Saturday 1 October 2016

Jamais vu

In my post "Deja vu"  (29 September) I noted that the EU nations are very good at postponing decisions which are necessary for financial stability. Its leaders recognise that there are things they must do but which they don't dare or care to do. Make us a properly functioning union, but not yet, or maybe ever.

To be fair to the mainstream political view in the EU they have recognised the need for freedom of movement to underpin the single market and the euro. But they still don't have the political and financial structures that are needed and the richer nations in the north do not recognise that the price of a one size fits all structure is wealth transfer to the poorer nations in the south. The southern countries are beset by extremely high unemployment, especially youth unemployment. Countries such as Greece complain that it is "austerity" that causes their problems, but it isn't, or at least I am certain that it isn't just that. It is because they can't compete with the German juggernaut. So the German economy benefits without them paying the price of subsidising the poorer countries. This is all very dysfunctional.

In the UK, of course, we have a single market, single currency, functioning central bank and patchy systems for the wealth transfers that are necessary for the parts of the country that cannot flourish under our version of "one size fits all". Yes, you jocks, I mean the Barnett formula.

You might be surprised that I am championing the Barnett formula and freedom of movement. Well, I'm not a fan of the Barnett formula as it discriminates in favour of Scotland compared with Wales and the poorer English regions, but the principle of wealth transfers is recognised here. And, if you want to have a single market and currency, I recognise that freedom of movement has to go with it. So yes, I agree that, for the EU to conceivably work properly, freedom of movement is essential. But so are many other things that they haven't got in place. And, if they had, that club is definitely not one I would want to be in. But the EU is a million miles from making it work at the moment and we are facing difficulties while we are in the EU as a result.

One of the difficulties is that our economy is a magnet for low earners, particularly in Eastern Europe. The availability of low cost labour has helped the UK economy but it has been unhelpful for low earners among the indigenous population, depressing wages. When freedom of movement was first conceived in the EU it was a smaller entity, comprised of Western European countries without large differences in living standards. They went for expansion and the single currency when perhaps it should have been one or the other.

I note that Jeremy Corbyn claimed in his conference speech to have the answer to the problem of wage disparity across the EU and its impact on what was his party's traditional core support, the lower paid British working class. On planet Corbyn  this is fixed by achieving "a degree of equality of work conditions and wages across Europe". As Poland's national income per head is 60% of ours and Bulgaria's is 40% this ain't going to happen on any sensible timescale. Unless, of course, Jeremy plans to rapidly reduce our level to theirs. I can perfectly well believe that's what he would do, though I even I might be prepared to give him the benefit of the doubt over whether he actually intends that. Unlike John McDonnell, who probably does.

You will have all realised that I called this post "jamais vu" because Corbyn and the Eurocrats have something in common: they can't see, won't see and so will never see the right answers to these problems.

No comments:

Post a Comment