The rising strength of China and Brazil, of India and the Civets, is based on hard work and free enterprise. Economies which have been kept poor by too much state control and by bad government in past decades, are being progressively liberated. As this occurs, so more businesses are set up, more jobs created, more people are better educated. A virtuous circle has been created.
The declining relative strength of the west, especially of Europe, is based on the opposite process. There is growing government interference in every aspect of economic life. The top down Euro scheme, little wanted by the German and French people, let alone the British, is doing untold damage to economic prospects. It is proving to be the ultimate ill judged intervention by the political classes, the final expression of governing power that is damaging families, businesses and job prospects.
It is of course true that the emerging nations have two natural advantages which should make it inevitable that they overtake the west in terms of total income and output. They are much more populous. They can catch up with western living standards by applying western technology and ideas to less productive economies.
In a way the surprise is just how big the gap was in favour of the west for many years given how few people live in the richer countries. Chinese communism prior to the enterprise reforms held the Chinese people back. Brazilian incompetence at macro economic policy led to many years of disappointment in Brazil. Russian communism combined with reliance on the Soviet empire restrained Russia for several decades and diverted a very high proportion of its low income into military spending. The west, led by US capitalism, powered on , from innovation to innovation. Waves of new technology, electrical, electronic, and then digital fuelled growth and rising living standards.
Listening to the Today programme under guest editors this week, we still hear the same complacent western mantra. Yesterday we were told that Africa needed an EU style market to make it rich. A BBC correspondent blamed global warming for the failure of the continent to feed themselves. Evan Davis was a breath of fresh air when he pointed out that crops were going to waste in fields because the trucks could not get to them to take them to market owing to poor roads.
I had hoped we might get a guest editor who would ask the big question – Is western decline inevitable? Was the Credit explosion of 2005-8 the last fling? Does the west have to accept a 10% cut in living standards to get off its diet of debts? Or can it bounce back with new energy, new ideas, a new wave of technology the world just has to have? How can it grow itself out of too much borrowing? How will we earn our combined livings in the new world which is emerging, where energetic Asian and Latin American countries make so much of what the world needs?
It would be good to go on from the big picture question to the role of the Euro and European government in hastening the western decline. Why not interview the enthusiasts for the Euro scheme and ask them how much more damage they want to do? Are they pleased to have brought the European banking system to its knees, to dependence on artificial injections of cash from the ECB? Did they learn nothing from the diaster of the ERM? Why is the Euro scheme different? Do they regret cobbling economies together that were performing so differently? Have they any idea on how to channel the German surpluses to cover the southern deficits? Was it part of the plan to create a world where the EU sends in technical administrators to distressed EU countries to put through large cuts in public spending? Did they realise they were creating a mutual austerity machine?
Do they think the industrial companies will hang around in western Europe to pay the high energy prices they impose in the name of anti global warming? Does making them conform with the growing libraries of rules help, when they can go to cheaper and easier jurisdictions to make their goods? Are they yet alarmed by the amount of industry that has decamped to Asia and Latin America?
There is dramatic change sweeping through the economies of the world. The west is not owed a living by the rest. The inequalities which affront many can be reduced by the west experiencing falling living standards, as well as by the rest enjoying rising ones. This may not be what the architects of Euroland had in mind, but it is the necessary consequence of their folly. It is high time the west asked itself more fundamental questions about how it will earn its future living and whether that needs a new approach from governments to do so.
December 28, 2011
” Is western decline inevitable? Was the Credit explosion of 2005-8 the last fling?”
Well Yes and No. Yes, if we continue along the same old statist track with a bloated public sector and politicos taxing and regulating everything is sight. No, if we adopt laissez-faire capitalism and stop calling for the government to keep us all safe from an endless array of made-up hobgoblins.
There is almost no chance that most polticians realise they are the problem and even less that they will get the hell out of the way if they do realise it.
So Yes.
December 28, 2011
Given that laissez-faire capitalism was responsible for the 1929 Stock Market crash it would be better for the economy if we don’t adopt it.
December 28, 2011
As you touched on third world problems, I thought I’d remind readers that the EU tariffs against third world food imports are mainly for revenue, not protection. This hurts poor farmers and our housewives alike. Yet more reason for leaving the EU.
December 28, 2011
Indeed
December 28, 2011
Agreed+2. Clegg continues to say one thing and acts in contrast. After a year of disastrous defeats (AV, Local elections, Scotland) one would think he would learn from his mistakes. He and the Lib Dems are so out of touch with public opinion it is astonishing why he continues along the same lonely furrow.
He now claims the economy is his priority and still promotes policies that will fail on Europe, energy, welfare and tax.
Clegg insults the country and talks it down as “pygmy” nation and appears surprised that France joins in on his derision of our country’s economy. When will he learn from his mistakes and take a different course and act with deed rather than hollow empty contradictory words?
Encouragement for the New Year would start with the decision by the CPS to prosecute of Mr Huhne so the country could rid him from government.
December 28, 2011
It also prevents the developing countries undercutting all our industries and farmers.
December 28, 2011
The left would counter all your well thought out arguments with the simple riposte ‘slave labour wages, do we want to engage in a race to the bottom?’ and that’s about as far as any debate would go.
Similar to when immigration was off-topic, all the left had to do was so ‘racist’ and that was the end of that. Or same sex marriage ‘homophobe’. Or lower taxes ‘for your rich banker mates’.
Fortunately the world does not stand still and we with it so change in the European socialist welfare governance model will come sooner or later.
December 28, 2011
If your ‘slave labour wages’ comment refers to China or Taiwan and South Korea for example you are wrong. These countries workers enjoy good standards of living and have done so for many years. For this not to be the case is considered to be bad business by the vast majority of employers there.
Lower taxes would not be specigically targeted at a handful of ‘rich bankers.’ Everyone benefits from lower taxes and the economy along with that.
As for ‘the European socialist welfare governance mode’ – You need hard facts to support arguments not formulaic jargon.
December 29, 2011
You can live like an Eastern person being an East European or Chinese if you think they have a good standard of living. Slave labour wages and race to the bottom are as far as the argument needs to go for sure, none of you lightweights would be able to live like this, so do not put it on any other British people.
December 28, 2011
‘Socialist welfare governance’
That really is the nub of our problem. If the EU were not a socialist/welfarist construct then the BBC, Neil Kinnock nor any other left leaning body or persons would support it – regardless of whether or not the EU brought prosperity or prevented war in Europe (which it didn’t.)
It really is like being trapped in the back of a car, with child locks operated, driven by a brattish 8-year-old and heading for the innevitable slow-motion crash.
How did the 8-year-old end up in the driving seat ???
December 28, 2011
Given that Chinese manufacturers only get $0.41-0.91 per hour the only way the UK can make products as cheap as China is to pay people in the UK ‘slave labour wages’.
December 29, 2011
Would not be economically viable or of any use to anyone except employers who would not be able to find anyone desperate enough. Make them desperate enough? They will not be working that’s for sure. TWOC’ing your car will be their work. Mine too.
December 29, 2011
Bazman – You speak as though we’re going to have a choice.
The original post was about the EU hastening our demise.
December 28, 2011
And our treacherous government continue to betray the people it is sworn to serve
A glorious example of rule by (stupid people-ed)
Seven years after a statutory instrument updating nature regulations glided virtually unobserved through Westminster, the Department for Environment, Food and Rural Affairs (Defra) has this week admitted it “unlawfully” put a new crime on the statute books.
This government will rue the day it turned its back on the electorate, I promise you that!
December 28, 2011
This was brought home to me personally by my two sons. One lives in Singapore and he visited me this Christmas. He is doing well, although, of course, there are enormous challenges at work, where he is rising to the top because he is reliable, easy to get along with and works even on Christmas Day, checking on people in Singapore who have been up all night and for much of the previous day. He is international – just as at home in the Philippines (Spelling?) as in Bangkok. Governments are easy on the regulation.
My other son works here in England. His wife is about to be made redundant as a school secretary. He has three children at State School (Catholic). He works a four day week because of the cut backs. He loves England and is very happy to stay here. But, like me, he is the poor relation.
I really agree with your excellent thoughts above, therefore. Well said! And why is it never discussed, just assumed, that the State is the answer to everything? Why are we dismissed as “right wing” even if we mention it?
December 28, 2011
Yes, it is almost as if the population has become infantalised by the state. Nothing can be done about anything unless the grownups in Whitehall say yea or nay.
December 28, 2011
Which son is happier and is better prepared to be happy in the future Mike?
Does that matter?
December 28, 2011
That is very astute.
Of course, like all parents, I try desperately hard to be impartial.
Actually, if I am really honest, there isn’t much in it. Life brings sufferings and testing times to everyone, doesn’t it. And very, very good times too!
My problem is more personal: I can remember when you made your fortune right here in England.
December 29, 2011
I used to want to make my fortune Mike but that’s not bothered me for a long time. Provided I’ve enough to get by and to provide for the people I’m responsible for money doesn’t worry me.
I get my happiness elsewhere – in caring for people, in social responsibility and in working away at the quality of my interactions with people and of what I do in general.
A four day week allows people time to focus on these kinds of things. It’s not all bad.
December 28, 2011
Mike Stallard: “And why is it never discussed, just assumed, that the State is the answer to everything?”
Because the BBC is the primary forum for discussions of that nature, it processing further to the left wouldn’t host that discussion.
Two years in government and this majority, supposedly Tory administration has done nothing substantial about the BBC. Except pop a EUrophile into one of the vacant top slots.
December 28, 2011
Indeed the damage the BBC does in slanting the debate on the EU, big government, the the bogus green exaggerations is huge.
A typical BBC report on any issue being:- “Not many realise that millions of people, all over the country, are allowed to go to the loo every day with no training, qualifications, supervision, minimum age or even any compulsory insurance – that cannot be right can it minister?”. Particularly with climate change making bacteria replicate so much more quickly and when the EU have recently brought in the new detailed “toilet guidance directive”. But are the inspectors in health and safely properly funded in this area and do we have enough of them Minister?
December 29, 2011
What about the other sources saying the same? Given the fact that you say you do not watch other channels too. Are you frightened you will have to believe?
December 28, 2011
I agree fully with all the point you make. But government the EU and the BBC are all set on the route 180% off course. The BBC especially is a huge part of the problem. Europe could have many competitive advantages. Alas the top down EU, Cameron, Nick Clegg with his absurd 50% and the, left to the core, BBC seem determined to squander them.
December 28, 2011
To illustrate the problem Nick Clegg in his new year message:- “we have taken the first steps towards building a fairer, greener and more liberal country” – so totally anti growth there as usual then.
December 29, 2011
A cleaner and freer country would be a terrible thing for some.
December 28, 2011
Absolutely.
So why is this never discussed?
I think myself that so much of our life works like this because those in power are simply afraid that they should be mentioned at all. Instead they are all assumed.
If anyone raises the topic, then they are attacked personally.
And so very many of the assumptions – wind farms, higher and higher taxes, the EU “democracy”, the “efficiency” of the Civil Service – are so utterly ridiculous that they fade away at the very first raised eyebrow.
December 28, 2011
This process of reducing our productivity started many moons ago when manufacturers and service industries woke up to the fact that third world countries had lots of cheap and in some cases well educated people. We, unlike the Germans chose to ‘export’ lots of jobs and carried on growing our lifestyle by borrowing thoroughly encouraged by the government.
The coalition needs to concentrate on just getting the economy growing. Forget EU promises, forget global warming commitments, forget the overseas aid budget, I’m sure the list could go on forever.
Just concentrate on the economy and the rest will follow.
December 28, 2011
Jose ,
Who is the “we” in ” we, unlike the Germans chose to ‘export’ loads of jobs….”
– Is it British consumers who decided they’d rather buy cheap tat than pay a bit more for home produced products which were usually high quality ? (quality is hard to sell these days when the first 3 criteria are price , price and price)
– and/or boards of large companies who exported jobs more for reasons of fashion than cost and because it was expected of them ?
– and/or pension funds etc who invested in BRICS and thus desired them to succeed at the expense of home grown industries ?
Whilst I am investing in projects in the UK which would have been blocked indefinitely had it not been for the financial crisis I am not as optimistic as you .
Just doing what we should have been doing better will not cut it .
We need a complete overhaul and comprehensive plan encompassing generating a housing surplus and saving for old age .
This sort of long term thinking is well beyond our politicians rather limited competencies .
Perhaps it could be entrusted to ex-military personel who did such a good job planning for Germany after 1945 ?
December 28, 2011
Germany also exported a lot of manufacturing jobs, as did Japan. However unlike these countries we didn’t replace low skilled manufacturing jobs with high skilled manufacturing jobs.
December 29, 2011
The fools.
December 28, 2011
You’ve covered a lot of ground in this post Mr Redwood. One rather important area you missed is where are the natural resources coming from to allow a rise to western standards of living by the rest of the planet? To maintain present oil production we will need at least another 5 Saudi Arabia’s oil fields, but they do not exist. Since every single product we can buy in every single shop is almost totally reliant on oil for it’s manufacture, transport and storage simply preventing mass starvation is a huge task that is not even discussed in public. For 10% of the planets population to live as we have been has used up most of the easily produced oil and coal, To assume that the world’s economy will continue as it has for the last hundred years merely with a change in the balance of power is surely foolish and missing the big picture.
Reply: The energy will be found or generated. There will be new oil and gas finds, shale gas exploitation, tar sands oil, more nuclear, more biomass, and better fuel conservation and greater energy efficiency.
December 28, 2011
Pete the Bike, you are wise to draw our attention to the big picture. The complementary issue to natural resources is consumption. Even if the world population stopped growing now, seems to me subsistence farmers will aspire to an affluent western lifestyle, there by generating a vast increase in demand. I do not foresee many heading in the opposite direction, no matter how appealing the “good life” may sometimes be portrayed.
Re the reply, no doubt some more resources will be discovered, but the big question is will it be enough. The only game-changer I can see on the horizon is nuclear fusion, and that is still some way off as a practical proposition.
December 28, 2011
As the price of oil increases more and more of it become viable to recover .
The energy in stranded coal can often be extracted by gasifying it in situ (ungerground coal gasification or UCG) . The syngas can be liquified to provide syncrude and syndiesel as the Germans did in WWII .
Still , the underlying trend is that the ROIE or EROEI (energy returned on energy invested) is going down from as much as 100:1 in a Saudi Arabian field to 8:1 in the North Sea to as little as 2:1 with tar sands .
Whilst I agree with J.R. up to a point I think we may be just pushing the can down the road another 30-50-100 years .
We ought to have a plan-B and dare to think of a different less energy intensive lifestyle .
December 28, 2011
PS I don’t see the “plan” of working longer hours for more years as a solution .
Just seems like running around in ever decreasing circles till we disappear up our own backsides .
Need to work , and live , smarter , not neccesarily harder .
Time for a radical rethink .
December 28, 2011
Don’t worry about that Pete
Peak oil is another politicians myth.
World Oil reserves at end 2007 1,238.892 billion barrels
World Oil reserves at January 2009 1,342.207 billion barrels
Gas is in an even healthier state
A full list of recoverable reserves using technology available today by country is available here http://www.eia.gov/international/reserves.html
December 29, 2011
To reply: Indeed energy will be found as it gets more expensive new conservation, efficiencies, economies and other reserves and technologies will become worth exploiting we have plenty of coal and natural gas. In the end we will crack nuclear fusion and have plenty from all the vast amounts of deuterium in the sea.
If it gets really expensive before then, we might even have to use wind, tidal and solar cells as they become competitive in cost terms and the technology becomes more competitive. Hopefully we will not have to and certainly doing this in advance of this, Huhne style, is just religious economic madness.
December 28, 2011
Speaking of radio 4, on the 10 pm news night before last, Gillian Tett and Anne Pettifor got it 100% right imo. Tett said the problem is that nobody will allow the insolvent banks to fail, and you cannot have capitalism without allowing bad business to fail. Pettifor agreed and added that the problem is not the euro, although the political structures around the euro are a mess, the problem is the insolvency of the banking system. We need a new Bretton Woods.
I have no doubt that the banking system is going to take Europe, the UK and the USA down. With or without the euro. It is hopelessly and irrevocably insolvent. This is what Cameron has risked all to protect, when instead he should be asking what we can do to remove this sector into bankruptcy before it takes down the entire country. The UK financial sector debt is now 650% of GDP.
December 28, 2011
Here is a link to the Morgan Stanley chart that gives UK debt as 650% and total debt at 1000% of gdp.
http://articles.businessinsider.com/2011-12-04/markets/30473957_1_household-debt-uk-safe-haven
December 28, 2011
Can the banks influence & political power be considered apart?
If you control the rules of the game you win even when you lose at someone elses expense until the rules mean nothing that is.
PS I hope someone is preparing for the worst and thinking about basics.
December 28, 2011
Economy is also psychology and little can be achieved by a negative approach. As our GDP per capita is between 5 and 10 times that of China and India, some re-balancing isn’t necessarily a bad thing. It doesn’t have to lead to western decline either, as we’ll have new markets with a vast new middle-class. At the moment only 1% of Dutch exports go to China as opposed to 72% to the EU. The internal EU market (where the Dutch gain about a month salary annually) and the euro (so far the gain about a week’s salary annually) are still important. The negative “us and them” language in the article towards the eurozone isn’t going to help Britain as it feeds negative psychology on some 40% of Britain’s trade. The current banking and sovereign debt crisis is a difficult one to get through, but soon the focus will be on growth and jobs and decreasing over-regulation for SMEs. No reason to remain so somber. It won’t help us developing markets in e.g. Asia.
Reply: How do you work out that the Euro gives every Dutch person an extra week’s salary a year? It looks like a job and wealth destruction over the whole zone.
December 28, 2011
Since WWII, the Netherlands has had a completely independent bureau for macro-economic analysis (www.cpb.nl/en). It uses complex econometric models, is used by government, all 10 political parties, trade unions and employer associations, to calculate the effect of economic plans. With everybody in the Netherlands referring to the same body, the battle lines have moved to highlighting advantageous parts of any analysis.
This Dutch bureau just published a book for the wider public. “Europa in Crisis” (sorry, in Dutch) from which I quoted my figures. Previously a German bank had tried to assess the euro-impact, but the CPB is regarded as truly independent.
December 28, 2011
Peter, are the “complex economic models” of the same quality as those featuring in the banking bubble, e.g. sub-prime mortgages?
Is the fact that everyone refers to the same source an endorsement of credibility or a warning from history of imminent disaster? Normally when everyone refers to the same “authority” hardly anyone does so because they know of their own knowledge and judgement that the source is of impeccable quality, rather they do so because everyone else is doing so. I hope the Dutch buck the trend.
December 29, 2011
It’s helpful to have independent sources. Maybe you have many statistical offices in the UK but one with the authority that everyone uses its statistics? How many different rates of inflation of unemployment etc. does the UK produce? And all equally reliable and undisputed? In the Netherlands parties benefit from having the same sources to reference. If you wonder whether it works out well, just compare some key economic indicators between the UK and the Netherlands.
Reply: There is an “independent” government office of statistics, which is independent of the politicians but controlled by officials. There is also a healthy market in providing additional figures and commentary on those figures in the private sector.
December 28, 2011
Yeh Peter tell that to the Greek, Portuguese and Spanish unemployed
December 29, 2011
For the moment, and probably more useful, we’re hiring Greeks, Spanish and Portuguese. Obviously a lot more is still needed to help these countries, help which will not be forthcoming from the UK.
December 29, 2011
Does this take account of the impact of (hard or soft) default within the Euro system? It is not very smart for Germany to think it has just received €60k for selling a Mercedes to Greece, when it turns out that €10k of that was loaned by Germany to Greece and is unlikely to be repaid.
December 29, 2011
When I quote about the gains made from having the euro, that does not, I assume, include the current crisis period. It may actually cost us in the short term, but the crisis will be a temporary issue.
December 30, 2011
Temporary in that it will have to end one-way-or-another, I agree. But, as an inevitable product of the structure that was put in place – in the face of a number of warnings – it is arguably no more than a reckoning for the previous apparent creation of wealth. In that case, a structure that was not vulnerable to something like the current crisis might not create the apparent wealth in the first place.
I give you a simple example, although I do not claim it is an exact economic parallel. If I borrow ÂŁ50,000 on credit cards I can increase my expenditure and apparent wealth (if I ignore part of my personal balance sheet) by the equivalent of many months’ salary. However, the requirement to repay will eventually create a crisis. Hopefully that crisis will be temporary, but the cost of addressing it will considerably exceed the earlier apparent benefit. Furthermore, if I want to avoid a future crisis, I have to stop pretending that I am richer than I am by going back to the plastic.
December 28, 2011
The EU behaves more like the former USSR than the USA. In this country, we seem to have politicians in charge who appear unconcerned that we are dropping lower in the economic wealth league table. It has been clear for years that countries such as China and India would soon become economic power houses. Somehow it was thought that we could carry on as before whilst allowing the EU to choke off enterprise with its litany of regulations. In the EU they want to produce a country called Europe. the architects of this are dictators who have no regard for democracy or the wishes of the people of the countries who will be subsumed into their empire.
December 28, 2011
According to press reports:
China are about to sign an oil exploration contract worth billions of dollars with Afghanistan today.
Do you think there is any chance we may now be paid for policing the Country ?
Were we asleep when the negotiations were taking place ?
Difficult to understand the logic of this, unless of course we are absolutely sure there is no oil to find.
Also understand China is looking in the same area for valuable mineral deposits !
December 28, 2011
In my recollection, we were not actually invited into the country to assist with ‘policing’. NATO invaded apparently in order to detain Osama bin Laden for planning the 9/11 operation on his laptop whilst sitting in his cave. Whilst there, we did not find Osama bin Laden although we searched high and low, but neither did we notice that the poppy cultivation which the Taliban had almost stopped by 2001 had increased to such an extent as to be supplying 90% of the world heroin trade.
http://www.globalresearch.ca/index.php?context=va&aid=18768
Furthermore, the Afghanistan heroin entering Europe is now transitting through Kosova, first recognised as an independent state by Afghanistan after its creation by NATO.
http://www.globalresearch.ca/index.php?context=va&aid=19581
Never forget: we are the good guys.
December 28, 2011
and remember, only the never ending ‘War on Terror’ will save us from the ‘bad guys’ so the more countries we invade, the safer we become.
December 29, 2011
Forthurst
I think they call it “mission creep”.
I was simply highlighting that the Afghanistan Government wants to retain us in place for a little longer, at our expense, and little reward, for million of our Pounds spent and hundreds of our lives lost, but the Chinese seem to have an agreement to search for oil (yes at their expense), which may net them Billions in profits.
One may be forgiven in thinking that perhaps, just perhaps, we should have had a head start, for no other reason than the Afghanistan Government would not even be in being, were not for the coalition forces, of which we were a significant member.
December 29, 2011
“I think they call it “mission creep”.”
That depends on whether you believe the original mission statement:
http://www.youtube.com/watch?v=7nD7dbkkBIA
December 30, 2011
forthurst
I seem to recall “without a shot being Fired” was it John Reid. ?
I remember thinking at the time, Some hope !.
9 years later we are still paying the price in lives being lost, millions of bullets, and Billions in cost.
December 30, 2011
“9 years later we are still paying the price in lives being lost, millions of bullets, and Billions in cost.”
..and the reason we are still there is?
December 28, 2011
The EU will strangle everything for all of its Members in time.
See they are still looking to increase their salaries this year.
Politicians will wake up one day and smell the bacon, by which time all of the pig farms will have gone bust !
There is none so blind as those who do not wish to see.
Keep on pushing John, keep on educating.
Sure you will get there in the end, the momentum for change is growing in the population, but as usual most politicians are behind the times. Many will jump on the bandwagon when the breakup becomes inevitable, just to try and save their own bacon (seats).
December 28, 2011
Until “the man in Whitehall knows best” attitude is beaten we will continue our decline.
No-one with any sense would start a business in manufacturing over here with the plethora of rules and regulations imposed on them.
Roon and Osborne are financially illiterate and we will probably have to suffer a bond run to actually cut government spending and cut welfare payments.
December 28, 2011
Where did your 10% figure come from?
The off the books debts are 6 trillion on top of a 1 trillion of borrowing.
Government income 550 bn. 50% of GPD is government. So if we loose 10% that’s 110 bn. That doesn’t pay the debts.
So there are going to be cuts. They are going to be Greek style cuts and its going to come largely at the expense of those on benefits, those who suck at governments teat (except MPs of course), and people with state pensions, including the civil servants.
Now the question is then will there be a Greek style revolt? It doesn’t have to be violent, as the Greeks also show us. 50% of the economy is now the black economy. That’s rising. What happens when the black economy, is the economy? What’s the appointed EU commissioner going to do so the EU gets its tax money? Send in the tanks?
ie. People can decided to cut the government out of their lives. It happens with the rich who offshore their assets to protect themselves against confiscation. The UK government for example, will resort to confiscation of pension assets like the Hungarians to keep their ponzi going.
December 28, 2011
Pension funds have already been raided – GB’s first budget. And no one lifted a finger to stop him, nor even to wag it in admonishment.
December 28, 2011
[…] the rest here: The Euro accelerates the west's decline Related Posts:U.K. Gilt Yields Decline to Records on Lingering Concern Over Euro Crisis U.K. […]
December 28, 2011
I am optimistic that we could revitalise our economy against strong emerging world competition.
I say could, because it will need government to see the private sector as something to encourage rather than something to simply extract tax revenue from.
There is great talent in this country, particularly at SME level and amongst the large numbers of self- employed, and this needs encouraging instead of restricting.
Governments want reduced unemployment, yet they fail to encourage businesses to employ. They want higher tax revenues from businesses yet do little to help them make those profits.
At local level, I waited over 6 months for a simple decision on whether the council would allow me change of use for an old industrial building.
The delay meant the project never happened and a few dozen jobs were never created.
December 28, 2011
Current mini depression aside, the west has not declined. The East, and South America have just grown faster. Given their low initial economic efficiency, and their ready export markets in the West, rapid growth should be easy for them with the right political environment.
As long as we do not fall in to a world where economic might becomes military adventure (like the US did in Central America, and Europe did in Africa, India, the Americas, etc, etc), then all that matters is that the wealth of individuals continues to grow.
Of course, if Europe, including the UK continues its economically illiterate, near suicidal austerity for growth program, then perhaps we will see real decline.
December 28, 2011
I disagree, Simon.
Ordinary workers are now coughing up high levels of tax whilst being conned into believing that they have been elevated into the middle classes. City professionals struggle to buy (or rent) accommodation first built for milkmen and police constables. People on ÂŁ40 k+ pa are bewildered as to where all the money goes and get themselves into hock to keep up appearances.
The ÂŁ buys less floor space than our parents (in ordinary jobs with one parent working) could afford.
I don’t deny that our standard of living is far better than our grandparents, however it is clearly in rapid decline.
I am not alone in worrying that our children might never find proper jobs (despite their talents and best efforts) let alone ever become financially independent.
December 28, 2011
The BBC will never ask the questions you pose. It receives large sums of funding from the EU and acts as a propaganda machine for the EU.
I believe the west is in terminal decline. There are many reasons why, but the main ones are the Nanny State (it has gone way beyond a welfare state) which has infantalised our population and over-governance. The political class – including its hangers-on in the Quangos, Charity-Quangos and lobbyists – is regulating and bleeding the country dry.
In the 1960s we had the Westminster Parliament, County Councils and local authorities.
Now we are paying for the EU; the Westminster Parliament; devolved Parliaments in Edinburgh, Cardiff and Stormont; County Councils, local authorities. We have thousands of Quangos and the ‘Rights’ brigade which means we are also paying for hundreds of thousands of foreigners to live here courtesy of the British taxpayer.
Our political class have ruined Great Britain.
December 28, 2011
The recent strikes protests in England over “cuts” to state sector pensions is an indicator of how the mood is changing.
Those who went on strike believe they have a right to the deal they had originally, even though it may prove unaffordable and they end up with less than is on offer today.
Those who do not support the strike – including those who actually pay for these pensions through their taxes – recognise the need for change and some reduction in the future cost – to them – of honouring even the slightly reduced deal offered by the Government.
There are many voices now urging Government to go further and faster. Not out of a desire to impose austerity, but out of a desire to liberate the productive side of the economy so that growth can return.
The answers are greater international free trade, especially in agriculture, lower taxes on business, much reduced regulation and in the UK particularly, greater competition between providers of state services like health, education, care and housing.
December 28, 2011
First the LtRO last Wednesday has proven a massive failure and the last legal hurrah for the ECB. Of the 450 billion on offer in absurdly cheap loans for collateral no bank in the world would ltd accept – approx 210 bn was recycled into free money – and 187 bn has now been deposited straight back in the ECB. The LTRO was meant to help refinance the EU instead out of the 450bn only 13bn has been used – a massive fail.
December 28, 2011
I read somewhere before Christmas that the latest ECB action was to simply give Mrs Merkel a quiet Christmas break.
December 28, 2011
The UK has to strategically reposition itself.
In all honesty to ourselves we have to accept the EU social model will lead to a long term economic decline. Once we accept that we can all start to accept that moving to a more global economic model (a traditional British one) will help us to rise above the EU economic black hole.
December 28, 2011
Can you explain what the EU social model is and which countries use it? Also why hasn’t Germany been affected.
December 28, 2011
What kind of UK are we trying to create? What level of wealth do we need?
December 28, 2011
Nice one, Rebecca. Answer on the back of a very large number of postcards, I guess!
December 28, 2011
The answer to your question is pretty difficult but we need enough wealth to sustain a country with a growing and ageing population. We need to create wealth to fund the the growing health care solutions that are on offer, we need wealth to afford to increase our efforts at education and development.We need to create enough wealth to create more, better paid jobs, we need to create enough wealth to provide better pensions for ALL of our retired citizens, we need to create enough wealth to be able to put resources into better management of the environment .
How much is that? Who knows, but so far in the history of mankind we have managed to overcome most adversities by innovation and creative solutions.
Try reading The Rational Optimist by Matt Ridley an excellent book
December 28, 2011
Final point. The problem with the UK and EU banks is a solvency crisis. This means the banks assets do not meet their liabilities. Same with the Government. For the banks this fundementally boils down to unproductive assets. Equities have not risen in value for a decade. This is due to the uncompetitive EU. And as much as you do not want to hear it the housing bubble has still not burst. Banks mistook the growth in the cost of housing for a growth in productivity. The housing bubble has been a bull trap.
Housing costs must fall. Business productivity must rise.
Interest rates are low because there is so little demand for investment because the EU and US is so unproductive.
December 28, 2011
Yes. This is a solvency crisis. That means the business is no longer viable. It means that spraying money at it will not make it viable, it means that you are throwing good money after bad. You could throw all the money in the world at horse buggy whips and the business would still not be viable. We have reached debt saturation, this debt based money system can no longer operate. We have to have another system. Until that happens we throw good money after bad. Cameron patently does not understand this, he has doubled down on linking our future to this system. A broken business model.
December 28, 2011
Totally agree. All collateral to secure debt is used up. So the ECB falls back on junk collateral to back up even more debt. The system is patently at its limits.
The problem with what the ECB is doing is moving from an economic model that has reached its limits to one that is now building on junk deb to sustain itself. This will lead to a huge collapse. The tipping point was breached by last weeks LTRO.
I work in a hedge fund that keeps all its clients accounts in t-bills or bunds. The public don’t realise that the whole financial community is getting ready for a huge collapse.
December 28, 2011
Let’s just call a spade a spade Javelin – bonds are crashing. It started in 2007 when US mortgage-backed bonds started crashing and is continuing now as EU sovereign bonds crash.
We’ve reached the end of a three decade-long bull market in bonds and now bonds are crashing, taking the fragile, over-leveraged banks that own them with them.
A quick look at bondscape.com confirms it. If you trust Lloyds Banking Group to repay you (without the retail deposit guarantee) in June 2014, you can get around 7%.
The government are trying to stop their bonds crashing, and they’ll probably still be trying to stop their bonds crashing in 10 years time – unless they’ve crashed of course.
December 28, 2011
Bang on the money, Javelin (@10.09)
Your blog name is quite apt.
December 28, 2011
JR: “It is proving to be the ultimate ill judged intervention by the political classes, ”
It would be interesting to correlate the number of administrators running the UK today compared with say, 1912.
Here is how I’d imagine the numbers would stack up.
1912 – British empire at the peak of its influence – 2000 admin in Whitehall, administering the UK & Empire.
2012 – British empire defunct ( no biggie ) Britain hanging onto the coat tails of a former colony to ‘punch above its weight’ ( a term illustrative of the utter cowardice and uselessness of the British Political class) its economy in a state of advanced decline 300,00 civil servants, councilors, MEPs, MPs, MSP, MWAs, Brussels administrators, United Nations administrators, employees of non governmental employees etc., etc., ad nausium.
December 28, 2011
APL ,
The modern day civil service has the benefit of computer systems .
Unfortunately that is more than offset by the stultifying effect of management consultancies whose only interests are to over-complicate and extend projects and flood whitehall with junior management consultants learning on the job at ÂŁ1,000/day .
December 28, 2011
APL
There are 6 million people employed by the taxpayer in the UK at beginning of 2011
If you mean Whitehall Civil Servants only there where 520,000 as at January 2011
December 28, 2011
John
“…are they pleased to have brought the European banking system to its knees, to dependence on artificial injections of cash from the ECB?..”
While I agree with much of what you said, the current crisis cannot be put squarely at the feet of the Euro. As Gary pointed out above – the origins are in a global financial crisis started by the banks, brought on by poor regulation here, in the US, and with Basel. Many banks are insolvent – and like Japan in 1990s, we cannot move forward unless and until that issue is solved. The current plan is to hose money about which I think most people agree will not work.
governments in the EU, the UK and the US have been captured by the financial sector.
I don’t recall you blogging about the Vickers report upon its publication but I thought this was perhaps a good step albeit probably too little, too late, and too slow.
Reply: I have often set out my own remedies for the UK banks. I support controlled administration for failing banks, to sort out their losses more quickly and to cretae new banks with firm balance sheets that can provide a better quality competitive banking service. In the UK HSBC and Barclays are fine. RBS should be sorted out whilst still in the publlic sector, creating 3 new UK clearing banks out of appropriate assets and liabilities owned by RBS.
December 28, 2011
The whole credit crisis began with government interference in the U.S. mortgage market, google “HOW FEDS INVITED THE MORTGAGE MESS”.
It should bring up the NY Post article.
The banks merely complied with the box ticking exercise and then off-loaded the sub prime paper as fast as they could; and who could blame them?
December 28, 2011
How exactly is the US Government to blame for the banks rebranding very risky mortgages as risk-free mortgages and encouraging people to invest in them?
December 30, 2011
The government forced the banks into making the sub prime loans. Once that box was ticked what do you expect the bank to do with the risky loan? What would you have done in their position?
Would you have held onto the debt until the inevitable happened, or try to offload it onto a less nervous investor?
The government should not be telling banks to lend my money to people who cannot afford to pay it back to buy properties in the less desirable parts of town.
December 28, 2011
Very helpful article, and glad you mention the CIVETS. With regard to the austerity inflicted on such eurozone members as Greece and the failure of eurocrats to recognise the basic flaws in the euro project, it is significant that in Der Spiegel today there is a hard hitting analysis of the failure of reforms in Greece, and with it a recognition, I believe, that Greece cannot deliver.
http://www.spiegel.de/international/europe/0,1518,805975,00.html
December 28, 2011
surely the problem stems from the nature of the philosophy behind the left orientated EU.
europe has been brainwashed into becoming the intellectual equivalant of a semi east european type state,now proved to be a failed system, reminiscent of when the soviet union held sway.
i say intellectual becasue the external propoganda based version of the soviet union was manifestly different from the reality.
doing good and feather beading workers and those unable or unwilling to work sounds so wholesome as to be beyond argument. it has the heart beats of those dishing out someone elses tax money fluttering with satisfied self glorification.
it reminds me of the doomsayers of global warming so well portrayed by the self righteous al gore who would not allow any other views than his to be acceptable.
to argue with them,which is supposed to be our right,is to become a monster who would either subjegate humanity to slavery in appaling working conditions and /or poverty or resign our planet to armaggedon as we bake our way to self destruction.
we should however do well to remember lady thatchers words.
”the trouble with socialism is that sooner or later you run out of other peoples money to spend.”
December 28, 2011
Dear John
I have to disagree with one part of your analysis. I am fairly certain that Brazil remains a basket case – too much intervention, too much reliance on commodities, too much government spending during a boom. In many ways I expect most of Latin America to go through another LatAm debt default a la the 1980s. After all what has really happened is that (Coastal) China has done the equivalent of Japan in the 1970s, joining the global economy as a full player and pushing up the cost of commodities. After adjustment, all the commodity players suffered.
China itself has problems – the rapidly ageing workforce (I estimate China has 20 years to get their economy “balanced” before the crippling effects of the one child policy – 4 grandparents = 2 parents = 1 child- catch up with them), the over-reliance on exports and lending money to Americans to buy exports and the CCP’s lack of legitimacy, ex-their “role” as the “guarantor of growth”, which paralyses necessary decision making on rebalancing the economy. But the odds are that China remains the one most likely to succeed amongst the BRICS.
India remains a permit Raj and Russia is a joke. SA is just commodities.
It is true that we are in the grip of scelerotic growth destroying institutions such as the EU and the endless mindless equality laws, just as postulated by Mancur Olsen, but I suppose that you can think of it as being part of the great cycle. BTW, you think things are bad here, you should take a look at Japan, which is truly a basket case.
Reply; The Chinese achievement is huge and still growing. The one child policy has not been enforced fully, and is now being varied anyway. There are still millions to come out of less productive work on the land into the cities. Recent Brazilian policy has stabilised the currency and inflation compared to past experience. Both China and Brazil have built some important industries.
December 28, 2011
China is a big success. It’s just that it is a lopsided big success – reliant on exports and financial repression (that’s an economic term for those unfamiliar with it). The one child policy wasnt fully enforced, but if you take a look at the Chinese demographic pyramid, it is far more top heavy than the Japanese or Italian ones, which had previously been the benchmark for an ageing society. They are moving to vary it, but given the rate of urbanisation, Chinese people are now suffering from a dramatic drop in the fertility rate. TFR in 2010 was 1.4 down from 1.85 in 2010. It’s too late to doctor it through fiddling with the one child policy.
I agree that there is still a reserve industrial army from the land to move over and there is room for a shift towards a more balanced (domestic vs. export) driven economy. It’s just that the problem of an ageing population is coming very swiftly for China (20 years isnt long in macropolicy terms) and changes need to be made soon – which are politically difficult thanks to the CCP’s desire to maintain growth. Will China keep growing? Probably. But China isnt without problems. And there remains the possibility that it will fracture, a low order one, but one that should not be dismissed.
As for Brazil, they have made some changes, but they remain a country with excessive protectionism – they raised non-tariff barriers on cars earlier this year. They remain a primarily commodity based economy having delusions of grandeur – too much government intervention, not enough basic education, a stupid left wing government. (Admittedly less stupid than some left wing governments, but essentially interventionist. Not all that different from pre-EZ EU.)
In ten years time I have no doubt that everyone will realise that the commodity bubble was all that propped up LatAm and people will be embarrassed by allowing themselves to be hoodwinked (again).
December 28, 2011
Well, prescient and omniscient as it may appear in retrospect, the BBC did deal with your central question here in a pre-recorded programme on Radio 4 at 10pm on either Xmas or Boxing Day.
Just in passing, two facts.
China’s great leap forward was built on the credit swamps of Europe and the US. Let’s see how they fare when the deleveraging of consumers in these contienents really starts to kick in.
Correct me if I’m wrong but isn’t Brazil’s rejuvenation built on booming commodity prices rather than any material change in that country’s means of economic production. A cow selling for $200, against $100 five years ago, is not a step change in industrial production that needs a whole lot of explanation.
Reply: China will now switch to more growth for the domestic market as real incomes rise. Brazil has attracted substantial new industrial investment. If the commodities you produce rise in real value you are better off.
December 28, 2011
All is not tickety boo in China. The lack of demand from the west is seeing thousands of factories close and hundreds of thousands of workers being laid off.
There are vast numbers of recently built properties vacant, factory workers and the middle class can no longer afford to buy them.
General Motors has had its quotas cut for cars going in to China.
December 28, 2011
Part of “Brazil has attracted substantial new industrial investment” is protectionism.
With the offshore oil industry, 2 out 3 oil rigs, service vessels and tankers have to be built in Brazil.
December 28, 2011
A great article John. I am getting ever more amazed at the complete failure of this argument to be more clearly articulated by politicians and political commentators in general. We are sleepwalking into disaster. When is someone on Question Time, for example, going to point out that the rest of the world doesn’t owe us a living – they want to eat our kids’ lunches….? That capitalism and free trade deliver far more from poverty than “aid” ever has or ever will? That we are tied to a disgracefully immoral system that dumps subsidised agricultural products onto African markets, driving local farmers out of business whilst erecting tariff barriers in “fortress Europe” to keep their products out?
We are in a dire position economically. This is precisely the time our politicians should be articulating a new vision of a free trade Europe, not this protectionist continental version of British Leyland……!
Your blog is a breath of fresh air. Keep going!
December 28, 2011
Hansard, April 14 1937. Mr Churchill “We seem to be moving, drifting, steadily, against our will, against the the will of every race and every people and every class , towards some hideous catastrophe. Everybody wishes to stop it, but they do not know how”.
Pretty much the same could be said in 2011, yes?
December 28, 2011
The Euro and Dollar situations have left us with a false market in our own bonds. I wonder if the low interest on our bonds will make things worse in the long term as it is leading us to a false sense of security.
What annoys me greatly is that we have a government and civil service which is (surely) not made up of idiots. They must know that the current overspending frenzy (on top of years of overspending) will accelerate our decline.
I do wonder if we will end up living off the land before our government does something about our decline.
Here is an example of how ridiculous things are: at a time when we should be urgently reducing the anti jobs regulations, new rules have just been introduced that provide temps with extra benefits. This was reported as good news by the BBC. We are still digging the hole.
December 28, 2011
Kenneth.
The last Government also REDUCED the number of years contributions neccessary to get a full State pension.
The problem is, no joined up thinking, with little commonsense.
We ask people to retire later, because they are living longer, but we make them pay less (in number of years contributions), to get a full State Pension Entitlement !!!!
No wonder we have pensions crisis…
December 28, 2011
If a single currency is installed for countries which do not constitute anything like an optimum currency area, then one way or another there will be economic penalties.
However euro-fanatics will see this as just another a price worth paying to further their obsession with “ever closer union”, alongside the destruction of democracy.
December 28, 2011
@Denis: If you view “ever closer union” as such an obsession, why did you join it in the seventies? (don’t forget to read preambles).
And Denis, why blame us for the “destruction” of your democracy? You’ve always had, and still have, the possibility of repealing the European Communities Act 1972, as even your 1975 referendum pamphlet stipulated very clearly. All you need is a majority in parliament.
December 29, 2011
Don’t be ridiculous, Peter.
How many of your compatriots do you think read the Treaty of Rome before your government signed it in 1957?
And how many Dutch MPs read it before they voted to approve it, without consulting the people in a national referendum?
December 30, 2011
@Denis: Not many people read a whole treaty in a referendum either, as the Dutch 2005 referendum proved. Some of my (educated) friends thought that it was about allowing bull-fighting in the Netherlands. I’d rather trust parliamentarians who rely on the specialists in their parties to study and comprehend each and every clause. Parliamentary democracy it’s called. (NB we had trial referendums in 1950 in which their was overwhelming support for European government). Even now you’d hardly find a Dutchman who would want to leave the EU, a little different from your situation.
December 28, 2011
I think that even if we made the Fairy Godmother and her magic wand our benevolent dictator, she’d be defeated by the crazy mess we’ve civilised ourselves into.
The problem in general appears to be that the system has acquired a life and direction of it’s own and no-one can pilot this gridlocked quagmire anymore, let alone dismantle it safely in order to take back a semblance of control.
(there is not one problem on your list that could be solved without causing at least two more, all those things are symptoms and they will keep on coming until the cause is sorted…)
December 28, 2011
Yes, big government starves the people – as seen in North Korea.
December 28, 2011
What is the appropriate size of a currency area? Eurozone today , Sterling today or maybe Lancashire should have its own currency so it could revive its cotton mill industry to compete with India.
Re the West’s decline –
1) please don’t forget we have a very old population with millions of pensioners who cost a lot of money.
2) The anti science and engineering agenda of the churches continues. Our education system remains crippled by money being wasted on bibles, hymn books and other irrelevances. China does not waste money on myths.
3) Billions are squandered each year on tax reliefs for churches.
December 28, 2011
China has got 23% inflation and labour strikes. How long before they become uncompetitive?
Reply: The official inflation figure is much lower. Judging by products on our shops they remain very competitive.
December 28, 2011
Being a member of the EU is supposed to promote free movement of goods and labour within the ‘common market’ and yet our shops are full of Chinese made goods.
Can any one explain that to me please. What is the advantage of the EU in trade terms when the Chinese seem to have unlimited access?
December 28, 2011
Students of Mediaeval history will know that the Byzantine Empire slowly suffocated itself to death with red-tape. So the future of the EU is certain…
December 28, 2011
As to populous countries having an advantage, it depends on what counts as an advantage.
Clearly the more people you have making widgets he more widgets you make. This improves GDP, but what good does it do for the widget makers?
I have often wondered whether Labour took a relaxed attitude to immigration because they saw it as an easy way to improve GDP. I propose that growth should be adjusted for population as well as for inflation.
I think the smart thing is to achieve growth by individuals becoming more effective, which is not the same as working harder.
December 28, 2011
On the other hand you could argue that the Euro may accelerate the enlightenment of the west as people are challenge to reconnect with and deeply understand the structures which underpin society.
=)
As I said – not all Eurosceptics are pessimists.
December 28, 2011
John, you could not have written a truer piece! We are living in a virtual communist State. Very ironic that the Arab world is fighting for democracy and our politicians hand it over with no bloodshed. It is partly the public’s fault because every time I have campaigned, people always ask what are “you” going to do for … and I say “nothing, the government should not interfere in your life because you run it better than we could! It does not go down very well, usually. The governments of the past 20 years have interferred more and more – a mirror of the EU and taken more and more of our money for themselves – another mirror of the EU. Why does Cameron love the EU? It probaby pays him a humugous amount of money to keep this country a member, after all, we pay the most of all the 27 countries except Germany. When will this incompetent government see that it will be the death of Britain and the UK. (Divide and rule being their mantra.)
Reply: The EU takes money from the UK, it does nto give us money. There are no payments to leading MPs, I can assure you.
December 29, 2011
A certain former MP, now a Lord, has allegedly greatly benefitted from EU grants for farming related matters on their very large holdings….not mentioning any names of course, but there might be lots of trees on those estates from which that Lord might be capable of swinging between……
zorro
December 28, 2011
Yes John brilliant analysis,and yet you still get dissenters who also don’t know their facts.
like pete the bike,has he not heard of the resources you mentioned,a quick google on Oil Shale
shows that in Colorado/Utah/Idaho there are proven oil shale deposits with easily 800 years of current US usage,new technology has already extended the life of thousands of wells in Texas and Oklahoma, some as much as 15 years beyond when they were estimated to run out.
As for efficiency when I was in my teens 1959 my father said good MPG was 30 mpg now cars are doing double that. We have 200 TRILLION cubic feet of shale gas under Lancashire alone,we should use it to generate electricity cheaply.Others on here mention the trade barriers erected by the eu against agriculture,I will requote AGAIN for the EDIFICATION [those dissenters without facts] my friend in Kirkwood Eastern Cape
who has 2.5 million orange trees,the price per Kilo in bulk is about 1p YES ONE P,BUT no exports to here because of the barriers,instead he supplies the home market and has the contract to supply ALL of Cathay Pacific’s orange concentrate to HQ in Hong Kong,he could however gear up and plant more land IF he could export to us,TRADE NOT AID,
BUT BUT that eu monster again,some other commenter said SA was only commodities
Toyota/BMW/VW/Mercedes/GM/Nissan and Ford all have factories in SA for the home market RHD AND export to all RHD countries including us,total employment in the entire sector is over 100000 people,ALUSAF has a plant making aluminium ingots in Richards bay employing over 5000,so it is NOT only commodities,BUT remember SA has more than 75% of the worlds Platinum [Think catalytic converters among many products] and about 80% of the world’s Chrome [Think Stainless steel] plus GOLD at a high recently of $1920
an ounce,producing about 400 tons annually 34850 ounces in a ton,the production price
to break even is about $380 per ounce.
December 28, 2011
Is it helpful to refer to Russian or Chinese ‘communism’? Bolshevism and Maoism were oligarchies based on rule by terror involving the murder and torture of tens of millions. The direction taken by ‘communist’ rule is dependent on the predilictions of the (unpleasant people-ed) in charge, not on the vapourings of Karl Marx.
It should be remembered that up to about 1830, China had been responsible for a third of world trade before instability and misrule destroyed it. That should be a warning to us. We are suffering from instability caused by misrule; we could be destroyed. Too much of what we are told to believe, is simply not true and falsehoods are very poor predicates for action, however many times they are repeated. Banksterism, Globalism (of which the North American Union and the European Union would represent important consolidations of power), Cultural Marxism, the AGW delusion, are all designed not to save us, enrich us and set us free, but to enslave us whilst transfering all our wealth to a (dubious-ed) financial oligarchy; some of our politicians are the willing servants of these monsters and they should not be trusted.
December 28, 2011
in theory an increase in world trade should benefit all of us but we are locked into a market which restricts our ability to deal elsewhere by artificial steps the biggest of which is designed to protect french farmers.
this attitude rebounds on us internationally and helps impoverish third world farmers.
there are 7 billion people in the world.
europe has say 1/2 a billion.
india iteself has 1 billion and they love us as we are also cricket mad.
we created an empire to trade.
we lost it because it was right to do so and the americans were determined to create their own empire based on money and exploitation.
we should not fear leaving the EU or having a swiss style relationship.
after all for those who mock the swiss as a tinpot self centred country we should remember that in 1963 when i first went their we got 12 swiss francs to the pound.
now it is one point three.
December 28, 2011
John manufacture has been outsourced to Asian and South American countries because they need cheap labour to mass manufacture cheap goods, which occurred long before the EU existed. Of course once the economy of these countries develops and wages increase they become unsuitable for low cost manufacture, causing the companies that had been outsourcing to them to go to other countries. Then the country either moves into manufacturing higher quality goods or declines until its wages are low enough to re-attract foreign companies.
Your criticism of growing government interference is ironic given that China has even higher levels of Government interference in the economy and private life than the EU. The EU doesn’t censor Google but China does.
Your comments about anti global warming means high energy prices is a fallacy; France generates 75% of it’s power from nuclear power plants, yet has many industrial companies. Also given that employment laws in most European countries make it nearly impossible to fire employees, the industrial companies can’t go anywhere.
Reply: As I made clear China remains much poorer per head than the west, partly because of past state involvement. China’s success is coming in those areas where the state liberalises.
December 28, 2011
John,i expected the banks to pile billions into the ECB over xmas,they like to pay the bonuses when parliament is shut as well.I want to concerntrate on democracy.Your speech on 24/10 indicates that you are only 20% of the MP you should be.This is not good enough in my opinion.I wonder if a 80% pay cut for non eurosceptic MPs would make them feel a bit more democratic.The three line whip needs to be looked at,i dont like it and i know Peter Bone is not a fan of it.
December 28, 2011
Those of us who have a smattering of economics and I trust a modicum of common sense are baffled as to how Cameron and Osborne and their current bedfellows are so blind to the logic that you and others daily expess. Are they not intelligent enough to enquire? Are they blinded by power? Do they think that they will fail and get the blame? Why are they so apparently dim?
December 28, 2011
Having finished reading the book “Logic of Life” that my son gave me for Christmas, I can fully see where you are coming from. We are just so *****d!
Daedalus
December 29, 2011
Presuming we can maintain peace:
The Chinese were eventually forced to adopt capitalism and competition in order to survive and prosper, and we will eventually be forced to re-adopt it too.
How long it takes and how pain it causes is not known. It took the Chinese and the Russians long decades of denial, is the EU capable of the same? I think so.
Glad to see the shout for Evan Davis (presumably it was Davis not Davies you meant John). I watched his fantastic series Made In Britain and am making my way through the fantastic book that accompanies it, a chrimbo gift.
The conclusions from the series I drew, was that while we still manufacture more than we think, with less people, we need to stop borrowing so that we pay for imports through exports. That bit that we borrow currently pays for things that we would otherwise have to manufacture, or earn through manufacturing/selling something else – either of which would provide jobs.
December 29, 2011
“The declining relative strength of the west, especially of Europe, is based on the opposite process…There is growing government interference in every aspect of economic life.”
Growing government interference in areas such as, say, immigration?
It’s really, really easy to cherry pick facts that support your prior prejudice, isn’t it?
Because down in Africa, there are many states with very little government interference.
And they’re doing really, really well, aren’t they?
I’d recommend a little studying of growth theory within economics, perhaps having a detailed read of some of the minds at the forefront of the literature, before jumping to such conclusions about what causes growth and what doesn’t cause it, what is endogenous and what is exogenous.
But the problem with doing that is that you wouldn’t be able to write rants like this quite so easily. A proper analysis usually gets in the way of a good rant.
December 29, 2011
James,
You really must try harder…..Immigration does not have any fundamental effect on a nation’s competitiveness or economic benefit (look at the House of Lords study). Are you suggesting that there should be a free for all? Totally ridiculous in a modern western industrial society surrounded by poorer, less developed nations with burgeoning youth population growth.
You then transpose the poor unreliable governance in Africa to try and show that unregulated countries/economies are poorer….What nonsense.
Did you say ‘endogenous’…? Now which economic guru used to talk about ‘post neo-classical endogenous growth theory’ recently?
zorro
December 29, 2011
To James Reade
I lived in Africa from 1980 till 2008,have been everywhere south of the Sahara.
Sir you talk nonsense, like I have done go and observe ON THE GROUND,ask questions.The
politicians would like to interfere in all aspects of everyday life but dare not,would you like to talk to my son in law who runs a huge copper mine in Congo.In Durban where I lived for 24 years,the traffic authorities in 2007 tried to collect on thousands of ignored penalties by African Taxi drivers[minibuses that carry 18 passengers] over 300,000 operate all over South Africa,by threatening to impound all miscreants vehicles on a certain day
KNOW what happened ? the ENTIRE industry [for that is what it is] blockaded Durban on the day before. CUT IT OFF WEST/NORTH/ and SOUTH GRIDLOCK everywhere ,END RESULT tickets DESTROYED,as the next step was going to be VIOLENCE.In the face of about 30000 Zulu’s Obed Mdlala the ANC mayor capitulated. Go try stop Africans earning a living on the streets dear man and see where that gets you,the mostly women who trade would remove certain parts of your anatomy.And before you say where is EAST ,IT IS THE INDIAN OCEAN,GLUG GLUG GLUG !!
December 29, 2011
I respectfully take issue with a number of points presented . “The rising strength of China and Brazil, of India and the Civets, is based on hard work and free enterprise.” Not true, the rising strength of China is based on a low currency value, and the use of state run corporations paying low wages to export to the US and countries globally, and by a willingness to buy GSE Debt and US Treasury Debt. The success of Brazil has been achieved through issuing consumer credit, and by participation in hot money flows in its banks farming and mining industries. Brazil successes, if they be called that, are the result of carry trade investing. In both cases, the City of London’s black hole investing machine, has assisted oligarchs from around the world to secretly invest in every ponzi credit scheme that has existed. And the City of London has assisted in hiding away profits in Caribbean pirate cove islands.
I raise a question, should lords who live in glass parliaments throw stones? The Honorable John Redwood continues. “The top down Euro scheme, little wanted by the German and French people, let alone the British, is doing untold damage to economic prospects. It is proving to be the ultimate ill judged intervention by the political classes, the final expression of governing power that is damaging families, businesses and job prospects.”
Can something that has been ordained by God be called ill judged intervention. God is sending the First Horseman of the Apocalypse, Revelation 6:1-2, to replace all current political and banking rule with the rule of authoritarians, as evidenced by the appointment of emergency financial managers in Michigan by Public Act 4, and by the appointment of technocratic governors in the EU’s periphery. The Sovereign Lord, Psalms 2:4-5, is passing the baton of sovereign authority from nation states to the EU ECB and IMF Troika.
God’s apostle, meaning sent one, recorded a dream for one’s consideration, The Revelation of Jesus Christ” and presented “those things which must shortly come to pass”, meaning that once they start to occur, they fall rapidly in place, like dominoes falling one on top of another. In Revelation 13:1-4, the Beast Regime of Neoauthoritarianism is seen rising up out of the profligate Mediterranean Sea countries of Greece and Italy. This monster of statism has seven heads, symbolic of its occupation in mankind’s seven institutions and ten horns symbolic of its rule in the world’s ten regions. It is being called forth by the 1974 Clarion Call of the Club of Rome for regional global governance, as a means of providing security and stability, in a world of chaos, that is coming from derisking and deleveraging out the Banker Regime of Neoliberalism.
Throughout history, God has provided a series of kings and a progression of kingdoms to rule mankind, Daniel 2:31-45, Freedom and Free Enterprise, the Libertarian dream, has come only recently and existed for a brief period, that is from the end of the Revolution War to the beginning of the Civil War. Fate appointed kings have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. And fate is pushing political and economic power of the UK and the US, the two iron legs of global hegemony, into the hands of ten kings, who will eventually come to rule, each in his own regional power base. With this distribution of power to regions, we see the rising of the Ten Toed Kingdom of regional global governance, where rule in the ten toes will be mired in the clay of democracy and the iron of diktat. The coming President of the EU will be one knowledgeable with the scheme of framework agreements.
As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word, will, and way of these two; they will give their full allegiance to their diktat Revelation 13:3-4. Eventually this Lord, will lord it over all other lords, whether they be in the UK or in the US.
December 29, 2011
John more brilliant analysis. Why waste your time though when Cameron is leader??
You should be sharpening your knife and plotting with Mr Cash & Carswell + the other 80+ patriots!
January 11, 2012
The defining feature of the EU elite has,is, and always will be a total lack of interest in anything outside of pure politics concerned with increasing EU integration and undemocratic central control. Unlike in the US and China there is no understanding or interest in economics, markets, risks and innovation and competition to compete in world markets as they have no interest in the world outside of the EU.
To a man they are all navel gazing King Canutes with his attitude but to markets, economics and risks as he had to tides. They really do think that they can set rules and regulations which will make countries economically sound. Again they have no concept that their can be things out of their control.
The EU is guaranteed to become an increasing economic failure because merely ignoring the rest of the world is no answer to the forces of globalisation. As navel gazers they can never address any problems of economics and competition today any more than they could a decade ago when they created the zone. Failure is guaranteed because the navel gazers cannot be replaced because they have ensured there is no democratic means or doing so. That is all part of the design of the EU to resist change. The real world can go hang itself.