Thursday, June 29, 2006

The EU yet again: and ideas for Britain

There's been a lively discussion in the comments to my last post. I will just distill a couple of the comments which relate to how I see Britain and its relation to the EU.

Our desire to join the EEC was because Britain had severe economic problems (we had to devalue the pound in 1967, so severe were these problems). The reason for these problems was essentially threefold:
  1. We had just fought WWII. The country was given over to a total war economy.

  2. The Empire, which was essentially a trading area was collapsing or being wrapped up (partially at the insistance of the US).

  3. We turned down the Marshall Plan loans offered by the US (which, of course, France, Germany and others took). Thus their economies were flourishing (albeit on cheap credit) whereas that of Britain's was foundering.

    EDIT:I was wrong: we took a look of cash (thanks to the commenters who pointed that out). However, as was also pointed out, our fucking stupid politicians (mainly Labour, natch) pissed it away on cachet, face, tea and pink wafer biscuits. The fucking tossers.


The massive increase in state spending that accompanied the Welfare State didn't help: taxes were raised sharply at a time when businesses were having to spend money on wholesale restructuring.

Unfortunately, that fat fuck Heath—a man who I would happily have dropped down a dark, deep, water-logged mineshaft. With sharks in*—and who negotiated our entry into the EEC was so desperate to join that he did so on massively unfavourable terms. France, in particular, said "no", so Heath kept offering concessions until they said "yes". This was a disaster and did not, in any case, bring the hoped-for recovery as any cursory study of the 70s economy will tell you; I am thinking particularly of the 1976 IMF crisis and the Winter of Discontent in 1979 (the latter of which, incidentally, Neil Harding maintained he barely noticed. He must have been the only one).

Rubbish piled up in Finsbury ParkAn iconic image of the Winter of Discontent: piles of refuse are dumped on the paths of Finsbury Park in London during a strike of refuse workers.

The main problem, of course, was not the EEC; it was the fact that we were still based on a "goods" economy. Unfortunately, even then, other people's goods were either cheaper (Japan, which embraced mechanisation) or far better (Germany). The government was shoring up these companies (by effectively owning them) and were subject to the whims of the unions whose demands continued to ensure that those companies remained uncompetitive.

Luckily, Thatcher came along (contentious, I know); she broke the unions and privitised the "goods" companies. Predictably, being deeply uncompetitive, they either went bust, downsized or were bought over. Britain started to turn towards a "services"-based economy.

Unfortunately, what has continued to stifle our economy is the huge range of expensive regulation emanating from the EU (and we seem to be the only ones who obey them). It is the EU itself, and the mindset of central state control, which is hampering our economy, not the "Empire mentality".

Release these shackles and embrace free trade and we would be essentially what we were when the Empire existed: a trading hub, bridging all nations and powerblocs. Or this is, at the very least, what we should be aiming for.

Remember, had we been able to negotiate in 2003, we would now have free trade with the US and, assuming that this Civitas briefing is correct (and I believe it is since I have argued on precisely the same grounds myself for some years) the EU: that would have been an amazing starting point, don't you think?

Let us supose that Civitas is right and that withdrawal from the EU would carry no trading penalties: let us also assume that in 2003 we were out of the EU and had been able to take up the US on their offer of free trade.

We buy US goods, add our own premium on them (whether by handling, etc.) and seel them on to EU countries (at under tariff rates). Or, of course, vice versa (i.e. flogging EU goods to the US).

Then we start to approach the emergent economies: let's take China. They need technical and services expertise, which we sell to them. We buy their manufactured goods, which we need. We also sell their goods in the EU (avoiding all of those nasty quotas that so upset them last year).

We become, if you like, the clearing house of the world. Plus, of course, as Timmy points out, it is imports that make us rich, not exports.

Next we start opening up the African markets: utilising the extraordinarily cheap labour and, in turn, building infrastructure to enable easier trade (it is not uncommon for companies building big factories to invest heavily in the infrastructure surrounding the site). We will also, of course, sell services such as mobile phones (which apparently boost the economy by some masssive amount) and the concurrent network infrastructure.

Coupled with a low(er) tax policy, we could attract massive amounts of inward investment, since we will have a foothold in at least two (the US and EU) of the world's biggest markets. We will also, ideally, be in cahoots with China and India and harnessing the power of the Third World nations, gradually bringing them out of their mediaeval existence.

In Africa, as big companies start to object to their workers (representing investment) being beaten up or simply disappearing, the political systems will have to improve. Any attempts to seize private property in those countries will be backed up by the ill-concealed threat of violence from a re-invigorated army (and one that is working in Britain's interests, not those of the US).

ENERGY: a couple of ideas for an increasingly pressing problem.
At the same time, we start to pursue an active energy policy, combining nuclear with installations such as LIMPET generators, two of which (on Islay and The Faroes) are already feeding electricity to the National Grid. After all, we have an awful lot of coastline capable of generating electricity and LIMPETs can be built on shallow coast (Islay) or into high cliff-faces (The Faroes).

We should also start investing far more heavily in the hydrogen economy via zinc oxide powerstations and hydrogen fuel research (which we are actually doing at St Andrew's uni, amongst others). The end aim is to become both energy independent and non-reliant on oil for anything other than manufacture (e.g. of plastics).

Next, we encourage companies to invest (through tax-breaks or whatever) in the next big project, the space elevator. The Liftport Group, a private consortium in the US has the contacts but could always do with funds. When the elevator is built the returns will be huge. We also look into and start acquiring mining rights on asteroids, etc.

There, that will do for starters...

See also: Wither Great Britain? and The EU: What's It Worth?

* I can't claim credit for this phrase. It comes from Grumpy Old Men by David Quantick. Which my father gave me for Christmas.

6 comments:

The Remittance Man said...

Neil Harding claims to have barely noticed the Winter of Discontent?

How did he acheive that? The only reasons I can think of are that he was either brought up in some country mansion shielded from real life by his family's inherited wealth or he was brought up on a municipal rubbish tip and the garbage filled streets felt quite homely.

Perhaps Mr H would care to enlighten us?

RM

Devil's Kitchen said...

RM,

Yes, in the comments here.

"As for the winter of discontent (I lived through it and hardly noticed), it was grossly exagerated by our press. The 3 day week under the Tories (Edward Heath) was far more of an inconvenience for most people. I remember constantly having to go and buy some more candles."

Extraordinary.

DK

Anonymous said...

Interesting that Neil Harding remembers that the 3 days week occurred under Heath but doesn't choose to recall why there were Power Cuts. I wish I could remember exactly why the government forced Power Workers to ration the power or why the succeeding Labour Government forced soldiers to play at Fireman Sam. What's the word - begins with beer and sandwiches and ends in I-O-N?

Anonymous said...

Are you sure about your point 3, We turned down the Marshall Plan loans offered by the US (which, of course, France, Germany and others took). Thus their economies were flourishing (albeit on cheap credit) whereas that of Britain's was foundering?

I'm hardly an expert in that period of history, but according to Wikipedia, we were by far the largest recipient of these loans, receiving some $3,297 million (though apparently 'There is no clear consensus on exact amounts, as different scholars differ on exactly what elements of American aid during this period was part of the Marshall Plan.').

Brian Dunbar said...

Excellent post - and I don't say that because you're flogging my favorite long-shot - the space elevator.

United Kingdom as clearing house between US, EU and China. I think that's been done and it drove your economy through the roof, back when. It's a good idea, says your interested American corespondant.

Anonymous said...

On Heath's concessions to France to convince them to let us join the EU, one recurrent rumour in the scientific community is that the deal involved nuclear weapons research -- France's first successful fission bomb test was in the 1960s, so there was a significant British lead. I'd be interested if others have heard this.

Dryden

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