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Showing posts with label EU. Show all posts
Showing posts with label EU. Show all posts

Wednesday, 11 September 2024

Letter from pre Brexit Britain

I stumbled onto this article in my drafts folder. It dates back to 2016, the year of the Brexit referendum, and was abandoned because, as a FCA staffer, I was ultra conscious of publishing (UK) politically charged material. I literally asked for permission to publish it and was denied. I have no doubt many of my colleagues, not to mention others in the civil service proper, sat on similar statements in order to defend their organisations' impartiality.

I'm long gone from the FCA and even the UK itself, so perhaps now is a good time to share. I have not changed the content of the post and have not even checked for link rot.

Enjoy.

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It has come to it at last. 

This blog will campaign for Britain to remain in the European Union - forever as sceptics and reformers, but also as eager members of a single market and committed citizens of the Union. 

What I believe

I believe in personal liberty, in free movement and free trade. I want as much of Europe, indeed as much of the world, as possible to be a place where British people can come, go, trade, settle and enjoy their rights as easily as though they were natives. And I want as many Europeans, indeed as many people, as possible to have the chance to do the same here in the UK. It's hard to achieve this without some level of harmonisation, reciprocity and arbitration. Europe aims to provide all of these things. That it doesn't always do so as well as it could is a reason to invest in the project - not to abandon it for one that does not even try to deliver on the same goals.  

I believe in democracy - and it hurts me that the European institutions can be so opaque, distant and insular, and indeed so unaccountable - not just to British people, but to anyone that doesn't work in the Brussels bubble. It hurts me that Westminster and Whitehall can be no less opaque, distant and insular, and occasionally as unaccountable, to everyone outside the small politics/policy bubble in which I work. The struggle against these evils is the same, and its tools are the same, wherever on the map the battle lines are drawn. Just as, say, the Scots were right to remain in the UK and stick with 'distant' Westminster, so will the Brits be wise to remain in the EU. 

I believe in sovereignty. Whatever happens I'll never regret the fact that the British people got to vote on continued EU membership - and I thought the same of Scotland's referendum. The question of how the people should decide matters of sovereignty is of a higher order than the question of which course they should choose. But sovereignty is tempered by the realities of power and influence: no country can punch above their weight without pooling sovereignty with others. A trade agreement limits a country's power over its terms of trade, so long as its partners reciprocate; a defence agreement binds it to the decisions of its allies, and vice versa.  

There is no tension between Euroscepticism and the Remain vote in my mind. The EU institutions are state institutions and hold power over us - they would continue to do so in many ways even post-Brexit. To question them is natural. To demand transparency and accountability to the European people(s); to hold them to standards of fiscal discipline or good regulation; to demand that they respect the principle of subsidiarity by devolving policy to the local level unless absolutely necessary; all of these are only natural. All of the Quitters should have joined in this work of reform, lent their energy and (in some cases) expertise to it; their error is not that they criticise the EU but that so many of them opted for exit over voice from the start. We needed you, Quitters, and you abandoned us. 

And here's the last thing I believe in. Europeans are not alien peoples living inscrutable lives in a different world - they are our people. Not in the racist sense of being predominantly white people of a Christian background, but in the real sense of having the same points of historic, cultural and political reference. They know, as we do, the glories and follies of colonial power; the lessons of classical Rome or Greece; the trauma and shame of the World Wars; the dream, however misguided, of a welfare state that can shield the people from want and squalor; and that of a free press and an independent judiciary; the joint task of rebuilding what was destroyed by the Socialist experiment; the journey, sometimes incomplete, to a secular state;  the struggle for equality and tolerance; and the traveller's joy at blurred borders. None of the up-and-coming powers of the world share all of these things with us in quite the same way. Some of them we don't even share with the Americans.  

What the referendum is really about

Britain can cease to be a member of the EU, but it can't physically leave Europe. Nor is it any side's intention for Britain to stop trading with European nations, or to prevent their nationals from visiting at all.  Skilled EU migrants will still be welcome - with Visas, but welcome nonetheless. And the proximity of Britain, physical, cultural and linguistic, will lead them here as long as our economy is growing.

Whatever the outcome of the referendum, Europe will always be our back yard in a way that the Americas or Asia or Africa will not be. For some, including myself, it will also always be our home. We should all want it to work well because if it doesn't we too will share in the consequences. Their politics, their wars, their financial crises will always spill over to us and vice versa. But Brexit can only reduce our influence in Europe, in return for, let's face it, only four freedoms, in descending order of value to me:
  • the freedom to change our mind about laws passed in the past, even if the rest of Europe hasn't caught up yet. (Where do I sign?)
  • the freedom to occasionally hold the least extroverted of the UK's businesses to more appropriate, more flexible standards (Why not?)
  • the freedom to hold UK governments to more flexible standards when it comes to respecting the rights of UK residents or subsidising UK businesses (Wait what?)
  • the freedom to discriminate against more of our fellow men and women because of their place of birth or residence. (WTF?)
Brexit is not some heroic sortie, sticking two fingers up to a dictatorial creeping super-state. It is walking away from the broadest, most profitable foothold Britain has ever had on the world with free, willing partners on the other side.  Never before have we shared so comprehensively in the wealth of other nations without holding a gun to their heads.

Nor is Brexit a broad popular movement against the bloodless, joyless talking heads of the Establishment. It is a cynical bargain between those who fear or resent globalisation, and those of a more libertarian bent that would unshackle themselves from a continent with a long tradition of meddlesome socialism in favour of a new globalisation. The former bring their sheer numbers and a good helping of political cunning; the latter bring the intellectual muscle and gravitas. So the Leave campaign can shapeshift to speak as one group of the other - until the day after the referendum when it becomes clear that they can't both claim a popular mandate.

Who I stand with
I stand with the majority of British businesses who don't want to be torn out of the Single Market. I stand with younger people and degree-educated people through the UK, who each favour staying in the EU by a large majority, and particularly with the one third of British people who don't feel they have to choose between feeling European and feeling BritishIn short, I stand with the people and businesses most likely to be net contributors to Britain's fiscal and trade balance; the ones who will pay both the price for Europe and the price for non-Europe. And I stand with the majority of Britain's MPs, the actual lawmakers that Brexit will supposedly return power to, who want us to remain in the EU.  
I don't stand against any of my fellow British citizens who, with their country's best interests at heart, have weighed what evidence they could and chosen Brexit. I wish they'd see my side of this argument. I do stand against cynical Quitter politicians who insult their own followers with unholy alliances brokered in the back rooms of a Russia Today studio, or attention-whores who treat Britain's future relationship with Europe as a lesser concern than their own careers and simply must decide their position at the last moment, over dinner with a media mogul oligarch. 

I do stand against those who peddle outright lies, knowing that it takes much more work to repair the damage of a false meme than it does to spread one; those who play dog whistle politics, depicting EU citizens as criminals, terrorists or rapists; those who denounce all 'experts' as though anything but expertise stands between us and an early grave; those who promise, with an eye to focus groups, to shower 'our NHS' with money snatched back from Brussels while also promising, depending on the audience, to rob it of many of its most-needed professionals or dismantle it outright. 

What's in it for you
  • If you're talented, hardworking or financially comfortable, the EU is a diversification policy. It ensures that you can move your life and business to any Member State virtually overnight if you wish to - porting over your employment rights, your qualifications, your pension savings and social security entitlements, with little fear of discrimination and limited bureaucratic obstacles. As with diversified savings, diversifying your citizenship away from one country dramatically improves your position by smoothing out (some of) the idiosyncratic risk that comes with being tied to the UK. Why would you need this insurance policy? Who knows? Maybe your specialism will become saturated in Britain; maybe the country will find itself in another long recession; maybe you'll need a change of scenery. Hell, maybe you'll fall for an attractive stranger on holiday. It can happen to you, Quitters. Even Nigel Farage fell for a German, you know.
  • The EU is probably the world's most ambitious and most rigorously enforced free trade project. It's one of the few places in the world where governments' powers to indefinitely prop up failing industries, restrict free trade and beggar their neighbours regularly meet a powerful, proactive challenge in the form of state aid and competition rules. Britain can negotiate all the free trade treaties in the world, but the level of enforcement we can expect will always be lower if there's a powerful country on the other side. 
  • The European courts are a valuable line of defense against abuses of power in the UK. Government and Parliament can always choose to make laws that restrict your freedom, and the absence of a constitution gives them a little more leeway for doing so. The Courts may in vanishingly rare occasions ban Britain from sending foreign-born persons into exile, but they also protect the rights of British people against an occasionally trigger-happy government. If you are 100% happy to trust, say your online privacy to GCHQ, this line of defence is useless. But you're not, and Brexiters are least happy of all.
  • If you feel that the global reach of the English language in business and official procedure is valuable to the UK, a kind of human capital built for the British at no expense of their own, consider that the EU is practically a sales machine for the English language. The dominance of English in the Institutions (by no means a foregone conclusion in the 80s or 90s) will be that much easier to challenge if Britain itself leaves.
  • The EU is probably the biggest driver of regionalism in the UK at the moment - and will probably remain so as long as a tight fiscal policy prioritises central control over local initiative. EU funding works in terms of regions more often than it does in terms of member-states, driving the creation of regional competence and control. If you are invested in reversing regional disparities, or if you believe (as I do) that decentralising fiscal policy leads to better, more accountable spending, the EU is on your side in a way that Whitehall and Westminster cannot currently match. 
  • The EU is probably the most effective means Britain has of keeping the dominance of its social elite in check. The one thing you can count on 'faceless Brussels bureaucrats' not to do is give a toss which school a senior lobbyist went to all of forty years ago, or which family they married into. They will be lobbied and often they will be corrupted, for such is the way of all government; but the vehicle for this is much more likely to be the sheer power and presence of corporations of sovereigns, leaving behind huge tell-tale pawprints; as opposed to the pixie-dust trail of tribal in-groups.
  • The EU is a protection against arbitrage. If you're worried that the British high street is disappearing in favour of online retailers based in low-tax Luxembourg, the amount of leverage Britain alone has on them is tiny. Europe on the other hand has substantial leverage.   

Who we EU migrants are

Many people have no idea what happens in the Brussels bubble and have no interest in lofty discussions about the sovereignty of Parliaments or compliance with EU Directives. But they do have an interest in money, in public services, and in fairness. To engage them, Eurosceptics have exploited resentment against European immigrants who they believed were flocking to the UK to take 'our jobs' and, paradoxically, to also take advantage of the benefits system.


Now migration in the UK is far from 'uncontrolled'. In fact, a simple look at the government's regular 'statements of changes to immigration rules' will convince you that they spend a lot of time working on controlling immigration - this is also obvious to anyone outside the country. But Britain cannot limit immigration of workers from Europe because freedom of movement (for workers) is a fundamental element of the project - written into its DNA from the Treaty of Rome onwards (and prior to this in a more limited form). Europe did not over-reach into freedom of movement. It really was something Britain signed up for when it joined. Tactically questioning the rules of the game after it's started is precisely the sort of thing that Brits disapprove of in other spheres of life.   

Very few EU migrants come to the UK for any reason that doesn't involve contributing to the country in one way or another. ONS estimates that about two thirds (67%) of EU migrants coming to the UK for a long-term stay do so in order to work, and just under two-thirds (62%) of those already have a job offer when they arrive. The rest presumably find one fairly quickly because 78% of all EU nationals in the UK in 2014 were in employment. The unemployment rates of British and non-British EU nationals were identical in 2014.

But wait! What of the other one third of Europeans who don't come here to work and the 22% who are subsequently not in employment? Well, another fifth-ish (19%) of all EU migrants come here in order to study, collectively paying our Universities, Colleges and landlords a fortune for the privilege. Anti-migration lobbyists estimated the pre-crisis contribution of EU students at ca. £1.35billion per year - about as big as, say, the UK's trade deficit with India at the time

Only about 8% of these EU students tend to be unemployed a mere six months after graduation, and they are as likely to go back to Europe to work as they are to get a job in the UK.

Unlike neighbouring Ireland, Britain has no collective memory of mass emigration - of British people leaving the island in droves to find work elsewhere out of necessity. Long may this continue. But it does mean our perception of who emigrates is desperately skewed. Ask around in Europe and their name for what we here call 'uncontrolled migration' is 'brain drain.' They do not cheer their compatriots who come here as cunning euro-foragers. They regret their loss, knowing that the most marketable workers are first to leave. Cynically, David Cameron invoked EU countries' fear of a brain drain when negotiating his 'new deal' for Britain. 

..And we don't come here for the (limited) benefits

This leaves the one in six Europeans who come here for family or other reasons, and whom the Quitter campaign still tries to demonise as motivated primarily by benefits.

Even the Prime Minister danced to their tune, commissioning a flawed ad-hoc study (available here and with some commentary here) that, to avoid embarrassment, had to be published in a highly irregular manner that the UK statistics authority openly criticised. Crucially, the government's calculations lumped tax credits to working people on very low wages (which EU migrants are more likely to receive) in with benefits paid to people not in work; which EU migrants are less likely to receive than native Brits. Overall, EU migrants' share of benefits spending is half their share of the working-age population, which really tells you something about their actual impact on the public purse. 

The majority of EU migrants coming to the UK for non-work and non-educational purposes come to join their partners (hence the rising relative number) and are very unlikely to be gaming the benefit system. How do I know that? Because it's easy to look at the timing of the Welfare Reform Act 2012, which substantially cut the benefits they might expect, and its impact on migration by different motivations. Even if all correlation implies causation in this case, it would suggest that only 4% of pre-2011 EU migration was elastic to welfare benefits, and that further benefits cuts since 2012 have not affected it.

This should surprise no-one; we know benefits uptake among new EU migrants has, over successive waves of EU enlargement, been generally lower than that of UK natives (see here and here). We also know that the correlation between benefits generosity and the number of EU migrants is not significant, although the (negative) correlation between generosity and the employability of migrants might be.


Which brings me to the main point. The UK isn't an overly-generous country when it comes to benefits. Many Brits see ours as the most generous welfare state in the world but in the Continent Britain is seen overwhelmingly as Margaret Thatcher's country, an America-light with a deregulated labour market and a devil-take-the-hindmost attitude to the poor. The fact that its welfare has never been very generous has traditionally meant it tended to get more educated and employable European migrants in the first place (see here). Once adjusting for the cost of living here, the UK is on a par with Italy, and substantially less generous that Norway, Denmark, Luxembourg, France, or Germany. You can see this for yourselves here (and as I illustrate in the graph below). Anyone willing to move just to claim benefits would be better off elsewhere. The UK is comparatively even less generous when it comes to unemployment and disability benefits, even after adjusting for a lower unemployment rate. 

Why am I counting Norway in the group of comparator countries? Because it, too, abides by the EU's freedom of movement rules. Even though it's not an EU country. Because it's in its national interest to do so. Even though it's got a much more generous welfare state. Do you get it? Good.

The one type of benefits with which Britain is more generous is housing - which makes sense since the UK is an expensive place in which to both rent and buy property. Specifically on this, we've known since at least 2014, and the research by Battiston et al (2014), that claims of preferential access to social housing by immigrants are actually false. Comparing like for like, immigrants are less likely than natives to receive social housing, and EEA immigrants even less so. This 'immigrant penalty' has fallen over the years but not reversed. Immigrants are substantially more likely to rent from private landlords and it takes 15 years in the country for a European immigrant to have the same chances, other things being equal, as a native-born UK citizen at getting social housing.

So Britain's real draw is not a generous benefits system but rather the fact that it generates jobs, has a number of successful universities and a language that is dead-easy to learn and widely spoken; all of which is important to people who (you guessed it!) intend to work or study here and much less so to ghettoised benefits scroungers, whoever they are.  

To assist MPs seeking clarity on the issues being brought up by constituents, the Library of Parliament produced an excellent briefing last year on what benefits foreigners, including EU citizens, can claim in the UK. Broadly speaking, EU citizens aren't automatically eligible for benefits in the same way as UK citizens - they need to have the 'right to reside' in the country, which is conditional on having first been in work or otherwise able to support oneself without benefits for three months. No one can simply turn up and claim benefits in the way that some Quitters imagine. In fact the poor folks at the LoP have also been forced to issue a briefing to debunk viral emails that made wild claims about what asylum seekers and refugees were costing the UK, among a long catalogue or related publications. Principled Quitters could have helped to at least stem the tide of misinformation - almost all of which came from their side - but they never lifted a finger.


Declaration of interests 

I have, since 2013, been a UK citizen, and proudly so. I was born and raised in Greece and am still actively involved in the politics of my birthplace. As an EU citizen, I did not have to naturalise and my right to remain and work in the UK was never in doubt. I did it because I genuinely felt (and feel) that I belong here, and that my life and fortunes depend on the UK’s prosperity. I also made this choice because, having been close to the policy industry all my working life, I felt it was appropriate to be a voter in this country. My wife is an EU citizen but has not naturalised.

I have never had any income from the EU institutions, or any contractual ties to them. I was however briefly a registered expert for the Commission, which meant my employer at the time was reimbursed for two Eurostar round-trips. In a different employment, in the first two years of my career (2006-8), my employer received EU (ESF) funding, which paid for half of one of the (exclusively UK-focused) projects I was working on. Finally, my current employer (whom my views do not represent or bind in any way) works in an environment heavily influenced by EU regulation; I work within this framework daily, although I have not interacted with the EU institutions in this employment. I have friends working for the European Parliament, the European Investment Bank and the Commission.

I am fortunate in many ways in this life, and I pay all the tax one would expect based on my income. I did the same before I naturalised. Last year, according to HMRC's personalised annual tax summary, I paid £15,100 worth of tax towards welfare, pensions, education, and health alone. The year before, I paid £11,655. That's not all of the tax I pay - just the part that goes into the broader welfare state. I also pay my share of the UK's contributions to the EU budget. A colossal £128 this year, up from £127 a year earlier. That's about the same amount I pay for broadband; and less than a TV licence.

Monday, 17 November 2014

The NHS and the sad, contradictory world of UKIP voters


In my previous life as a Twitter gladiator, I was told a number of times, by people who should have known better, that Britain’s UKIP is a libertarian party. Hell, they said to me, even their own Constitution says so.

As a new British citizen and voter I was very eager to vote for a libertarian option, and on the key issue of Europe, I could almost understand UKIP. I've seen my share of Grexit flamewars and believe strongly that the British need their long-overdue referendum on EU membership, as indeed do the Greeks.

That's not to say I want either country to leave the EU. The institutional issue of whether or not the people deserve a vote on a matter of sovereignty is, to me, quite separate from the political issue of whether they should vote yes or no. And anticipating that the people will go for the ‘wrong’ option is the worst possible reason to deny them the choice.

That said, I could never see a libertarian option in the Brexit, pints and fags brigade – or the People’s Army as they now call themselves. The personality-cult vibe, the sheer amount of power concentrated at the hands of its leadership, the borderline illiteracy and nastiness of some of its supporters, were enough to put me off from the outset. That would have been the end of it for me, despite the meteoric rise of the party, first in the polls and then in Google searches as a bewildered commentariat scrambled to keep up.

Unfortunately, as UKIP enters the mainstream of British politics and starts courting a broader demographic, the online debates are becoming louder and more absurd; and the last round regarding the future of the NHS was the last straw for me.

Craven backpedalling

Perhaps inevitably in an ageing society riddled with sticky inequalities, the NHS became a key battleground in the run-up to the Scottish referendum, and is poised to play the same role in the upcoming election. It's a major defence line for Labour, who quickly discovered in Scotland that the NHS can be used against them just as easily as against the Tories. It makes sense, therefore, that UKIP are now being challenged on their health policies as they threaten to poach Labour voters. The Labour attack line is that they want a US-style healthcare system and want to privatise the NHS, and it does rely on some pretty libertarian-sounding comments from Farage:
"Frankly, I would feel more comfortable that my money would return value if I was able to do that through the marketplace o[r] an insurance company than just us trustingly giving £100bn a year to central government and expecting them to organise the healthcare service from cradle to grave for us."
The UKIP response to the above, pathetically, did not make any attempt at a libertarian defence of these statements. In fact, in the recent past it has denounced libertarian thinking on the NHS as ‘Right-wing ultra-libertarianism.’

No, the party’s main defence of Farage’s words, beyond a tu quoque jab at New Labour’s record on privatisation, is that the comments were made ‘two years ago’, and ‘policies develop and change over time’. This is of course true, but two years make for a very quick conversion from a libertarianism strong enough to question the sacred NHS, all the way to paternalism. What exactly happened?

We'll get to that, but let's get one thing straight: UKIP are at ease with much greater contradictions. They have, for example, squared libertarianism with an obsession with the State’s right to determine who can and cannot live or work in the UK, as well as a refusal (also written into its Constitution) to enter any treaty that limits the discretion of the UK government – which presumably includes every free trade agreement ever written. You can read other, more intelligent critiques of their self-description as libertarians here, here, here and here, but please do so after reading this one through to the end.

Bad self-branding and craven backpedalling aside, I think UKIP’s libertarian credentials cannot be demolished or defended by words alone; what politicians say does not actually matter. You have to look deep into what their marginal voters say, because few populist parties, UKIP included, will take a principled stand for anything at the expense of power. It is the profile of the marginal UKIP voter, and their views of the NHS, that has changed so rapidly over two years as the party has reached out to a broader audience. One does not grow into a contender in national politics without screwing over the early faithful, who, in UKIP’s case, may well have included a lot of anti-federalist libertarians like myself.

So in order to test UKIP voters’ views, I’ve collected their responses to a number of YouGov poll results over the last two years, always on subjects other than UKIP itself, and always polls which were not used to report on the UKIP vote itself. I am doing this in order to avoid accusations of bias against YouGov, which I will not be well placed to defend against. The important thing here is that, even if YouGov is biased against including UKIPers in its polls, as they have claimed over time, I don't see how it can simultaneously exclude UKIPers and pick more fruit-cakey UKIPers over more normal ones. 

For nationalised services, but against NHS spending?

Asked to pick from a range of potential priorities for the country in mid-October 2014, Labour voters put Health first; Lib Dems ranked it second, and Conservatives and UKIPers ranked it third. And when challenged to prioritise public spending, NHS Spending was the UKIPers’ last priority, regardless of how their options were presented to them. And of course they recommended the lowest ideal average wage for doctors and nurses out of all the parties.

So on the face of it UKIPers are almost certainly less resistant to at least some NHS cuts than other voters. Part of the reason might be that UKIPpers are the most likely voters to say the NHS doesn’t serve them well, but then they say this about everything; check out their responses.

But are their budgeting priorities based on an opposition to cradle-to-grave healthcare and the nanny state? Not by the looks of it. When asked directly what things the government should have power over, UKIP supporters are clearly in favour of a public-run NHS, and barely a statistical error behind Labour supporters in calling for state control of just about anything. 84% of them believe the NHS should be publicly-run, ahead of all but Labour supporters, and, come to that, 40% of them even believe the government should have the power to dictate the price of groceries.

Or perhaps just National Socialists?

The list of UKIPpers' socialist soundbites goes on and on. 70% of UKIP supporters would rather the railways were nationalised, and for practically the same reasons cited by Labour supporters. When appraising St. Maggie Thatcher’s legacy, UKIP voters were as likely as Labour voters to cite ‘privatising utilities such as BT and British Gas’ as her biggest failures, and more likely than any other party to cite ‘deregulating Banking and the City of London’ as her greatest failure.

And make no mistake, they mean that last bit; they are decidedly against the mobility of capital, especially when it comes to takeovers of British firms, which they oppose more strongly than anyone else; in fact 69% of them would be happy if this were banned by law.

And while UKIPers rail against social engineering through government regulation elsewhere, they are as supportive of quotas for women as any other party apart from Labour; just not of quotas for ethnic minorities, which are clearly based on a very different principle (?).

The UKIPers do draw the line somewhere, though. They are the least likely to want the government to take an active role in housebuilding. They are also, incidentally, the most housing-secure voters out there, and therefore stand to lose the most from falling property prices.

What do they mean by libertarian?

Libertarianism is a pretty niche corner of the political map; it's not popular, frankly. So how did UKIP crash into us?

Well, we know UKIP supporters are the most likely out of the four major parties to agree with the phrase ‘people have a right to keep the money they earn’ as opposed to ‘people have a duty to contribute money to public services.’ They are almost as likely as the Tories to believe the state spends too much on Welfare - although more on this will follow. They are strongly in favour of assisted suicide. They believe that internet access is a human right, as much as anyone else. And they are, on the face of it, opposed to British force projection abroad, more so than other voters; they even want the West to stay out of Russia’s way in the Ukraine.

For some, their first brush with libertarianism may have been opposing the smoking ban, even though half of the UKIP faithful are now in favour of a ban on (less harmful) e-cigarettes. Even more support a ban on flavoured e-cigarettes; perhaps they remind them of shisha pipes?

Anyway, it's a start. But then again I wonder.

Migration and economics aside, I've come across many deeply un-libertarian things that UKIPers believe. Oddly, 25% of them don’t believe the right to life should be protected, perhaps due to a preoccupation with applications of this in a military context, or perhaps due to their support for euthanasia. Like Conservatives, they are much more tolerant than other voters of police power to arrest and detain without charges. And they’re definitely against gay marriage.

Speaking of this, consider their support for businesses denying service to homosexuals on grounds of religious or other persuasion (which I actually agree with). Liberal parties (Labour and Lib Dems) see support peaking when it comes to membership clubs denying service. Conservatives and UKIPers' support peaks when it comes to Bed and Breakfasts). The key ingredient being, I think, sharing a bed.

But it gets weirder. UKIP voters are almost twice as likely as others to want the media to identify people who claim to have been raped; this is actually higher than the percentage of UKIP voters who want the accused to be named (which of course is also not acceptable). I suspect some mens-rightery is at play here.

Coming back to the issue of tax, it’s fascinating that the majority of prospective UKIP voters don’t even think their party is the best placed to get taxation right; and they don’t care. According to their responses, they would much rather pay more tax and get immigration reduced. Similarly, nearly half of them believe NO ONE should be allowed into the UK from the EU regardless of the country's skills needs or economic efficiency. More proof, if any were needed, that UKIP voters don’t intend to use the party as a platform for building a libertarian society – not by a long shot.



Maybe they're Thatcherites?

Many UKIPers see themselves as Thatcherite as opposed to libertarian. A good distinction to make, but also far from an ideal description of the party faithful. Asked to name Britain’s greatest PM, UKIP supporters were more likely to go for Maggie than any other past PM, but they did so by a much smaller margin than the Conservatives.  They were more likely than voters of any other party to pick Churchill – perhaps they too see themselves at war.

To figure out what exactly made UKIPers less rabid Thatcherites than today’s remaining Tories, it’s enough to look at the margin between the two in appraising different aspects of Thatcher's legacy; the biggest difference is in assessments of her economics – with 60% believing Maggie left the UK economically better off, vs. 85% of Tories.

And though UK voters don’t seem to like force projection these days, they were the only party voters who cited ‘winning the Falklands War’ as Thatcher’s overall greatest achievement; a libertarian distinction could be built around the claim that the Falklands War was a defence of British citizens and territory. Quite how the UKIPers thought the UK came to own an archipelago on the other side of the world is beyond me, but their view of libertarianism seems to allow for very substantial initial endowments established through illiberal means, at least when they are in their favour.

Maybe they're victims

While their views on social mobility are very, very close to those of Labour supporters, UKIPers are the voters least likely to believe education affects life opportunities - perhaps they should try it. They are the least likely voters to feel capable of influence in the workplace, which as my readers know, is a very good predictor of job satisfaction; they are also more likely than voters of other parties to feel precariously employed. If this sounds a little left-leaning, then perhaps it is. Remember, 29% of today's UKIP voters would never find the Conservatives appealing as a party.

But were they left behind by the progress or otherwise of the last 20 years? Well they are more likely than even Labour voters to say that the economy was 'always' stacked against people like them. They are twice as likely to think their personal household situation will be worse in a year’s time than even Labour supporters. And they also generally believe the next generation will be worse off - more so that voters of other parties.

As if the world hadn't already been cruel enough to them, they also seem to have the least satisfying love lives. Perhaps Ken Clarke was right after all.

Maybe they've been misled

Disappointment with the world does leave on open to suggestion, but then some UKIPers would believe anything. 10% of them believe that the net number of migrants into Britain is more than 2m a year. 19% of them think more than a million EU migrants are claiming Job Seekers Allowance.

Less credibly, UKIPers are substantially more likely to believe in ghosts, and an analysis of the 2010 vote suggests that ghost-believers have generally flooded into UKIP and out of other parties.

What we do know is that they're more susceptible to dog-whistle politics. In a recent poll, YouGov tested two different versions of the Government’s personal tax statements – one with the Government’s own crude (and inflated) measure of ‘Welfare’ and one with the Institute of Fiscal Studies’ more economically literate (and more conservative) measure. The UKIPers' share of people who thought welfare spending was ‘much too high’ went up by 79% on the Government’s version of the figures, vs. 67% for the electorate as a whole.

The bottom line

Whatever the party's past, today's UKIP supporters, I think, are openly nationalist and closet socialists. Their mistrust of state intervention comes not from a preference for freedom and personal responsibility, or any concept of economic efficiency, but from mistrust of what they see as institutions infiltrated by a hostile agenda.

The UKIP supporter questions the legitimacy of policy and institutions, because they believe that both are working against the British people. But they openly welcome state intervention in other arenas where institutions still appear to them to be working towards their own goals, or where they can recall institutions of the ‘clean’ past that could still be reinstated. Hence, for example, UKIPers’ gut instinct to defund the NHS may well stem from their belief that the NHS has been subverted in order to subsidise at best jobs for the boys and girls, and at worst the weakening of the British population and the colonisation of Britain by unsavoury, mongrel races (yes many UKIPers think this way).

Maybe they're right, now and again.

Say what you will of the UKIPers, but they do have one message that resonates. On matters of economic governance and human rights the electorate is far less liberal than the parties of Westminster, and both sides know this is the case. Interestingly, the majority of UK voters believe that ‘a political class [are] clubbing together, using their mates in the media and doing anything they can to stop the UKIP charge.’ Only Lib Dem voters disagree on balance, and even 42% of those agree.

Westminster parties believe that by making a convincing economic case for something they can win people over, but on the subject of Europe and immigration the electorate would happily take a fair amount of economic hardship in exchange for getting their way. This is inconceivable to our political elite, and that's why they can't stop UKIP, for the time being. This is how they almost lost Scotland, after all. The only thing the establishment can do for now is wait until, in pursuit of power, UKIP compromises and mainstreams itself enough for its visceral message to start ringing hollow. But the disruption we could suffer in the meantime is immense.

Thursday, 10 October 2013

PLZ HELP THE COMMISSION - KTHXBYE

This arrived in my inbox earlier today:


Announcements and Publications
09 October 2013

Information request

Availability of short term export credit insurance for exports to Greece

As a consequence of the difficult situation in Greece, a lack of insurance or reinsurance capacity to cover exports to Greece was observed in 2011. This led the Commission to amend the Communication of the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance (Communication on short-term export-credit insurance) by temporarily removing Greece from the list of marketable risks countries. This modification is due to expire on 31 December 2013.

To determine whether current market situation justifies the expiry of Greece's removal from the list of marketable risk countries in 2013, or whether a prolongation is needed, the Commission invites Member States, credit insurers and other interested parties to submit information on, among others:
  • Private credit insurance capacity
  • Activity of insurers acting on behalf or with State guarantee or the State itself in provision of short-term credit insurance for exports to Greece in 2013
  • Sovereign sector ratings
  • Corporate sector performance in Greece
The deadline for replies is 6 November 2013.

More details on this information request and how to send contributions 

Thursday, 18 August 2011

MORE MUSINGS ON THE BAILOUT TO END ALL BAILOUTS

I've promised before to write more about the Grand Bargain for Greece agreed in late July - the latest bailout to end all bailouts. I'm still working on material for a new post but for now, here's one I prepared earlier.

What follows is an article I prepared for ACCA's Financial Services e-newsletter. It is written from a UK perspective but readers may still find it of interest.


Greece – can we look now?


Part I: The Exposure

On 21 July 2011, the leaders of the Eurozone nations announced to what must have felt like the entire world that they had reached a deal on a new rescue package for Greece, one that would reduce the country’s borrowing costs and outstanding debt, ensure its continued liquidity and hopefully set Greece back on the path of fiscal sustainability. They stressed that this is a one-off package, and that other embattled countries could not take it as granted that they would be offered the same.

What does this deal mean for the UK? The place to start answering this question is the exposure of UK banks to Greece. Now people tend to play with words when this question comes up, including in Parliament itself. For a start, it’s important to distinguish between exposure to Greek banks, exposure to Greek sovereign debt and claims on the Greek private sector, and then exposure to the much broader risk of contagion in the case of a Greek default. The good news is that there are definitive figures out there. The bad news is that they are dated and problematic in multiple ways.

Stashed away in the detailed tables of the latest Quarterly Review from the Bank of International Settlements is a detailed, if dated, answer to the question of direct exposure. As of December 2010, the UK banks’ total exposure to Greek public and private debt was $14bn. But less than half of this, around $6bn, was exposure to Greek government debt or Greek banks, where the risk of losses is greatest. Overall, UK banks appear to only carry about 2% of the total Greek exposure of European banks.

  
In fact, UK banks are nowhere to be seen on the list of top financial institutions by exposure to Greece, and what little they hold in terms of Greek bonds tends to be in shorter maturities. This is important because most bonds maturing after 2020 don’t seem to fall under the financing offer for Greece that was agreed by the banks through the Institute of International Finance (IIF) back in July. For what it’s worth, it appears that RBS is the most exposed UK bank, although it’s officially written down half of its £1.4bn worth of Greek bonds already.

This brings me to an important point. For the purposes of accounting profits and losses, the allocation of Greek bonds between the banks’ banking books and their trading books (which alone must be marked to market, leading to recognised losses when bonds lose their value) is crucial. Non-Greek banks typically hold about 31% of their Greek bonds by value to maturity, so most of their exposure is already marked to market – the banks will have recognised significant losses on them already. This is important because bonds bought at a deep discount may appear to be taking a haircut under a buyback scheme (the much-celebrated 21%) while in fact turning a profit for the banks participating in the swap. Coming back to RBS, for instance, the bank would recognise a profit of ca. £275m on this transaction. As a Greek, I feel a little cheated, but as a UK taxpayer... ka-ching!

By the way, if you’re thinking this impairments business might present a headache for auditors, you’re right. Especially given the wide variety of conflicting practices banks are likely to adopt. Further reading for the intrepid auditor here.

Now for the wider question of contagion and what it might mean for UK banks. To be fair, the contagion is already happening, so this is pretty much a moot point. But it’s easy to dismiss this as mere panic, an irrational response. That’s until one realises just how interconnected the European banking system is, and how exposed the UK is, through various different routes, to the contagion seeping out of Greece.

According to the BIS data I cited above, UK banks have a $22.8bn exposure to Irish banks and the Irish sovereign; another $20bn to banks and sovereign debt in Italy; another $6.8bn in Portugal; and a whopping $30.7bn in Spain. And the $80bn this adds up to are just the obvious risks, the black sheep of the European financial family. Given that the European stress tests earlier this year estimated the Core Tier 1 capital of the major UK banks for 2011 at about $300bn even in an adverse scenario, a substantial impairment of assets in the most troubled Eurozone countries would cause significant problems for them although it wouldn’t wipe out their capital. Still, there is no telling where the contagion would stop and indeed which other sovereigns and banks might follow should the PIIGS go.

This is why we must turn to the bigger picture.


Part II: Is the Eurozone insolvent?

Throughout the various stages of the European debt crisis, the argument has been made that, if only the Eurozone could co-ordinate fiscal policy and issue debt collectively, for instance via Eurobonds, it would put an end to all this drama of speculation and contagion – Europe would become a borrowing superpower and no one would ever dream of doubting its creditworthiness.

The idea that a fiscally unified Europe would be undeniably creditworthy is wrong on many levels. Superpower status, fiscal union, and indeed fully-fledged federalism, didn’t stop S&P from downgrading the US to AA+ earlier this summer. Perhaps more importantly, given who buys US debt nowadays, it didn’t stop the Chinese rating agency, Dagong, from downgrading the US to A with a negative outlook. Some might say that these downgrades reflect the mechanics, not the fundamentals, of US debt, and that’s fair enough. But even if Eurozone members can somehow be coerced into fiscal union (and they may well be in the following months) the delays and horse-trading involved in drawing up a collective Budget for the Eurozone will make the debt ceiling negotiations in the US seem like an elegant costume drama ball.

But it is the fundamentals, not the mechanics, of debt that truly worry the markets. In the Eurozone as in the States, policymakers may not want to countenance the thought that the entire bloc might be collectively insolvent. Yet for over a year this question has been preying on commentators’ minds. The IMF even did the math on this in a fascinating report last year that went largely unnoticed. They found that the Eurozone, mighty Germany included, is not, in fact, solvent in the long term. According to the IMF calculations, the only long-term solvent countries in Europe were Hungary and Denmark. Bulgaria and Estonia were also strong candidates, but that was about it. The news for the UK were particularly grim.


Markets also find it hard to think of sovereign nations as being insolvent; much of the world’s financial architecture rests on the assumption that there is a magic circle of ‘decent’ sovereigns that can never default, and this belief has persisted after the 2008-9 crisis despite ample historical evidence to the contrary. The only difference is the ever-retreating boundary of the magic circle, as each embattled sovereign puts pressure not only on those countries that are financially exposed to it, but also any country seen as equally or less ‘decent’. Right now, the magic circle includes very few countries beyond the small group of AAA-rated sovereigns, and the result is a AAA asset bubble that could pop with disastrous consequences.

European policymakers are increasingly testing the surface tension of this bubble. Consider the European Financial Stability Facility (EFSF). Caught up in their own rhetoric of being under attack by evil speculators, Europe’s politicians hailed it as a shield for the Eurozone. But market participants, still smarting from the experiences of 2007 and 2008, quickly identified it as no more than a massive Collateralised Debt Obligation (CDO) and treated it accordingly. The market tested first the junior, then the mezzanine, and finally the senior tranches (see also here and here) of this construct – the guarantees by France and Germany. The very existence of the EFSF prompts the market to do this, much like the very mention of fiscal integration prompts the question of the Eurozone’s collective solvency. This in turn explains the ever-diminishing half-lives of Eurozone initiatives to calm the markets.

Until the markets are convinced that Europe’s finances are sustainable, this drama will continue to play itself out regardless of what schemes are concocted by its leaders, and will claim ever more, ever more conspicuous victims. Long-term sustainability trends can be reversed more quickly than one would think – relatively small changes can add up to a lot over a 50-year horizon. But they do not reverse themselves.

Monday, 2 May 2011

OMG OMG OMG NEW EUKLEMS DATA... AAAWWW

When I saw this today I thought, that's it. I'm all statporned-out so clear my schedule. This would only have been THE most crucial database updated at THE most crucial moment.

Unfortunately the latest edition of EUKLEMS still only goes up to 2007, though it does include every kind of data one could possibly want on every European economy and a few more besides. And it does so for each of the 72 industries identified at the 2-digit level of the 2007 Standard Industry Classification (SIC07).

EUKLEMS focuses on tracking the inputs and outputs of industries and accounting for productivity. If you are geeks, read up on the methodology here. If you are only interested in Greece, download the Greek dataset here and the Eurozone aggregate dataset here.

Unfortunately in the case of Greece a lack of appropriate data on the prices of intermediate inputs means that we can't get the full suite of findings. In other countries it is possible to do really impressive things like break down real GDP growth into its constituent parts and account for Total Factor Productivity.

But we will settle for what we can get.

Blast from the past: EUKLEMS reminds me of the stuff I used to write for my old masters the FSSC when I was a carefree wee lad. It was, ironically, co-launched with a trade union. What times.  

Tuesday, 19 April 2011

Φτιάξτε τις δικές σας στατιστικές για τα οικονομικά μας μεγέθη - U CAN HAZ UR OWN GREEK STATISTICS!

[Scroll down for the English version of this post. If you are already familiar with official statistics, you may want to also look at the last update of the EU-KLEMS data described here]

ΟΚ, όχι ό,τι νούμερα θέλετε! Μόνο ό,τι προσφέρει η μαμά Eurostat. Σε κάθε περίπτωση προσέξτε σε τι βάση σας παρουσιάζονται τα στοιχεία (π.χ. % του ΑΕΠ ή Ευρώ;) Αυτό μπορείτε να το ρυθμίσετε από το Select Data και από κει στην ταμπέλα Unit. Από την ταμπέλα INDIC_A μπορείτε να ρυθμίσετε ποιο λογαριασμό ή λειτουργία του κράτους θέλετε να δείτε.

Έχετε δύο επιλογές:

Δημόσιες δαπάνες (ESA95): Χρησιμεύει στο να δείτε περιληπτικά τις κοινωνικές παροχές (D62Pay) και τους μισθούς των δημοσίων υπαλλήλων (D1Pay) αλλά και τις συνολικές κρατικές δαπάνες (TE). Kάποιες παροχές μπορεί να τις χάσετε γιατί ο περιληπτικός λογαρισμός D62Pay δεν τις περιέχει όλες, ειδικά τις παροχές σε είδος... δεν έγινε πάντως καμμιά ζημιά. Σημειώστε πάντως ότι υπάρχουν και πολλοί άλλοι λογαρισμοί πέρα από αυτούς τους δύο. Εξερευνήστε τους.

Δημόσιες δαπάνες (COFOG): Πιο χρήσιμο αν θέλετε να μάθετε 'πού πήγαν τα λεφτά.' Κατηγοριοποιεί τις δαπάνες ανά λειτουργία του κράτους (π.χ. παιδεία, εξοπλισμοί κτλ). Προσοχή γιατί μερικές κατηγορίες είναι συνοπτικές και περιέχουν τις αποκάτω τους, π.χ. η κατηγορία Παιδεία περιέχει και τα ποσά της Τριτοβάθμιας Εκπαίδευσης, η οποία κατά τα άλλα έχει δικό της κωδικό.

Μερικές ακόμη στατιστικές που μπορεί να σας ενδιαφέρουν:


Έσοδα, κόστη και οικονομική κατάσταση των επιχειρήσεων: Για όσους αναρωτιούνται κατά πόσο βγαίνουν ή όχι οι μικρομεσαίες επιχειρήσεις στην Ελλάδα και τι κόστη τους αναλογούν, η Κομισιόν παρέχει τα παρακάτω στοιχεία από 2002-08. Ανοίξτε το zip, πιάστε οποιοδήποτε αρχείο με τίτλο της μορφής data_200*_eu_no.xls και πηγαίνετε στα tab με τίτλο GR και εξής. Τα στοιχεία προέρχοναι από έρευνα και όχι από φορολογικές δηλώσεις ή άλλα επίσημα στοιχεία οπότε είναι στρογγυλοποιημένα για λόγους εμπιστευτικότητας. Σημείωση: Micro: λιγότερα από 10 άτομα προσωπικό. Small: 10 ως 49 άτομα προσωπικό. Medium: 50 ως 249 άτομα προσωπικό. Large: όλες οι άλλες επιχειρήσεις

Ποσοστό επί των αγορών και προμηθειών του δημοσίου που κοινοποιήθηκε δημοσίως: Οι αριθμοί διατίθενται σε όρους % επί του ΑΕΠ και % επί των συνολικών αγορών και προμηθειών του δημοσίου. Ανεκτίμητο για όσους αγαπούν τη διαφάνεια στο δημόσιο βίο.


Πραγματικοί φορολογικοί συντελεστές ανά οικονομική δραστηριότητα: Για όσους αναρωτιούνται πόσο φόρο πλήρωσε τελικά ο καθένας. ΠΡΟΣΟΧΗ: οι πραγματικοί φορολογικοί συντελεστές υπολογίζονται ως ένα απλό κλάσμα: (όγκος δραστηριότητας) / (φορολογικά έσοδα από τη δραστηριότητα). Είναι πολύ μικρότεροι από τους επίσημους φορολογικούς συντελεστές γιατί παρεμβάλλονται παντός είδους νόμιμες φοροελαφρύνσεις, νόμιμες αλλά αμφιβόλου ηθικής πρακτικές εκ μέρους των φορολογουμένων και βέβαια η απλή φοροδιαφυγή.

Συμμετοχή των διαφόρων οικονομικών δραστηριοτήτων στα φορολογικά έσοδα: Όπως και παραπάνω, αλλά σε όρους % επί των συνολικών εσόδων του κράτους.

Συντελεστής Gini: ο συντελεστής Gini είναι ένα ευρέως αποδεκτό μέτρο της ανισότητας των εισοδημάτων σε μια χώρα και παίρνει τιμές από 0 (απόλυτη ισότητα) ως 100 (απόλυτη ανισότητα). Χρησιμεύει σε όσους θέλουν να αποφανθούν για το κατά πόσο έχει αυξηθεί η εισοδηματική ανισότητα (και να συγκρίνουν την Ελλάδα με άλλες χώρες), αλλά δεν μετρά άλλες διαστάσεις της ανισότητας. Περισσότερες πληροφορίες για τον υπολογισμό και τη χρήση του συντελεστή μπορείτε να βρείτε εδώ.

Πληθυσμός που κινδυνεύει από φτώχεια ή κοινωνικό αποκλεισμό: ένας γενικότερος δείκτης κοινωνικής ανισότητας που μετρά το ποσοστό του πληθυσμού που είτε στερούνται βασικά και αναγκαία αγαθά και υπηρεσίες, είτε κινδυνεύουν να τα στερηθούν κατά καιρούς, είτε έχουν πολύ αδύναμους ή ανύπαρκτους δεσμούς με την αγορά εργασίας. Περισσότερα εδώ.

Αυτά είναι τα νούμερα που δεν θέλουν να δείτε ούτε οι μεν, ούτε οι δε. Ούτε οι δεξιοί ούτε οι αριστεροί. Ούτε οι επαναστάτες ούτε οι καθεστωτικοί. Είναι τα στοιχεία που επιτρέπουν στον κάθε πολίτη να μιλήσει μόνος του άφοβα και να μην αρκείται στο να επαναλαμβάνει συνθήματα, ούτε να σκύβει το κεφάλι επειδή 'μίλησε' ο Χ Ψ οικονομολόγος.

Αυτά τα στοιχεία είναι διαθέσιμα και δωρεάν. Μην ντρέπεστε να τα χρησιμοποιήσετε κι ας σας πουν υπερόπτες ή 'δήθεν επιστήμονες'. Δεν χρειάζεται να είστε επιστήμονες. Είστε πολίτες και αυτά είναι τα όπλα που δικαιωματικά σάς ανήκουν. Τσακίστε τους όλους. 
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Not your OWN statistics, as in made up - it's Eurostat data, but you can compile it as you prefer.

You've got two options:

Spending data (ESA95): Useful for identifying social transfers and salaries. Press the Select Data link and change the INDIC option to look at other types of spending and government financial data. Remember in this link it's all in % of GDP, but you can run the same data in nominal Euros by pressing the Select Data link and changing the UNIT option.

Spending data (COFOG): This is the 'functions of Government' classification, which is more descriptive than ESA95. It doesn't correspond readily to accounting entries but it makes much more sense than ESA95 which can be a tad confusing.

Other data you might be interested in:

Business cost and revenue structure: Useful for working out and benchmarking the cost structures of Greek businesses, especially small and medium-sized ones. The Commission provides this estimated data for 2002-08. Unzip, then check out any file named data_200*_eu_no.xls, then move to the GR tab and the ones following it. This data is rounded as it is sourced from surveys rather than national statistics or tax returns and thus confidentiality needs to be maintained. Note: Micros are businesses with fewer than 10 employees. Small businesses have 10 to 49 employees. Medium-sized businesses have 50 to 249 employees. All others are Large.

% of public procurement advertised in the Official Journal: Available in both % of GDP and % of total public procurement. A must for people interested in public sector transparency.

Implied tax rates on economic activities: Essential data for anyone wondering where our tax revenues came from and who hasn't been paying their share. Note that implied rates are calculated as the ratio of (volume of activity / tax receipts from activity). As such they will be lower than the headline tax rates, as they include legal tax relief, legal tax avoidance of varying levels of moral acceptability, and of course, straight-up tax evasion.

Contribution to total gov't revenues by economic activity: As above except expressed in terms of % of total revenues.

Gini coefficient: The Gini coefficient is a measure of income inequality, ranging from 0 (total equality) to 100 (total inequality). Useful if you're trying to track trends in income inequality, but not useful for commenting on any other manifestation of inequality. More details on the coefficient and its use can be found here.

People at risk of poverty and/or social exclusion: This is a more general measure of inequality, capturing the % of the population that is either at risk of poverty, is experiencing extreme material deprivation or is only marginally attached to the labour market. More here.