Plus ça change….

25 April, 2012

This cartoon was reproduced in The Irish Times on 25th April 2012.  It was originally published in Punch in 1909.

Instead of John Redmond, just substitute David Boyd Barrett or Joe Higgins or any multi-purpose rabble-rouser, and instead of Saxon tyranny let’s think of the “oppressors” in the ECB or the troika.  We want their money, but they can keep their policies.

Todays Financial Times has an interesting comment piece from Bill Clinton’s former Treasury Secretary, Lawrence Summers.  Here is a small extract.

 ….no country can be expected to generate huge primary surpluses for long periods  for the benefit of foreign creditors. Meeting debt burdens at rates currently  charged by the official sector for credit – let alone the private sector – would  involve burdens on Greece, Ireland and Portugal comparable to the reparations’ burdens Keynes warned about in The Economic Consequences of the Peace ….  The twin realities that Greece, Italy and Ireland need debt relief and that the  creditors have only limited capacity to take immediate losses, mean that all  approaches require increased efforts from the European centre.

Given the comparison used by Summers, it’s ironic that it is the Germans that are in the vanguard of attempts to avoid sensible burden-sharing among the wealthier Eurozone nations.  Current ECB policy is trying to impose a “Carthaginian Peace” on the Eurozone, which will have severe consequences for all, not just the bailed-out countries.

As an aside, I wonder does German Chancellor Angela Merkel (a highly-qualified physicist) agree with Summers’ controversial remarks in a 2005 speech where he suggested that the under-representation of women in science and engineering could be due to a “different availability of aptitude at the high end,” and less to patterns of discrimination and socialization?  His remarks are believed to have contributed to his resigning his position as president of Harvard University the following year.

Now here’s a story to give you a warm glow, especially if you are a taxpayer in the European Union.

The European Union’s highest court officially reprimanded France on Thursday (9 June) for not doing enough to care for hamsters.

Ruling on a case brought by the European Commission three years ago, the  European Court of Justice determined that the French republic had shown a lack  of due care towards its dwindling population of the black-bellied rodents.

Wild European hamsters, which can live for four years and grow to more than  20 cm in length, are considered farmland pests, but are threatened with  extinction in their small habitat in Alsace, eastern France.

The court found France had allowed harmful crops and unchecked urbanisation  to destroy nearly 1,000 hamster burrows between 2001 and 2007.

“The court holds that the measures to protect the  European hamster in Alsace, implemented by France, were not adequate” to protect  the species, it said a statement,  adding that France needed to address the situation immediately.

Under the ruling, France must adjust its agriculture and urbanisation  practices or face daily fines from the European Union. As the European Court of  Justice is the EU’s highest court, France has no further right of appeal.

There are an estimated 800 wild European hamsters left in France, although  there are plentiful populations elsewhere on the continent.

Hamsters are protected under the EU Habitats Directive, which requires  countries to protect animal species “of Community interest,” including the  European hamster, the court recalled.

The mind boggles at the cost of this exercise, involving highly-paid Commission officials and armies of lawyers and officials.  No wonder that the European Union’s annual budget for administering its institutions, including the Commission and the European Court of Justice, is €8 billion (out of a total EU budget of about €140 billion) and rising.

I concede that there is some price that we should be willing to pay for biodiversity, and I acknowledge that the Commission has a mandate to take action against a Member State which has failed to comply with its obligations under European Union law.  But surely, when it comes to allocating resources to this role, there are greater priorities for the Commission than looking after a few hamsters?

Bini Smaghi at it again

13 April, 2011

In today’s FT our “friend” from the ECB, Lorenzo Bini Smaghi,  is saying that Irish taxpayers shouldn’t complain if they have to bear heavy burdens which arose from failures in local financial regulation.   This is the same tune we have heard him singing before: ‘Ireland’s meltdown is the outcome of the policies of its elected politicians’

Just because it’s true doesn’t mean he has to keep rubbing it in….

There has developed a popular theme (meme?) in Ireland of late: namely that Germany, France and other countries must share the pain with us because it was their banks that lent boatloads of money to our banks to throw at property developers.

It certainly suits the Irish case (and character) to maintain that others must share responsibility, and only the very hard-hearted (which no doubt includes Lorenzo) would see no merit whatsoever in that argument.

But it’s a bit like the argument as to whether a bar owner bears any responsibility if he keeps selling drink to a clearly inebriated customer who then smashes himself up in a drink-driving car accident.  Is the drinker fully to blame, or does the bar owner have any legal (or moral) liability? 

In most States of the USA, under what are known as dram shop laws, a bar that lets an obviously drunk customer drive away can be held financially responsible for damage caused by that customer.   The principle has yet to be established, or legislated for, in Ireland.

Nevertheless, perhaps the Irish taxpayer should mount a lawsuit against the ECB to establish that they share responsibility for the damage caused by the Irish Government’s and Irish banks’ fiscal drink-driving.  If it would shut Lorenzo up, it might be worth a try.

The most recent post on the blog of BBC Newsnight’s economics editor Paul Mason is called “Timetable of the euro-showdown” and is very informative, albeit slightly worrying.

 As an aside, it includes this quote: “So the difference in this phase of the crisis is that what is driving the problem is not economic collapse and abject political mis-accounting (as per Greece) nor the collapse of a kleptocratic banking and property elite (as per Ireland), but collapsing confidence in the Eurozone’s authorities.”

Interesting to see Auntie Beeb’s man describing what we had as a kleptocracy.

From The Economist:

Italians, unlike the British, French and, increasingly, the Germans, do not see the EU as an arena for the resolution of conflicting national interests. Instead, “Europe”, always referred to as if it were somewhere else, is a supplement to—and maybe, one day, a replacement for—their own government, which is axiomatically bad. The EU is like one of those benign but stern creators that reach out of the clouds in Renaissance masterpieces.

To successive Italian governments, “Europe” has been a convenient excuse for imposing unpopular measures. It is why Italians must sort their rubbish, give up their farmland and let in foreign goods. “Europe” is also the reason why certain things cannot be done—in the bureaucratic slang of Rome, it is the vincolo esterno (external constraint).

I have commented before (for instance here, and here) on how the EU pays lip service to the principle of subsidiarity, while in practice it seeks to expand continuously the range of areas over which it takes action.  Almost every month there are fresh examples of matters that should be dealt with at national level, but on which the EU sees fit to initiate legislation.  A good example surfaced today.

Belgium wants to use its EU presidency to underline the key societal role played by companion animals like dogs and cats, Belgian Deputy Prime Minister for Health and Social Affairs Laurette Onkelinx announced yesterday (9 September)…… “During our country’s presidency of the Council, we are underlining the important role of companion animals in civil society,” said Onkelinx, speaking at the launch of a website on dog welfare in Brussels.  “Dog and cat overpopulation creates a lot of suffering for unwanted animals,” she added, explaining that “sharing information and experience is the basis for every development in animal welfare, and here, for a Europe-wide solution and strategy to create an appropriate and responsible attitude by us humans towards animals”.  Onkelinx pointed to the Treaty of Lisbon, Article 13 of which reads “the [European] Union and the member states shall, since animals are sentient beings, pay full regard to the welfare requirements of animals,” as a possible basis for further EU action in this area.

It’s no wonder that EU citizens have to stump up €8 billion a year (out of a total EU budget of €130 billion) to pay for the cost of administration – it must take a lot of Commission officials to look after Fido’s welfare.

Disclaimer follows …..  In citing the above example, I am making no statement as to whether or not I think the effect of any proposed legislation is good or bad (it would presumably be good, on balance); only that I think national legislatures should be responsible for enacting it (or not enacting it).   So please don’t attack me, dog-lovers and cat-lovers!

Minister for Finance Brian Lenihan was quoted this week as saying that “….. there is nothing in the Lisbon Treaty that diminishes our sovereignty in fiscal matters….. the government secured a protocol confirming this position in advance of the second Lisbon referendum.  To suggest ….. that our corporation tax rate is threatened by proposals announced today is highly irresponsible and certainly not in the interests of this economy which depends so much on foreign direct investment.   As I said in my Budget speech: ‘The 12.5% Corporation Tax rate will not change. It is here to stay.'”

I think he is whistling in the graveyard.  He is right in saying that the Corporation Tax rate in Ireland will remain at 12.5%.  But that’s not going to matter, because what’s really going to happen is that the EU, or a large subset of its member states,  will introduce a new tax system allowing them to tax companies, irrespective of where they are incorporated or are resident, largely on the basis of the proportion of sales made in each country.   That system is part of proposals for what’s known as a Common Consolidated Corporate Tax Base (CCCTB).

So if you have a company resident and managed in Ireland, the current system means that all its profits are taxed in Ireland at 12.5%.  But let’s say that 40% of that company’s sales in the EU are made into France.  What’s likely to happen when CCCTB comes into force is that France will levy Corporation Tax (at their, higher, rate) on 40% of the Irish company’s EU-wide profits.  That’s a bit simplified, and of course credit will be given for Irish tax already paid on those profits, to avoid double taxation, but it indicates the nature of the problem.

Since Ireland is a very small country, most sales by multinational companies are made outside the country.  The danger of CCCTB is therefore very real and very large.

But doesn’t Ireland have a veto on changes such as this?  Well, we have a veto on any direct challenge to the actual rate at which we charge Corporation tax, but we may not be able to stop other EU member states from pressing ahead and changing their tax systems to one based on CCCTB.   The responsible EU Commissioner (who has the cumbersome title of Commissioner for Taxation and Customs Union, Audit and Anti-Fraud) is of a mind that CCCTB should be implemented by means of the “enhanced cooperation procedure”  of the EU Treaty.  This procedure would only require that one-third of all EU member states agree to implement CCCTB in their territories, and they could go ahead.  

The enhanced cooperation procedure is the means by which the concept of a “two-speed Europe” will come into being, and Ireland’s corporation tax advantage could be its first victim.

It’s one of the sacred cows of Irish politics: that we are a neutral country.  

Our sham neutrality has its origins in the struggle for independence and the partition question.  Rabid republicans were so blinded by their hatred of the old enemy Britain that they welcomed its possible defeat by Hitler and his allies.  Not taking sides in the Second World War, or not even having an official view as to the relative merits of Nazi dictatorship and democratic Britain, was a bit dodgy, so it had to be elevated to something grander than a mere cosying up to “my enemy’s enemy”.  Hence this wonderful principle of “neutrality”.

If Russian troops landed tomorrow on the west coast and set about annexing this brave Republic, would we not be shocked if the United States and other EU countries did nothing to help us?  We  certainly would feel aggrieved.  So why do we not expect this to work in reverse?  If our friends are prepared to sacrifice their citizens’  lives to keep Ireland free, should we not be prepared to lift a finger when they are in danger?

Sixty years ago, when the world was sharply divided between totalitarian communism (is there any other sort?) on the one hand, and free market economies (both democratic and non-democratic) on the other hand, there was a case to be made for not being willing to support either side militarily.  Even then, it was a pretty disgraceful position, as the tyranny and cruelty of Stalinism had been exposed, and the arms-bearers of Britain and the United States had saved our bacon from Nazi rule. 

Eleven years ago when NATO tried to save Kosovo by attacking Serbia, Ireland had no view on the matter. As one jornalist wrote “In the first war on European soil in some 50 years, the Government neither approved nor disapproved of the Nato action.  Ireland’s neutrality policy on the issue was hard to explain, and even more difficult to justify.”

Just what does “neutrality” mean in 2010?  In what dispute are we neutral?  Is there no cause which would justify us taking up arms?  Are we always going to be freeloaders? 

Sean Lemass remarked that  “a Europe worth joining is a Europe worth defending” and he was correct.  Martin Luther King, quoting Dante Alighieri, said that “The hottest places in hell are reserved for those who in times of great moral crises maintain their neutrality”

Another religious man, Bishop Desmond Tutu, warned that “If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.”   

There’s truth in the old saying that the minute your shift into Neutral when you’re trying to go up a hill, you start going backwards.  So which of our political parties is going to be brave enough to call a halt to this craven and backward policy?  I’m not holding my breath.  Until other countries publicly call us out on this, instead of muttering behind closed doors, our politicians will continue to confuse cowardice with principle.

OK, so I’m not a professional economist, or a qualified lawyer, but fools rush in …..

Firstly, do the EU Treaties, and Article 125 in particular, really prevent a bailout of Greece, as we see/hear said frequently?  I don’t think so, but it depends what you mean by bailout.

Article 125 of the TFEU (post-Lisbon Treaty) states: “The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume …… etc etc”.

So, despite what some commentators have said, there is no prohibition on lending money to Greece; what can’t happen is for the EU or any Member State to take over its loans, or give it “free money”  And I would think that, as long as the interest rate charged is not unreasonably low, there would be no problem.

Secondly, almost regardless of what interest rate the Eurozone members charge Greece , I expect to see a challenge brought in the German Constitutional Court to the German participation in the loan facility.  I have already commented on that Court’s robust attitude to all EU matters, and the way it jealously guards what it considers is its ultimate right to decide if Union activities are ultra viressee this post

In a famous case in 1993, a Eurosceptic member of the FDP Liberal party took the Maastricht treaty to the German Constitutional Court in Karlsruhe, claiming that the abolition of the deutsche mark (as part of the creation of the Euro)  was unconstitutional. The court only agreed to permit the ratification of the treaty by Germany on the basis that currency stability would be as well protected by the European Central Bank as it had been by the Bundesbank.  There has, in effect, been a threat hanging over the ECB and the Eurosystem that at any time the good judges in Karlsruhe might seek to trump their actions; this would bring to a head the unresolved issue (at least in the minds of the German judges) as to who, in law, gets to make the final determination as to whether an action of the EU is ultra vires, and goes beyond the legal authority conferred by Member States in the various EU treaties.

Thirdly, a question: why is the Euro being hit so badly by the fiscal woes of Greece and other delinquent states, when the value of the dollar is apparently not affected by the budget deficit and debt problems being experienced by (for instance) California?

Fourthly, if Greece defaults (and some observers believe this is very likely), might the resulting grief suffered by that country’s citizens be a help to the Irish government in its battle with our public service unions?  Maybe Greece needs to be the sacrificial victim, pour encourager les autres?

Here we go again.   The placebo-pushers are on the move.  And unfortunately I read here that an Irish MEP is to the fore in promoting this nonsense:

“The third EU Homeopathy Day will be hosted by Marian Harkin MEP in the European Parliament on 23 March. Organised by the European associations of patients, practitioners, doctors and pharmacists of homeopathy and the European homeopathic and anthroposophic medicine industry association, the event will focus on the need to respect the choices and preferences of the 100 million users of homeopathy and anthroposophic medicine in Europe and to act on their request for the integration of homeopathy and complementary medicine into health care policy.”

It appears that the European Commission plans to launch a review of EU pharmaceutical laws, so the homeopathy quacks feel that it’s a good time to launch a lobbying push in Brussels.  They want  the EU to require all member states to provide access to their worthless products  from publicly-funded health systems.  That’s your taxes, dear reader, that will be used to promote products that have never been shown to have any beneficial effect, except possibly at the level of a placebo, other than in dodgy and biased tests. 

What next? Free witchcraft services for medical card holders? Read the rest of this entry »

There is now a prospect of Germany and other Euro members co-ordinating a bailout of Greece’s finances, supposedly to support (rescue?) the Euro.  I wonder if this is an example of political pride get in the way of sound political economy.

I didn’t see the US Federal Government, much less individual US states, stepping in to bail out California’s finances after they got into a mess.  Where was all the talk about intervention being needed in California so as to protect the US Dollar?

So why not let events take their course in the Eurozone?  Eventually, the cost to Greece of raising new debt would become sufficiently high that it would be forced by the market into massive expenditure cuts, just like California. The standard of living in Greece would fall to what is justified by their national output. Just think West Virginia.

I don’t think German taxpayers should permanently subsidise the standard of living of badly-managed Eurozone countries, at least not to any great extent.

If you say to me that expenditure cuts couldn’t happen in Greece because there would be civil unrest and political collapse, then I suggest that it would be better if Greece were not in the Euro zone in the first place.

I don’t think the above is special to Greece, by the way – it applies to any PIGS member. (Is Ireland still a PIGS member?)

Every time I receive a gas bill or an electricity bill I get a bulky brochure.  The brochure mainly contains stuff that I have absolutely no interest in reading and, to add insult to injury, it is 100% larger than it needs to be because it’s printed in both English and Irish. 

What a disgraceful waste of paper, ink, fuel etc etc.  I am not given the option of receiving no brochure at all (a link to an online version would do nicely), nor am I given the right to opt out of the dual language version and get a slimline, monolingual version instead.  The price of submitting to the vanity of the extreme wing of the Irish language lobby is high, both socially and ecologically.

Read the rest of this entry »

Canada has filed an official complaint at the World Trade Organisation against a European Union ban on imported seal products, saying it violated trade rules. Foreign ministers in Brussels adopted in July a ban on seal products from Canada, ruling the goods could not be marketed in the 27 EU nations. In a letter sent to the European Union and the WTO, Canada said the move was inconsistent with the EU’s obligations under international trade rules.

Now I’m not necessarily in favour of allowing seal products be sold in Ireland.  Frankly I don’t know enough about Canadian seals, how they are killed and processed, the Inuits who depend on them for a living, whether seals are an endangered species, or any of the other issues relevant to deciding on this particular matter.

But I am puzzled as to why this was decided in Brussels and not separately in Dublin, London, Paris etc etc.  Read the rest of this entry »

Abortion and Lisbon

29 September, 2009

It’s annoying to see another crackpot letter in The Irish Times  last Friday arguing that we should vote No to the Lisbon Treaty because of the abortion issue.  The letter,  from Rev Anthony Scully, includes this choice extract:

The European Union has embraced the “Culture of Death”. Yet again, Europe has become a slaughterhouse. Millions of its own children have been exterminated. Defenceless human beings have been and are being denied the right to life.  A vote for the Lisbon Treaty is a vote for the culture of death.

This is crazy stuff, and I’m surprised that The Irish Times gives space to such inflammatory and perverse outpourings.

Already (even in Ireland) we implicitly, and necessarily,  recognise that the death of a foetus does not warrant the same legal protection as the death of a child or adult.  For otherwise our law would require that, every time a woman becomes pregnant but fails to deliver a live baby in due course, there would be a full and formal legal Inquest into the “death” of the “person” . 

Read the rest of this entry »

I consistently argue that there is a perfectly respectable basis on which to vote No in the upcoming Lisbon referendum, as in this post.  But there is such a plethora of extremists and crackpots who are on the same side of the fence, that it makes it an uncomfortable position to maintain.  And with every passing day, I find it harder to raise my head above the parapet on this issue. 

The last straw is probably the new campaign by Cóir, which includes some of the crassest and idiotic posters I have yet seen.  For ignorance and fallaciousness, it’s hard to beat the one that says “€1.84 Minimum Wage after Lisbon?”.   Equally disappointing was Read the rest of this entry »

I’m looking at the photo today on page 7 of the Irish Times of the outsize red and yellow cards being brandished by campaign director Pat Cox and (Ireland for Europe chairwoman) Prof Brigid Laffan.  The caption says that they were at the Office of the Referendum Commission in Dublin yesterday to urge red and yellow penalty cards for those “who tell lies” about the Lisbon Treaty.

Am I alone in feeling patronised by this toytown approach to the Lisbon debate? My only surprise is that Mr Smug himself, our Minister for European Affairs, isn’t present to add his (considerable) weight.

This adds to my annoyance that Prof Laffan’s organisation, by virtue of its title, assumes that anybody who is against the Lisbon Treaty must be against Ireland’s full participation in the EU (I am assuming that when when they say “Ireland for Europe”, they mean the EU and not the geographical entity….).  This is emphatically not the case.

And while I’m at it, how come the Referendum Commission is allowing its offices to be used in this way by one particular side of the argument?

Perhaps the juggernaut of  EU integration (and the centralisation of law-making authority)  has had some sand thrown into its machinery.  From what might be thought a surprising source as well.

 Germany’s constitutional court ruled on 30 June that, while the proposed Lisbon Treaty is compatible with the country’s constitution, the German parliament should have the final say if the EU wanted to extend the competences beyond what is contained in the treaty.  In addition, the judges ruled that Germany’s highest court should have final say on interpretation of EU law, allowing it to overturn judgements by the European Court of Justice (ECJ).  The 147 page-long ruling suspended the ratification process of the treaty until the new provisions requested by the court come into force.

Der Spiegel has some interesting background and comments :  “In essence, the court ruled that by passing the so-called ‘accompanying law’ to the Lisbon Treaty, which determines the rights of German parliament to participate in European legislation, the representatives had relinquished significant monitoring rights to Brussels. According to the judges, this unconstitutionally subjects the people that they represent to the whims of a bureaucracy that lacks sufficient democratic legitimacy.”   Ouch.  Read the rest of this entry »

Ireland has benefited greatly from membership of the EU, and hopefully it will continue to do so as a full and commited member.  However, to be deeply involved in and to respect an institution of which one is a member does not mean that one suspends one’s critical facilities or simply stands back when one believes that the instution is heading in the wrong direction with its policies.

This is what has been happening for many years with the EU, which has been engaged in a centralisation of power and legislative capacity towards its own institutions at the expense of lawmakers and citizens in individual member states.  What is most difficult to cope with is that there does not seem to be a coherent philosophy which underpins this drift towards the centre; rather there is just an inexorable process which is driven mainly by the self-interest of the Commission, the Parliament and the European Court of Justice.   A recent report by the Institute of Economic Affairs has an excellent overview of this topic.

Thre are many areas of law-making which can undeniably be more effectively and coherently implemented at the EU level, but at present there is no simple way ensuring that the principle of Subsidiarity is adhered to (and the related proposals in the Lisbon Treaty are fairly toothless).  Read the rest of this entry »

The European Commission on 30 June called on member states to boost their non-smoking legislation in order to move towards a “smoke free” EU by 2012.  The Commission is suggesting that smoking in “enclosed public places, workplaces and public transport” be banned by 2012, while children’s exposure to tobacco should be specifically tackled and “efforts to give up tobacco use and pictorial warnings on tobacco packages” should be encouraged.

Now I think the objective here is a good one, and Ireland already is well advanced in the area of anti-smoking legislation.  But that’s not the point.   The point is that I can’t see why, following the principle of Subsidiarity, the Commission cannot leave it to each member state to decide how far to go in combating smoking under its laws.  Read the rest of this entry »