank and helpful comment.

  20. Ken
    Posted January 18, 2011 at 12:31 pm | Permalink

    I don’t like the French and German ideas, as John has relayed. I certainly do not like the eu quango. I prefer democracy.

  21. Lindsay McDougall
    Posted January 18, 2011 at 12:48 pm | Permalink

    If we want to increase tax yield, the tax to revise is income tax. If we proceed with zero income tax on incomes of up to £10,000, then we should raise the standard rate of income tax in order to claw back at least some of the lost revenue. We should also reduce the top rate of income tax from 50% to 40%.

    Not fair? Perhaps, but it is a fact that the rich and dynamic can and do vote with their feet whereas the rest of us generally don’t.

    Nigel Lawson got it just about perfect in 1988, with rates of 0%/25%/40%. If anybody knows what the thresholds were at that time, I will gladly adjust them for inflation and compare with current thresholds. I am virtually certain that the threshold for the 40% rate in now substantially lower in real terms.

  22. Mark
    Posted January 18, 2011 at 1:10 pm | Permalink

    The shocking thing about Brussels is their belief that they can impose their ideals without democratic legitimacy. Do they not understand that this is a recipe at the least for nations to seek their rights of self-determination, if not for actual revolution in due course?

    • Martyn
      Posted January 18, 2011 at 6:08 pm | Permalink

      The ‘EU’ and ‘democratic legitimacy’ do not fit together all that well.
      EU ‘Regulations’ are simply handed out having full legal force in all member states which do not need to pass through National parliaments. No member of any recent government of ours seems to care about this.
      EU ‘Directives’ do need enactment by our government to become UK Law, though the wording of the new Law is left to Parliament (which goes some way to explain why we have so many badly thought through and badly worded laws these days).
      The EU Commission is supposed to act consistently with the principle of subsidiarity and not to act where national or regional governments could do the job as well. In practice the Commissioners just ignore this principle.
      Where, then, is there democracy within the EU democracy and does anyone anywhere have any accountability in what it does?

  23. Alte Fritz
    Posted January 18, 2011 at 1:52 pm | Permalink

    Such posts remind one of the corporate state. As I recall that was a concept popular with most fascist movements. It was an alternative to free market capitalism and communism.

    It was an element of fascism which did not fall away in popularity after 1945. To the contrary, it seems to have done rather well, especially when pitted against Anglo Saxon free market capitalism. I think that Edward Heath was quite keen on (corporatism-ed).

    The trouble, of course, is that it has never had a very good economic track record.

  24. Johnny Norfolk
    Posted January 18, 2011 at 3:28 pm | Permalink

    Having lived in both Germany and France it never ceased to amaze me how narrow and naive they are, as you have found. They just do not understand how the real world works. Regretably there are more and more people like this now in Britain. Led by the Labour Party/BBC

  25. Kenneth Morton
    Posted January 18, 2011 at 3:46 pm | Permalink

    There seems common agreement among all parties in both Houses of Parliament that there should be no problem in holding the AV referendum, due in four months.

    Surely this indicates that the case for denying the British people a vote on membership of the EU is considerably weakened. This is a matter that must be dealt with at some point. To my mind the a referendum should be held on the same day as the next European Elections.

    Once this referendum is held the country the result will indicate whether we should walk away from the complications of Europe or else back to the hilt the core policies of the EU, such as the integration mentioned above.

  26. Bernard Otway
    Posted January 18, 2011 at 5:45 pm | Permalink

    Amazing how many like Lola agree with me on Emmigration,what about Mr George who has GONE,and Lola,s comment about banning emmigration reminds me of a series made and shown on BBC tv in the late 1970,s[wouldn,t be shown now] starring the actor from the series on now Ballykissangel who plays the builder whose daughter is married to the Policeman,this series envisaged a totalitarian left wing government who by the mess they had made,actually did Ban emmigration,this Ban was one of the Main planks of the show and it was examined from a few angles,but in those days the sentiment of the series was that this government it portrayed was BAD and worse.I wonder if anyone remembers it or if it exists in the archives of the BBC it is probably filed under HERESY with instructions to only show it in 1000 years.And while I am at it in my opinion even if John,s piece appeared on the Conservative Home site ,most of these comments would be Censored/Moderated ,as they seem to be doing to my comments a lot recently and without even acknowledging that they have not allowed them,certainly my comment above would not appear and others forecasting revolution,like the one older man saying it about in his children,s time

  27. Bazman
    Posted January 18, 2011 at 7:10 pm | Permalink

    Maybe we could run our economies on a Russian model where the tax rate is extortionate on everything. There is a real price and an artificial price where the difference is made up in carrier bags and bin liners of cash. The system is absolutely corrupt allowing extreme capitalism and communism for the rich the exist at the same time. Am I going in the right direction? Yes you are comrade! To use an old Russian Joke.

  28. Mike Stallard
    Posted January 18, 2011 at 7:40 pm | Permalink

    By a strange coincidence, I am currently studying the eighteenth century when the French bled their subjects dry without any semblance of asking first, through a parliament. They stagnated and, when the State went bankrupt under all those geniuses, there was an almighty revolution and lots of innocent people got horribly murdered.
    Meanwhile in dear, slack old England, there was a proper parliament, proper payment of taxes, proper Bank of England, proper control and surveillance of expenditure and we got all sorts of exciting revolutions instead – industrial, agricultural, transport, scientific…..
    Of course, all that is quite irrelevant in the 21st century…….

    And, by the way, thank you for that insight – a very helpful view into what the French are thinking.

  29. Peter
    Posted January 18, 2011 at 9:00 pm | Permalink

    I am increasingly depressed about the outlook for Britain. It is no longer the country that I knew. There is little freedom to build a future for yourself and even less incentive as it will all be taken away from you through inflation, taxes or regulation. I am looking for alternatives abroad and people that feel the same way. There are several countries that do not tax or regulate their citizens to death, with tax rates of far less than we’re paying here and lots of opportunity to make a life for your family. It’s time to do something for my son.

  30. Johnny Norfolk
    Posted January 18, 2011 at 11:20 pm | Permalink

    Big slip up on Newsnight. JR actually had a chance to speak without much interuption.
    Is this a record or a mistake. ?

    • Denis Cooper
      Posted January 19, 2011 at 10:59 am | Permalink

      And spoke well, I thought.

  31. mork
    Posted January 19, 2011 at 3:59 am | Permalink

    so John, if i have understood you right here, you are arguing that SIMPLE TAX COLLECTION is a useless endeavour? After all, your European compatriots are simply saying that people and companies should pay the tax rate already set, the *necessary* taxes taken for the right for that company to trade in that country, and profit from its people and economy.

    …you think that paying taxes is bad full stop?? Taxes are essential – unless you desire a Corporate State, where “company profits” are the cost the citizen pays, and gets far less back than they do from Govts for the money taken.

    i wouldn’t trust the French and Germans one inch if i were Greek or the other PIGS, but the notion that perhaps corrupt politicians and companies should start paying taxes does not sound particularly bad to me.

  32. Gary
    Posted January 19, 2011 at 10:05 pm | Permalink

    John,

    I just want to clarify my assertions that “mark-to-market” precipitated the 2008 crisis, because you deleted my post, so I assume that you did not agree.

    The FASB introduced the accounting rule called FAS 157 that forced banks to mark their assets to market, where they had previously marked them to “model” ie. whatever they said that they were worth. Many seasoned market watchers said this was the trigger for the 2008 market collapse. It may not have been the cause, that was poor balance sheets, but it was probably the trigger. It was predicted here in 2007 that FAS 157 could lead to trouble :

    http://www.treasury-management.com/showarticle.php?article=60

    Some derivatives under this rule had ZERO value, because there was no market for them. I then said that in a panic the authorities turned around and amended FAS 157 and said, in effect, that the derivatives could be marked-to-model again. Here it is :

    “On April 9, 2009, FASB issued the official update to FAS 157[20] that eases the mark-to-market rules when the market is unsteady or inactive. Early adopters were allowed to apply the ruling as of March 15, 2009, and the rest as of June 15, 2009. It was anticipated that these changes could significantly boost banks’ statements of earnings and allow them to defer reporting losses.[21] The changes, however, affected accounting standards applicable to a broad range of derivatives, not just banks holding mortgage-backed securities.

    Opponents argue that the implications for investors are that the valuation of assets underlying such securities will be increasingly difficult to analyze, not less so. An example would be determining a company’s actual assets, equity and earnings, which will be overstated if the assets are not allowed to be marked down appropriately.[citation needed][22][23]”

    http://en.wikipedia.org/wiki/Mark-to-market_accounting#FAS_157

    Reply: I do not delete things I disagree with. I do delete things which name companies and individuals, making serious allegations about them which might be difficult to defend in law.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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