Brexit and the waning days of the United Kingdom

[Zanza]

Sure, but there is a long way between saying you now have to make the best of it and arguing that the UK would have been better off outside the EU all along.

[Sheilbh]

Sure, but there is a long way between saying you now have to make the best of it and arguing that the UK would have been better off outside the EU all along.

Yeah. But I think that's probably true. I think we would have been better off joining right from the start and helping shape it or staying out as the 'leader' of the wider EFTA which until Britain joined the EU included the Nordics, Ireland, Portugal and others and enabling a stronger group of 'associate' members.

I think we've always had the worst European policy (from both a Europhile and Eurosceptic position ) of being a bit of a spoiler rather than a constructive, full member. In part because it was always a controversial issue - 1983-1993 is probably the only time when at least a huge minority of one of our major parties hasn't been agitating to leave - and in part because, with the exception of Blair and Heath, I don't think any of our leaders have actually been strong Europeans.

[crazy canuck]

It is more a matter of radicals vs conservatives rather than left vs right. It is perfectly possible for radical ideas to come from either the left or the right. The conservatively-minded will generally resist these new ideas. If an idea succeeds in getting mass support it can become the new norm.

Except we are talking about main stream politics - not the fringes.  Although I grant you the fringes get to make a lot more noise thanks to the internet.  When Churchhill made his quip, socialism was a significant mainstream movement within the left not a radical fringe.  I agree with Sheilbh that ultimately liberal democracy won out and both the right and left moved toward it.  Where I disagree with him is I think we are a long way off from moving away from liberal democracy - but that may be more wishful thinking than anything else. 

[Sheilbh]

I don't think democracy has to be liberal, but should still be supported, and I'm not convinced the last 30 years of liberalism haven't passed their sell-by date. I don't know what we're moving to but something different. For example see the IMF slight critique of neo-liberalism on two points one austerity but more interestingly free movement of capital which they are now worried is actually quite destabilising and causes financial crises. I think it's only a matter of time before we see a return to such a retro post-war policy as capital controls just now it'll be called 'macro-prudential regulation'.

Also you're right but, frankly, the program of most mainstream leftists now isn't a million miles away from the program of mainstream, reformist, ameliorative Social Democracy of the Bernstein and the Erfurt program or the early Labour Party. The SPD had very revolutionary language and sort of forewards but this from 1891 isn't that far from where many on the left would be now. There's always been a tension in the left between an often apocalyptic, revolutionary analysis and a reform based prorgram:

1. Universal, equal, and direct suffrage with secret ballot in all elections, for all citizens of the Reich over the age of twenty, without distinction of sex. Proportional representation, and, until this is introduced, legal redistribution of electoral districts after every census. Two-year legislative periods. Holding of elections on a legal holiday. Compensation for elected representatives. Suspension of every restriction on political rights, except in the case of legal incapacity.
2. Direct legislation by the people through the rights of proposal and rejection. Self-determination and self-government of the people in Reich, state, province, and municipality. Election by the people of magistrates, who are answerable and liable to them. Annual voting of taxes.
3. Education of all to bear arms. Militia in the place of the standing army. Determination by the popular assembly on questions of war and peace. Settlement of all international disputes by arbitration.
4. Abolition of all laws that place women at a disadvantage compared with men in matters of public or private law.
5. Abolition of all laws that limit or suppress the free expression of opinion and restrict or suppress the right of association and assembly. Declaration that religion is a private matter. Abolition of all expenditures from public funds for ecclesiastical and religious purposes. Ecclesiastical and religious communities are to be regarded as private associations that regulate their affairs entirely autonomously.
6. Secularization of schools. Compulsory attendance at the public Volksschule [extended elementary school]. Free education, free educational materials, and free meals in the public Volksschulen, as well as at higher educational institutions for those boys and girls considered qualified for further education by virtue of their abilities.
7. Free administration of justice and free legal assistance. Administration of the law by judges elected by the people. Appeal in criminal cases. Compensation for individuals unjustly accused, imprisoned, or sentenced. Abolition of capital punishment.
8. Free medical care, including midwifery and medicines. Free burial.
9. Graduated income and property tax for defraying all public expenditures, to the extent that they are to be paid for by taxation. Inheritance tax, graduated according to the size of the inheritance and the degree of kinship. Abolition of all indirect taxes, customs, and other economic measures that sacrifice the interests of the community to those of a privileged few.

For the protection of the working classes, the German Social Democratic Party demands, first of all:
1. Effective national and international worker protection laws on the following principles:
(a) Fixing of a normal working day not to exceed eight hours.
(b) Prohibition of gainful employment for children under the age of fourteen.
(c) Prohibition of night work, except in those industries that require night work for inherent technical reasons or for reasons of public welfare.
(d) An uninterrupted rest period of at least thirty-six hours every week for every worker.
(e) Prohibition of the truck system.
2. Supervision of all industrial establishments, investigation and regulation of working conditions in the cities and the countryside by a Reich labor department, district labor bureaus, and chambers of labor. Rigorous industrial hygiene.
3. Legal equality of agricultural laborers and domestic servants with industrial workers; abolition of the laws governing domestics.
4. Safeguarding of the freedom of association.
5. Takeover by the Reich government of the entire system of workers' insurance, with decisive participation by the workers in its administration.

[Zanza]

1. Universal, equal, and direct suffrage with secret ballot in all elections, for all citizens of the Reich over the age of twenty, without distinction of sex. Proportional representation, and, until this is introduced, legal redistribution of electoral districts after every census. Two-year legislative periods. Holding of elections on a legal holiday. Compensation for elected representatives. Suspension of every restriction on political rights, except in the case of legal incapacity.
2. Direct legislation by the people through the rights of proposal and rejection. Self-determination and self-government of the people in Reich, state, province, and municipality. Election by the people of magistrates, who are answerable and liable to them. Annual voting of taxes.
3. Education of all to bear arms. Militia in the place of the standing army. Determination by the popular assembly on questions of war and peace. Settlement of all international disputes by arbitration.
4. Abolition of all laws that place women at a disadvantage compared with men in matters of public or private law.
5. Abolition of all laws that limit or suppress the free expression of opinion and restrict or suppress the right of association and assembly. Declaration that religion is a private matter. Abolition of all expenditures from public funds for ecclesiastical and religious purposes. Ecclesiastical and religious communities are to be regarded as private associations that regulate their affairs entirely autonomously.
6. Secularization of schools. Compulsory attendance at the public Volksschule [extended elementary school]. Free education, free educational materials, and free meals in the public Volksschulen, as well as at higher educational institutions for those boys and girls considered qualified for further education by virtue of their abilities.
7. Free administration of justice and free legal assistance. Administration of the law by judges elected by the people. Appeal in criminal cases. Compensation for individuals unjustly accused, imprisoned, or sentenced. Abolition of capital punishment.
8. Free medical care, including midwifery and medicines. Free burial.
9. Graduated income and property tax for defraying all public expenditures, to the extent that they are to be paid for by taxation. Inheritance tax, graduated according to the size of the inheritance and the degree of kinship. Abolition of all indirect taxes, customs, and other economic measures that sacrifice the interests of the community to those of a privileged few.

For the protection of the working classes, the German Social Democratic Party demands, first of all:
1. Effective national and international worker protection laws on the following principles:
(a) Fixing of a normal working day not to exceed eight hours.
(b) Prohibition of gainful employment for children under the age of fourteen.
(c) Prohibition of night work, except in those industries that require night work for inherent technical reasons or for reasons of public welfare.
(d) An uninterrupted rest period of at least thirty-six hours every week for every worker.
(e) Prohibition of the truck system.
2. Supervision of all industrial establishments, investigation and regulation of working conditions in the cities and the countryside by a Reich labor department, district labor bureaus, and chambers of labor. Rigorous industrial hygiene.
3. Legal equality of agricultural laborers and domestic servants with industrial workers; abolition of the laws governing domestics.
4. Safeguarding of the freedom of association.
5. Takeover by the Reich government of the entire system of workers' insurance, with decisive participation by the workers in its administration.

They were quite successful implementing their program in the last 125 years. It's interesting that they had such a strong grassroots view with elected judges and popular referendums. The current SPD doesn't seem particularly keen on those.

[The Brain]

Swedish former Communist leader and major fuckface CH Hermansson died recently at 98. The Swedish political establishment wept in the press. Some ciriticism from the "conservative" paper Svenska Dagbladet, but the rag also published an apologist pointing out that Hermansson stopped supporting Stalin in 1956 (!). I will not weep if the left perishes.

[Sheilbh]

They were all over Europe.

But sat watching the Labour (the only social democratic party in Western Europe founded on an explicitly reformist basis) battle it's weird to look back at the great revolutionary program of the Second International era parties

[celedhring]

I was looking for the old euro crisis thread but I can't find it, and this looks like pretty much the successor thread. So here it goes.

The Commission has finally dropped the proceedings against Spain for excessive deficit. The fine was supposed to be up to 0,2% of our GDP and freezing of structural funds. See, the conservatives tried to buy themselves a majority by lowering taxes in the election year, and we failed to meet deficit targets as a result (although I don't think we have ever met deficit targets since the whole thing exploded back in 2010).

Thing is, I can't think of any stupider punishment for a country struggling to balance its books than a fine that's measured in GDP terms.

So at the end of it all, the Commission has found itself with a punishment that couldn't be enforced, and as a result the credibility of the Stability Pact has been eroded.

[The Minsky Moment]

Thing is, I can't think of any stupider punishment for a country struggling to balance its books than a fine that's measured in GDP terms.

So at the end of it all, the Commission has found itself with a punishment that couldn't be enforced, and as a result the credibility of the Stability Pact has been eroded.

Wash rinse repeat.

[Berkut]

I was looking for the old euro crisis thread but I can't find it, and this looks like pretty much the successor thread. So here it goes.

The Commission has finally dropped the proceedings against Spain for excessive deficit. The fine was supposed to be up to 0,2% of our GDP and freezing of structural funds. See, the conservatives tried to buy themselves a majority by lowering taxes in the election year, and we failed to meet deficit targets as a result (although I don't think we have ever met deficit targets since the whole thing exploded back in 2010).

Thing is, I can't think of any stupider punishment for a country struggling to balance its books than a fine that's measured in GDP terms.

So at the end of it all, the Commission has found itself with a punishment that couldn't be enforced, and as a result the credibility of the Stability Pact has been eroded.

Yes, that is clearly the fault of the voluntary organization trying to enforce the rules set up by the very entities breaking them!

[Sheilbh]

They were quite successful implementing their program in the last 125 years. It's interesting that they had such a strong grassroots view with elected judges and popular referendums. The current SPD doesn't seem particularly keen on those.

It is interesting that they never tried to implement any of that sort of thing in Weimar when I think they did implement a lot of their other 'political' points. I imagine now part of the reason in Germany is the Nazis, but I wonder if, in 1918, the SPD were looking at the council communists, the Russians and the like and shying away from it?

I was looking for the old euro crisis thread but I can't find it, and this looks like pretty much the successor thread. So here it goes.

The Commission has finally dropped the proceedings against Spain for excessive deficit. The fine was supposed to be up to 0,2% of our GDP and freezing of structural funds. See, the conservatives tried to buy themselves a majority by lowering taxes in the election year, and we failed to meet deficit targets as a result (although I don't think we have ever met deficit targets since the whole thing exploded back in 2010).

Thing is, I can't think of any stupider punishment for a country struggling to balance its books than a fine that's measured in GDP terms.

So at the end of it all, the Commission has found itself with a punishment that couldn't be enforced, and as a result the credibility of the Stability Pact has been eroded.

Sensible decision so hopefully that's a useful precedent for Eurozone policies. Striking that apparently Schaueble was calling round EPP Commissioners to encourage a 0% fine.

Also probably a better decision to formally sanction Spain and Portugal but then levy a €0 fine than not to formally sanction them as happened with France which is also in breach. Though I admire Juncker's honesty when he was asked why France wasn't being sanctioned and answered 'because it's France.'

[Sheilbh]

By the by, interesting blog by Bagehot/Jeremy Cliffe on our new interventionist mood:

Theresanomics
Britain's newly interventionist economic consensus is a question, not an answer
Jul 31st 2016, 16:09 BY BAGEHOT

FOR much of the past two decades, a consensus has defined Britain's industrial and labour policies; a theory of the country's place in a globalised economy and of what it does best. It spans politicians of the left (from Peter Mandelson to Ed Balls and even Ken Livingstone as he ran London) and of the right (Margaret Thatcher, Michael Portillo, George Osborne and most of those around them). It is a tome to which most recent arguments about regulation and economic reform are merely annotations.

The story goes something like this. Compared with, say, Germans, Britons are poor at making things. Especially when they have to fund and manage that process themselves, rather than contract it to foreigners. When it comes to buying machinery, making it work, training specialist technicians to operate it and keeping the whole caboodle profitable over many years, Britain is not so hot. It is, however, good at doing stuff for people. Want to start a cleaning business, a restaurant or a call centre? In Britain you can do it cheaply and easily. Want to trade derivatives, provide legal advice or design advertisements? London, Manchester, Leeds, Edinburgh... take your pick. Need a new anti-cancer drug or software programme? Cambridge, Swindon, Cardiff await your investment. Indeed, a big part of all this is Britain's ability to hoover up foreign cash and offer an attractive meeting-point where firms from third countries can come and do business.

Beneath the skin is a structural analysis sometimes (though not always) referred to as "Varieties of Capitalism". At its core is the observation that, for historical and cultural reasons, different sorts of Western market economy have developed different strengths that tend to reinforce each other. Germany, Sweden and Japan sport collaborative labour relations, rigid jobs markets, patient capital, whizzy applied-technology centres, vocational education systems and a risk-averse culture. These interlock and make those countries good places for manufacturing. They are best at plodding but fiddly tasks that it takes a long while to learn and investments that pay off only over time. Britain, America and Ireland have a different eco-system: based on fast and fluid investments, generalist skills, strong research universities, a risk-taking culture and a liberal, adversarial corporate governance regime. This most promotes fast-moving, mostly office-based industries with sparklier rewards and scarier risks.

Britain's governments over recent years have tried to accentuate its strengths. They have been exceptionally open to foreign trade and investment, have calibrated regulation and foreign policies according to the needs of the City of London, have kept the country's product and labour markets the most liberal in the EU, have first rolled back (Thatcher) and then kept rolled-back (Major, Blair, Brown, Cameron) the role of organised labour. That has had pros and cons. It leaves some British workers poorly protected and forced to compete on price in low-skill service jobs; it means heavy exposure to financial shocks and migration surges. But it also underwrites low unemployment and a large, lucrative pool of employment in high-end service jobs, some of the prosperity from which trickles down (though too little to correct what is, by European comparison, an hourglass-shaped society). An imperfect settlement, certainly, but nonetheless one for which many countries would trade their status quo and which could be very much worse.

Yet the consensus is slipping. For the first time since the Thatcher years, both main parties are questioning it. On the right, Theresa May has committed to restricting foreign takeovers, putting workers on company boards, meddling in executive pay and (further) cracking down on immigration. From Ed Miliband, the former Labour leader, she has lifted "predistribution": the notion that the state should crank up incomes through regulation, rather than topping them up with welfare. Mrs May has also pooh-poohed Mr Osborne's bid to turbocharge cities like Manchester and has created a department for "industrial strategy", a term that often implies ministers deciding which sectors are grooviest at a given moment and always implies a cosier relationship between firms and the state. And she has halted plans for a new, Chinese-backed power station.

Meanwhile on the left, Owen Smith (the more centrist of the two resolutely left-wing candidates for Labour's leadership) wants to tighten up the labour market, increase taxes on high personal earnings and investment incomes and create a Ministry of Labour. None of the other parties, from the Liberal Democrats and the Greens to UKIP and the SNP, seems to think very differently. As Matthew Parris pointed out in the Times yesterday, this outlook is taking hold in the country at large: "Inch by inch, we economic liberals may be losing ground."

That many want to rub capitalism with sandpaper is understandable. Britain's red-in-tooth-and-claw economic model has meant precarious work for millions. It generates greater inequality and worse living standards than the German model. Though it need not be, it is synonymous with a run-down public sphere: closed libraries, dirty streets, overpriced housing, overcrowded and unreliable public transport and a poor work-life balance. It can be especially unforgiving to post-industrial towns. It threatens to make the country too reliant on the whims of autocratic political and business leaders in Beijing, Moscow, Dubai and the like. The Brexit vote, the biggest shock to Britain's place in the world since Suez (and perhaps before then) was in many ways an itch to these rashes. It is right that the country's leaders should ask the obvious questions.

But questioning is all they are really doing. Mrs May and Mr Smith talk as if their corporatist, or christian democrat, or social market (or whatever you want to call them) proposals had never occurred to their predecessors. Most of all, the new consensus—Theresanomics?—thus far fails to offer an alternative to the imperfect but buccaneering model that has dominated policy-making for the past decades. Have Britain's strengths been overrated? Does the country have other strengths, waiting to be tapped, that others have missed? Is Britain, culturally and structurally, less different from its northern European neighbours than previous governments have recognised? Perhaps the answer is yes. If so, let Mrs May and Mr Smith and those of a similar bent give forth. But thus far I am unconvinced. When I asked Professor David Soskice of the London School of Economics, one of the fathers of the Varieties of Capitalism school, whether it made sense to look to northern Europe and Asia for a model of political economy Britain could emulate, he demurred: "No, I don't think it does. I think we should look to the United States, which has a capitalist system much more similar to ours."

This matters for two reasons. First, however desirable a shift may be, there are big reasons to doubt whether Britain, the quintessential "liberal market economy" (or LME as the Varieties of Capitalism theorists categorise it), is temperamentally suited to the structures and norms of a Germanic "coordinated market economy", or CME. Second, there are plenty of ideas in the ether that would help address Britain's problems while working with, not against, the grain of its existing, LME model: for example, Mr Osborne's attempt to knit together the big northern cities, measures to help workers in a fast-moving economy retrain and relocate, reforms to boost and improve the quality of university attendance (even at the expense of the country's perennially flaccid apprenticeship system), a trade policy focused on selling the City to China, perhaps even some first moves towards a negative income tax or citizen's income. Or in the words of Nick Pearce, a former 10 Downing Street policy head to whose fine blog post on Mrs May and Varieties of Capitalism I am indebted: "May would do better just to loosen the spending taps, and invest in infrastructure, R&D and skills, while leaving corporate governance reform, industrial strategy and regional policy to Heseltinian romantics."

The point is: Brexit has thrown much into the air. Britain, it is true, needs a detailed debate about its economic future. But the terms of that debate matter. If there are good reasons for the country to try to jolt itself out of its LME eco-system and into a CME one, let Mrs May and her fellow travellers produce them and let Britain conceive its future accordingly. But if there are not—if Britain's current model is indeed path dependent and ineluctable, if Mrs May and Mr Smith are letting ends obscure means—then the country needs a very different discussion: about how it can make the best of its existing strengths. Time for answers.

[The Brain]

Germany, Sweden and Japan sport collaborative labour relations, rigid jobs markets, patient capital, whizzy applied-technology centres, vocational education systems and a risk-averse culture. These interlock and make those countries good places for manufacturing. They are best at plodding but fiddly tasks

We're great lovers.

[The Minsky Moment]

By the by, interesting blog by Bagehot/Jeremy Cliffe on our new interventionist mood:

I'm wary of these kinds of cultural/institutional arguments.  From 1970 to 1993, manufacturing as a share of GDP in Germany declined from about 34% to 23%.  That decline in manufacturing share matched the rate of decline by the US over the same period.  After 1993, however, the manufacturing share in Germany stabilized at 22-23% for the next two decades, where they remain today.  Since all the German cultural/institutional differences people often point to were in place during the 1970s - such as codetermination and apprenticeships - it is by no means clear these are the key causal factors. I do note the most significant events hitting the German economy in the early and mid 90s were integration with the east and entry into the currency arrangements that would eventually become the eurozone.  The net effect of those events, later reinforced by Hartz, was that Germany enjoyed (and enjoys) the benefit of a currency that is relatively undervalued for German fundamentals, and the German domestic economy has been characterized by relative wage restraint.  That's a good combination if the goal is to have a successful export-oriented manufacturing sector.  It also helps to have effective national health insurance and decent physical infrastructure.

[The Minsky Moment]

Rolls still makes aircraft engines in Derby.  That's pretty fiddly.