Saturday, 2 July 2016

Just Like The Kernel Of Wheat In Jesus' Parable, The Dead Seeds Of The EU Must Be Sown Into The Earth

Today, thousands of people with scant regard for democracy are marching through London to protest against the democratically voted for referendum decision to leave the EU. Putting aside the issue of valuing democracy, the people who voted Remain, and the people who voted Leave that are now regretting it, are worried about the future post-Brexit. They should not be, particularly once they get a handle on the bigger picture that extends several decades henceforward.

Sometimes a little bit of pain is required to prevent even more pain. If your young child comes to you with a splinter in his thumb, you know the best way to deal with it is to get it out from the under his skin straight away by pressing down on it with your fingernail.

Your young boy may resist the added pain, but you know that what is causing him that extra pain is actually reliving him from worse pain, soreness and possible infection in the long run. This is what is happening with our leaving the EU - we are getting out at a time when very few people understand that it is a gradually crumbling empire, and that in its current state it is going to have to eventually die before its constituent nation states can live.

Brexit will almost certainly set off a domino effect of other nations joining us with their own exit in the next few decades. It will be a slow dismantlement of the EU, but it is almost inevitable that it will happen, for reasons I talk about in greater detail in other Brexit-related blog posts

Don't misunderstand, I have no time for all the anti-immigration bile going around, and I'd hope that when the other nations follow suit and join us outside the EU that they'd do so because they can see how even more prosperous our nation becomes with independence, not under the influence of the plethora of extreme right-wing parties gathering momentum in the north-western European countries. But for the good of the continent, individual nation states need to save the EU from itself: it is stagnating, it is unsustainable by being inimical to growth, and no nation past or present that has copied its model has seen anything other than economic disaster.

Playing the long percentage game, with the exception of Germany, France and possibly Belgium and the Netherlands if things go their way, the majority of the EU countries are almost certainly going to trail behind the world's emerging nations in the next few decades, and it's for five main reasons.

Firstly, in a wider global market with most countries more actively involved than ever before, cross national competition is going hinder set-ups like the EU that impose tariffs against imports from non-EU countries.

Secondly, the market for consumable goods is steadily shifting away from Europe towards Asia, which will give them the advantage in the market for future consumables too.

Thirdly, the single currency (the Euro) ultimately works far better for Europe's big players - but it is in many ways a hindrance for the rest, which means Germany (in particular) is going to be involved in a lot more Greece-like scenarios as the predominance of the market shifts Eastward.

Fourthly, and this is a development of the second and third points, as the market predominance shifts Eastward, the quantities of advanced engineering products that Germany, Belgium and the Netherlands sell to China are going to diminish as China becomes the leading player in advanced engineering in the next two or three decades. And this won't necessarily be the case, but the yuan is the only realistic trading currency in the world that could become a gold standard.

Fifthly, the whole continent of Europe has a serious fiscal crisis in that it is catastrophically failing to restrain the pressures of increasing government spending with an ever-aging population. The tax burden necessary for a society of this kind is going to be severely detrimental to the economy even if it were a free trade area with the removal of barriers.

However, given that it's not a free trade area, it's a customs area under the thumb of a political superstructure that erects a common tariff bloc around its member nations and robs them of open trade with the rest of the world, I think we can replace the word 'detrimental' with the word 'ruinous' economy.

Forget for a moment about the world we do actually live in - the one where politicians, bureaucracy and establishment-interference is ingrained in our expectations - and consider this question. Why should the UK leaving the EU cause any market instability at all? To answer honestly is to admit that, it shouldn't, and that what's causing the bulk of the problems is the size of the interference in free trade of the politicians, bureaucracy and establishment-interference in the first place.

The moment we decided to leave the EU, nothing about the UK's productivity or its businesses' ability to create value changed. It's as not as though there was a national flood that drowned out the UK's commercial activity. When everyone awoke the following day they woke to the same physical UK. The big thing that changed, however, was that the EU, which regulates countless details of our exchanges became, in potentia at least, a different kind of obstacle for buyers and sellers to trade freely.

Moreover, the attitude of Eurocrats since Brexit was announced gives exhibition to the very reasons it was good to leave them in the first place. The reaction to the prospect of their not having such a big say in our lives, plus their threats of even bigger impediments to our free trade by further taxes, tariffs and social restrictions, demonstrates not just why we're better off out, it also gives a future hint of the fragility of the foundations on which its structure of constraint is built.

As long as each domestic government oversees the basic necessities of light regulation to protect consumers from any of the undesirable things that might affect a mutually voluntary transaction (trades description issues, health and safety breaches, quality of product, and so forth) - basically all the things that we as consumers wouldn't wish to be victims of due to asymmetry of information - there is absolutely nothing that prohibits mutually voluntary and beneficial trade between two people or two nations except the unhelpful constraints imposed upon them by politicians, bureaucracy and establishment-interference.

What we are in danger of is a self-fulfilling prophecy of doom, whereby pontificating about how troubled economy is going to be creates an insidious social instability which affects business and outside investment, which precipitates the more troubled economy for which everyone was blaming the opposition.

What we need, however, is to be smart and resolute, and understand that the freer we can be in becoming even more of a global trade power, the less turbulence we'll see in our economy, and the more other EU nations will begin to see how, in extricating ourselves from the union, and enjoying more mutually beneficial trade relations and increasing our status as dominant global economy, they too can follow suit and help signal the beginning of the end of many of the ways that politicians, bureaucracy and establishment-interference place unnecessary constraints on our lives.

Mark my words, here is what's going to happen - and I probably will be quoting this in a few years' time. After the expected volatility and instability over what people seem to be referring to as 'uncertainty', England (possibly without the union of Scotland, Wales and Northern Ireland, although they'd be mad to divorce us to become wedded to the crumbling EU) will be thriving with their improved global trade relationships, and perhaps (if our leaders are wise) a healthy attitude in not restricting the movement of people, goods and services in Europe.

Then, bit by bit, as the EU political union becomes ever-more precarious, and as more and more countries start to desire autonomy and obtain the domestic economic stability to break away*, the EU as we know it will fold in on itself, as Europe's nation states gradually claw back their ability to play to its market strengths outside the EU bloc, and as everyone gets wiser and wiser to the fact that models like the EU model just won't be sustained for longer than a brief-ish passage in humans' trajectory of gradual progression, less involvement by the establishment in their lives, and increased freedom and liberty.

* No one could have failed to notice what the Eurozone crisis has done to the likes of Greece, Italy and Spain.