Mr Miliband has plunged into the politics of identity, by telling us he is proud to be English. He has also apologised for Labour’s past, which he tells us was not good at cherishing or promoting England’s identity.

        The amusing thing about his foray was the Channel Four interview with him.  It was a great interview. It stuck entirely to Mr Miliband’s chosen topic. It asked a series of simple and good questions. The more he was asked, the less Mr Miliband said. The interviewer had no need to do what they usually do, and go off after some different topic or embarrassment. At the heart of Mr Miliband’s case was no heart, no lungs,  no soul for England. There was certainly no policy for England, no wish to tell the EU that England has a right to a life.

           He was  unable to identify a single English characteristic that could not be said to be a British characteristic as well. His definition of Englishness, a stoicism in the face of adversity, is surely a British characteristic if it is anything. He rules out an English Parliament. He  has still not come round to the better answer, twin hatted English and UK MPs at Westminster with English votes for English issues. He has still not renounced his and the EU’s wish to balkanise England with false regionalism. Labour did its best in office to eclipse England and to set up as much English regional government as possible, to try to distort and twist our sense of identity.

           I would be interested to hear your thoughts on the special characteristics of England. As Mr Miliband had in mind the contrast with Scotland, some of our different culture and characteristics you would have thought were obvious.

             He seemed as tone deaf to Englishness as the BBC were to the mood of the UK as a whole  during the Jubilee. Maybe the BBC were put off by a sea of Union flags, and by the enthusiaism for monarchy. Their chosen presenters were in the main ignorant of our history, ill informed about the pageant, incapable of providing informed commentary and always wishing to take things down to the lowest common denominator. The BBC is usually tone deaf to England, and with their friends in the EU do their best to deny it voice or existence. Over the Jubilee water pageant  they extended the insouciance to the wider nation.

              I am particularly angry with the BBC after hearing Sunday’s interview on the World at One about the Euro’s problems. Three senior people who have constantly urged more European integration, have backed the Euro and in the case of Mr David Miliband thrown away some of the UK’s powers of self government in support of this cause, were allowed long periods to say what they wished in a kind of extended pro EU party political broadcast. They were not asked a single  difficult question. At no point did the BBC think to ask them why the Euro scheme had gone so badly, or to suggest they might be partly responsible for the unemployment, the broken banks, the collapsing economies and all the other disasters the Euro is now bringing. Surely Mr Sutherland, a former Irish EU Commissioner, should have been asked if he now thought the Euro had worked out well  for Ireland?

 

       For many days the markets have known that Spain needs a loan to help bail out her banks. It makes the decision of Spanish Ministers to spend last week denying it all the more bizarre. It is yet another example of the poor EU/member states spin in handling this rolling crisis.

      Spain apparently will receive money for her banks on softer terms than Ireland, yet Ireland also needed to borrow money because of the state of her banking system.  It’s all borrowed money, reflecting past government mistakes in handling state finances. There will be resentment about the different standards applied and the difffering demands.

       A better answer than  more state debts and more collective loans would be to sort out the poor state of some Spanish banks. Future regulatory standards are to be based on living wills. That means selling off the bits of the banks that work and closing down the bits that are overburdened with debt and cannot trade successfully in the future. Those who have financed the banks take the hit. Why don’t they start it now? If it makes sense for a future crisis to do that, why not try it out in the current large banking crisis enveloping Europe today?

 

The UK and the US navies both have eighteenth century wooden sailing ships still in commission. HMS Victory in dry dock at Portsmouth is the icon of the British fleet, a constant reminder of Trafalgar and the glory days of Nelson. USS Constitution, refurbished and afloat in Boston harbour, is the frigate that the British navy could not sink or capture, affectionately known as  “old Ironsides”. She  had  a distinguished career as one of the USA’s first group of six powerful  naval vessels.

The stories of both, paradoxically, are the story of freedom in their own countries. Victory is the most recognised symbol of Britain’s resistance to Napoleon. Britain fought for the small nations and independent peoples of Europe against the French dictator who wished to place all under his rule and continental system. Victory guided by Nelson led one of the two lines of British warships into battle against the more heavily armed and formidable allied fleet of France and Spain off Cape Trafalgar. They achieved the most stunning victory in a battleship encounter from the age of sail. Britain truly ruled the waves. She confirmed her pre-eminence at sea, by showing her ability to defeat two great powers  at the same time. The victory meant Napoleon could not invade Britain with the Grand Army and complete his eclipse of independence and self determination  in Europe.

The USS Constitution claimed to be a frigate. Her keel length, however, was almost the same as that of Victory. Her beam was narrower. Quoted as a 44 gun ship, compared to Victory’s 104, there are other references to her carrying 55 guns on some missions. Victory was 50% heavier than Constitution,but Constitution had sides as thick as 24 inches at the waterline. More importantly, some of her timbers were in American live oak, which is stronger at resisting cannon fire than English oak. As a result, when in wartime exchanges with British ships, the cannon balls fired against her either bounced off or lodged in the sides of the ship, refusing to penetrate fully.

Constitution successfully fought and captured two British frigates, both less powerful than herself, in separate ship actions. She also defeated two smaller English warships  together. She was finally retired with a perfect record of engagements with the enemy. She helped secure the American revolution. She showed that  even at the time of Britain’s maritime supremacy that the USA  had at least one warship which could evade Britain’s most powerful ships, and defeat any British ship smaller than her. This was news to the British navy, which was used to winning against the odds in actions they willingly undertook. The British did succeed in capturing the smaller Chesapeake in 1813, and the powerful but damaged President in 1815, two of Constitution’s five  sister naval vessels of the first US navy.

The  new Republic was to demonstrate a great capacity to wage war and fight for freedom. USS Constitution gave the fledgeling republic a sense of power and capability. The sailors and gunners of Constitution showed huge skill and bravery. They posed a challenge to the crews of British warships far greater than the typical French or Spanish vessel. These defenders of freedom practised sailing and gunnery more, and were good at both.  President was damaged before the final action by sailing error.

 Similarly, the heavily outgunned British fleet at Trafalgar never doubted its ability to win. The British only had 27 battleships with 2318 guns, to the Allies 33 battleships and 2872 guns. The British just believed that their skill at sailing and gunnery would win the day, as it did.

 

            Voters are fed up with austerity. The government is worried about the lack of growth.

            The government’s original plan was to cut public spending whilst expanding the private sector. The acceleration of growth would produce a large increase in tax revenues, which in turn would limit the need to cut public spending to bring the deficit down.

            As readers of this site will know, the fine words of the government ‘s strategy were never reflected in the subsequent  figures. Over the last two years the government has had to scale down its estimates of private sector growth. It has also revealed that it has increased, not cut overall public spending. Despite or because of this, the economy has slipped back into a  second mild recession.

             So what does the goverment need to do to trigger the private sector led growth they promised? Why isn’t the private sector in general, and manufacturing in particular, accelerating as planned?

             The private sector has been hit by three main forces. The first is an absence of bank credit for worthwhile projects and businesses. The second is the high rate of inflation the Bank has presided over, squeezing real incomes and so cutting consumption or demand. The third is a series of tax rises which have harmed enterprise and actually cut rather than increased revenues.

             So what should be done to change this? 

              First, the bank regulators should be told they have done quite enough to give the banks stronger balance sheets. The regulatory controls on cash and capital, which were far too lax in 2004-7, are now far too tight. They should be temporarily relaxed to allow more lending.

              Second, the Bank of England should announce no more quantitative easing, and should start to move interest rates up to closer to the private sector rates already working in the marketplace to normalise monetary policy. The Bank should make clear it will in future be more hawkish about inflation.

              Third, the government should revise tax rates to set optimum rates for raising revenue. Several rates are now above the level to maximise income to the state and need to be cut.

             It would also be helpful if the government did more to cut the costs of regulation on business. They could also stimulate much more private sector infrastructure investment through their licensing and planning decisions on energy, transport and housing.

 

          The mood seems to be changing a little in the two main party leaderships since we held the Parliamentary vote last year to require a referendum on the EU. Then they were both adamant that it was a bad idea. The Conservative leadership said they would provide a referendum should any future powers be conceded to the EU, to be defined by themselves. Labour stuck to its position in government that referendums were undesirable and not needed. They after all gave away massive powers of self government at Nice, Amsterdam and Lisbon, but never thought a referendum necessary.

          Now we read that both leaderships are gingerly considering offering a referendum on the EU. In Labour’s case the aim is probably to offer an In/Out referendum in the hope and expectation that they would win it to keep the UK in. Labour as a party would of course campaign for a Yes vote to staying in on current terms, as these are the terms they signed us up to.  They would hope to split the Conservative party in the process, with many Conservatives campaigning to leave the EU whilst the leadership might be in two minds with some wanting to vote to stay in on current terms if it was that or out completely.

          The strategy is of course risky for Labour, which is why they have not rushed to offer a referendum. There is the risk from their point of view that they could lose the referendum. The British people might vote to come out. There is the near certainty that either way, whatever the result, Labour would be on the less popular side of the argument and would simply end up reminding people just how much power they gave away whilst in office. Labour could win the referendum, but  make themselves unpopular in the process. Some people might vote to stay in through gritted teeth, believing they had to, but not feel good about it.

          The Conservatives also have to think very carefully about this issue. If there is serious talk of offering a referendum on Lords reform- and I am told there is – they need to understand that many people will be amazed that we can have a vote on that, following the vote on how to elect MPs, but still no vote on the big topic that really matters.

                The leadership’s view on the EU is that they want to get powers back from the EU, but are currently blocked from trying by the Coalition agreement. They  concede that the current relationship is not working for the UK, but they probably want to negotiate a less intrusive  relationship that keeps the UK in the EU but outside the Euro core. A premature In/Out referendum makes this a difficult strategy, as the UK electorate will either say pull out or say stay in on current terms before they can renegotiate. Meanwhile many in the Conservative party would welcome an In/Out referendum and will vote to come out.

           The Conservative leadership could offer a twin referendum strategy. It could offer a referendum asking the UK people if they want the government to negotiate a better deal with less intrusive Brussels controls immediately. Labour and Lib Dems would find that difficult to oppose and the UK people are likely to vote Yes in large numbers. That could then give the Coalition government the mandate to demand a new relationship from Brussels, and might be easier to achieve within the Coalition than an In/Out vote. The Conservatives could offer a referendum on whether to accept the revised terms or to leave, once the negotiations had been completed.  That way the Conservative leadership could be on the popular side in the first referendum, and keep its options open on whether to stay in or leave, depending on the terms they obtained in the negotiation. That would provide maximum leverage to get a better deal.

         Those who think an early In/Out referendum is the best answer for Eurosceptics need to be careful. We want to avoid a re-run of 1975, where all three main political parties, the CBI, the TUC and most other main institutions lined up to tell us the EEC would be good for our economy and essential to our trade, leading to a large majority in favour of membership.

 

          As we are talking about the unquenchable thirst for self government amongst the English speaking peoples, it is timely to remind ourselves of the way the USA seized her independence.

          If you visit Boston, the cradle of the revolution, you will find there the techniques of propaganda and memorials to unflinching bravery in the cause of independence. It is an uncomfortable visit for a British lover of liberty. The British government managed to combine being on the wrong side of several of the important issues about taxation, representation and self government, with monumental incompetence in handling its formidable firepower against a small and lightly armed opposition.

          There were always some who favoured a full break from the mother country. Others became radicals as the British blundered. Britain provoked more fury by the colonists through her deeds whilst  showing more vulerability in  battle than her well armed forces should have demonstrated. The British government managed to make superior arms a disadvantage, offering too few concessions too late on each occasion of challenge. They turned many thousands of loyal and bemused Englishmen turned  colonists into independence seeking Americans by their words and deeds.

            Understandably the American historical accounts at the main sites celebrate each victory, and condemn each British use of force when temporarily successful. The story of the thousands of American colonists who enlisted with the British is left largely untold. No true lover of liberty, even a British one, can fail to be moved by the drama, the impudence, the scintillating success of the challenge mounted to remote rule by a small band of dedicated politicians who wanted the right to set their own taxes.

              The revolutionaries used the arrival of tea ships in Boston to stage the very memorable picture of the trade  issues. They  threw the imported British tea into the harbour in a PR stunt worthy of the best. Americans wanted the right to handle their own trade.

              They used the sorry shooting of a few of an unruly crowd in Boston by a handful of  British troops caught in a difficult situation as an example of an unfeeling massacre by a superior army. They turned the costly defeat and overthrow of the colonists lines at Bunker Hill into proof that a colonial militia could take on the British forces. Paul Revere’s famous ride to warn of the approaching Red coats was made the more famous by his unfailing ability to turn out printed versions of very emotional and successful American propaganda.

              Most lovers of liberty agree that people should have a say in how they are taxed and how they trade. The American Republic was founded on those very principles. The strong prosecution of the one sided war by the side weaker on paper showed just what home advantage, and  a just cause can achieve. Many once loyal colonists converted to the cause of independence as they saw how the war was going. The British recruited many more revolutionaries to the cause, both by their inept political response and their hopeless use of force.

 

 

            Getting rid of continental jurisdiction over the UK is as easy an enacting an Act of Parliament.  It was an Act of Parliament that brought in major EU powers. It is through amending or repealing that same Statute that EU powers can be limited or removed.

             England had to do this before. In 1533 Henry VIII was worried about the succession and believed his marriage to Catherine of Aragon to be void, as he had married his brother’s wife. The King wished  English divines to settle the matter without fear of Rome intervening and overruling. The Crown appealed to long history and custom, and to the powers of Parliament, to assert its own authority at the expense of the see of Rome. Parliament willingly passed an Act preventing future appeal of legal cases to Rome or elsewhere overseas. The UK wanted to make its own decisions. Royal will used Parliamentary authority to allow the Crown to end appeals to Rome.

           In language which rings down the centuries Parliament said:

“…this realm of England is an empire, and so hath been accepted in the world, governed by one supreme head and King…

And whereas the King his most noble progenitors and the nobility and Commons of this said realm, at divers and sundry Parliaments…made sundry ordinances,laws, statutes and provisions for the entire and sure conservation of the prerogatives liberties and pre-eminences of the said imperial crown of this realm, and of the jurisdictions spiritual and temporal of the same, to keep it from the annoyance as well as the see of Rome as from the authority of other foreign potentates attempting the diminution or violation thereof…”

         The EU has violated and diminished that imperial sovereignty, confirmed as the King’s by Parliament in 1533 and progressively transferred to Parliament over the ensuing three centuries. What could be corrected by a revolutionary Act in 1533, with some distortion of the past truth about  the power of the see of Rome, could today be corrected by an Act of Parliamentary will. The Commons needs to  invoke  the spirit of English and British independence that was common for three centuries or more prior to 1972.

          Those who say that the UK can no longer be independent because it has signed binding Treaties do not seem to grasp our long history of independence, or understand how Treaties work. Treaties are solemn and binding for the time that they suit the signatories to them. When they cease to suit one or more of the contracting parties, they are renegotiated or renounced. 

                 If the UK wants a different relationship with the EU it merely has to assert some political will. It will either be able to negotiate one more to its liking, or assert one, as Henry VIII did in rejecting appeals to Rome. It would be a less revolutionary act than Henry’s with more history and precedent on its side, thanks no little to the successful change of relationship with Europe achieved by the Reformation.

                Looking out at the sea of Union flags in London over the Jubilee week-end,without  a single  twelve star banner of our EU  membership or servitude in sight, it seems  time for Parliament to awake. Many UK voters want their Parliament to do as the people wish, not as Brussels commands. They want the High Court of Parliament to be the ultimate source of authority in many areas. They dislike the new fashion of appeal to a distant European court to find out what we are allowed to do.

 

         I am breaking off from my series on the EU for a day or two to deal with the demand for some response to Mr Krugman.

           I agree with Mr Krugman that we need more econ0mic growth. We need it to create more jobs in the US, the UK and the rest of the EU. We need it to raise living standards. Like Mr Krugman I am no fan of austerity.

           I also see Mr Krugman agrees that the Euro was a badly designed currency. He and I agree that there have been major imbalances between various states in Euroland, with no easy way of correcting the large balance of payments and banking imbalances that have built up thr0ugh the foolish design of the system. He has pointed out that Florida, after a housing bubble, received 4% of its GDP in the form of enhanced federal transfers. This is aid on a scale unknown within the Eurozone, where the richer areas are reluctant to subsidise the poorer areas. I have always argued you need a banking, budgetary and payments union to make a success of a single currency. Alternatively they need to get on and break it up quickly and cleanly.

             Where I find Mr Krugman less convincing is in his belief that a country deeply in debt can simply borrow more or print more to create sufficient extra public sector demand to get back to rapid growth. He believes that most of the UK deficit is cyclical – that it will vanish once we have fuller employment. He further believes we can get to full employment by printing and spending more in  the public sector, without triggering an inflation which could  damage the private sector . Such an inflation could more  than  offset  or swamp the beneficial effect of more public spending on demand. Any analysis of past UK recoveries would lead people to doubt this idea.

           Mr Krugman does not agree with those in the UK who say that President Obama has got it right by administering a big public sector spending boost which has led to faster growth. He is very criticial of the US for cutting too far too fast. He points out that since the middle of 2011 US real government spending per head has been falling. Despite or because of this the US economy has grown reasonably for the last three quarters. Meanwhile the UK, where real public spending has been rising, has experienced two quarters of decline in output. Not all of the differences in spending levels are the result of cyclical effects.

            If we look at the UK’s recovery from the 1981 and the 1991-2 recessions, we will see that in each case the government cut the growth rate of public spending and the economy started to grow more quickly. On each occasion commentators and the Opposition united to say that public spending was being cut savagely and too far.  In each case the move to decent growth came from a good increase in private sector consumption and investment.

            In 1981 output fell 2.5% whilst public spending was constant. In 1983 compared to 1982 real public spending rose by just 0.5% whilst investment and consumption expanded to give an overall growth rate of 2%.

           In 1991 output fell 2.5% whilst public spending rose by 3.25% in real terms. In 1992 real public spending came down  by 0.25%, and rose by the same amount in 1993. By 1993 the economy was growing at 1.25%, and by 3% in 1994.

           On both occasions of recovery the government felt it had to set out a path for cutting the level of public borrowing, to prevent high interest rates doing more damage to the larger private sector.

             Growth came from a change in the stock cycle, from a pick up in private sector investment, and from increased consumption. Any or all of these could have been hit by a loss of market confidence in the public finances, leading to crisis interest rates.

               This time there are some differences. The first is that the loss of output in the recession was far larger than in 1981 or 1991-2. The second is the level of public spending and borrowing is so much higher relative to the size of the economy, than in the earlier periods. The Public Sector Borrowing Requirement was 2.75% of GDP  in 1982-3, and 5.75% in 1992-3. The third is the banks are under much stricter regulatory requirements to cut loans and reduce credit to the private sector than in previous periods. The fourth is official interest rates are much lower. Then as now, sensible commentators and Ministers allow some  extra borrowing to accommodate  the impact of lower activity.

             Mr Krugman would doubtless argue that the magnitude of the output loss coupled with the savage deleveraging of banks in the private sector is a good reason to demand even more extraordinary measures to increase spending and borrowing in the public sector further. I would argue that we need instead to look at the intensity of the private sector squeeze, and do more to alleviate that. The combination of large tax rises and continuing high inflation for many basics have squeezed the UK private sector badly, and left it so far unable to trigger the bounce back that has characterised previous recoveries. We need work on tax levels and banks, as I have argued here, with continuing pressure to improve productivity in the public sector.

 

 

 

The main argument that advocates of our current EU relationship advance is that we do more than half our trade with the EU so we have to maintain full membership to keep all those jobs. It is the most stupid argument in current UK politics. It is extraordinary that it has been trotted out uncritically for more than fortty years, and still many in the media fall for it.

It is often based on the lie that more than half our trade is with the rest of the EU. This figure ignores our very profitable trade in services, where well over half is with non EU countries. It ignores the Rotterdam and Amsterdam entrepot effect, where trade with the rest of the world passes through these large ports and is counted as EU trade when it is with places further away.  It fails to take into account that our trade with the rest of the EU is in heavy deficit, whilst our trade with the rest of the world is in good surplus.

Worse still, it assumes if we tried to change our relationship or if the UK electors voted to leave, that trade would be lost. Are they seriously suggesting Germany would no longer sell us BMWs and Mercedes? Do they think we could not manage by buying cars we make here, if they will no longer sell us cars they make over there?

Do they not grasp that EU countries are signatories to international agreements on trade which would prevent any such interference in trade with the UK?  Why do they wish to bind us into close union with countries which they think have such ill intent towards us that they would seek to damage trade with us as revenge for our wanting more independence?

It is all absurd. The rest of the EU has too much to lose from its lucrative UK trade to want to damage it, and would be restrained anyway by the legal requirements of the international trading system.

They sometimes go on to argue that we need to be inside to have influence over the rules and regulations that apply to goods and services we supply to the rest of the EU. We have no such influence over the rules and regulations imposed by the US or China on our trade with them, but they never argue we should join some type of political union with these countries to sort this out. The problem with belonging to the EU is that we need to apply EU rules not just to goods and services we supply to other EU countries, but they also  make us apply them to products we want to sell to third countries. As often the UK ends up with more rules and regulations than it wants or needs, this can make it more difficult to sell outside Europe.

 

Two arguments are constantly recited by the defenders of our current EU entanglement. Today I wish to deal with the more serious, the proposition that the EU is necessary to prevent wars in Europe.

This argument looks to some  at first to be attractive and well based. After all, say its proponents, Europe was torn apart by two long and damaging wars in the first half of the twentieth century. Who wouldn’t want to avoid that again? They go on, emboldened by the general agreement that European wars are a bad thing, to point out there has been no recurrence of major European war since the EEC and the EU were formed.

This is rather like arguing that we need to belong to the EU to keep horses and carts off our streets. In the nineteenth and early twentieth century our streets teemed with them, but since joining the EU they have disappeared.  The obvious rejoinder to both arguments is that membership of the EU has nothing to do with much of Europe being at peace, nor with how many horses and carts there are.

After 1945 the European world was radically changed in many important ways. West Germany was created as a democracy and decided to become a peace loving country with no aggressive military machine. Occupying forces also remained in Germany for the first 45 years after the  Second World War  to make sure the new Germany was a peace loving state with no means to invade others. The US army above all else acted as the new guarantor of European borders. It was also there in case any other country  decided against peaceful co-existence with Germany.

Gradually the major western countries all became democracies. They wished to pursue policies of peace and trade with the neighbours. They also had to live in a  world where the UN and the US acted as policemen for agreed borders drawn up after 1945. Plucky Belgium was never likely to invade France nor did the Netherlands have military ambitions in Germany.

With the UN, the US presence, NATO, and peace loving western governments, there was no danger of war in western Europe. The UK has not had territorial ambitions on the continent of Europe for more than a century. The UK did not need to join the EEC to remain peace loving nor to ensure it was free from invasion threat. Its membership of NATO and the UN gave it additional security, though this  was not needed against the members of the EEC.

I would turn the argument about the EU and war around and say there is more danger of a European war with the EU than without it. If the EU is about a peaceful Europe, why then does it wish to arm itself? What need has it of an army, unless it envisages military action? How could we be sure this force would only be for interventions outside Europe’s borders? After all, the EU has already attempted through member states to intervene in Balkan wars, and has expressed strong views on how the Balkans should be settled. Some would say EU interventions in  the Balkans did not always assist the peace.

I would be more willing to accept the argument that the EU is a force for peace if the EU stopped preparing for war.  I would find it less absurd as an argument if the EU refrained from wanting a military machine, and if it kept out of sensitive European political issues which stir up tensions over belonging and nationhood. It needs to  soothe them down, not stoke them up by injecting more division and another layer of split loyalties . Inserting a new and clumsy power into the old cauldron of  identity politics on the continent is far from helpful for the peace.  We see how the Euro, one of the drivers of more integration, is becoming a force for disharmony and tension between the member states.