Speaking of Walloons forcing a Byegium from the EU-Canada trade deal leads me to post this thoughtful email I received from Iain Bell, CEO of Quadrant Capital. Iain gives a balanced, alternative view to mine, therefore it’s worth a read …
I have found your last couple of posts to be quite feisty in fact, re Brexit and being a global citizen etc. So much so, that I was moved to write, not to take issue or argue, but to try to shed light on the other perspective (well, mine actually ? ) which takes the opposite view to you.
I voted Brexit, not out of jingoistic, nationalistic belief in British superiority. I voted Leave because I believe that monolithic centralistic powers, such as were and are, espoused by the proponents of the EU, are deeply inimical to the economic wellbeing of the supposed ‘citizens’ of the planned Federal superstate.
Anyway, there are a few contributory factors which influenced my vote and inform my worldview.
My perception of the effects of the networked world you talk about is that it actually destroys the information asymmetries that allowed governments to form the power base they currently hold. When you consider that in the past, without easy access to information, knowledge came from the priests (as you identified in the presentation you gave in Singapore), it was operated as a monopoly (never beneficial to the consumer) and this monopoly was inherited by secular governments. I have a feeling that the average internet-connected person today has more knowledge at their disposal than a government would have had, probably less than 150 years or so ago. So the trend in information distribution is flowing in the opposite direction to the intention of the EU, which was always to centralise decision making. Working in AI as I do, I am familiar with concepts such as ‘swarm intelligence’, ‘self-organisation’ (this is taking shape in financial markets as trade copying services). There is also economic theory regarding locality of information and the fact that remote decision makers can never make superior decisions to those situated locally with local knowledge. Essentially, the position of the EU, that the officials know best, is completely refutable. It was perceived by voters as an attempt to disenfranchise, and is easily recognisable within the operational structures of the EU, which are designed explicitly to be anti-democratic.
Terms like “anti-democratic” and “sovereignty” are dismissed as abstract by many. However, what sovereignty actually is, in its albeit imperfect way, is feedback to the decision making process within the government. Feedback is an essential component of intelligence. Error correction is the way most organisms learn, and this learning can be embedded in genes through the behaviours they engender actually leading to the organism having enhanced capability of survival and thereby driving increasing population fitness. A government with no feedback will have no way of correcting its errors, leading to destruction of the society it is tasked with administering. Government accountability implicitly forms the basis of such legal concepts as individual property rights (which are now largely recognised in their breach within our law) but the general principle exists within the legal systems of the Anglosphere that individuals possess rights, which are passed up to governments, not vice versa. This is also one of my objections to the UK being subsumed into a superstate; we actually legally and lawfully own the right to govern ourselves and this cannot be stripped from us arbitrarily, such as is envisaged in the EU treaties. Where rights are possessed by the individual, then taxation must be payment for a service and therefore contractual and so cannot be arbitrary and cannot be levied without due process and representation within the parliament. Direct taxation of income becomes legally questionable where there is no representation. These concepts are the foundation of the economic success of the Anglosphere. European legal thinking has it the other way round. Corpus Juris, Code Napoléon. I suggest that this anti‑democratic tendency in the EU is the actual cause of its economic malfunctioning, since accountability of the decision making is a requirement for its outcome to be beneficial to societal wellbeing.
Clearest evidence that lack of accountability is damaging is provided by the euro. The euro is an unmitigated disaster for the people of Europe. It has caused grave economic distortions that have impoverished the south (Greece, Italy, Spain and Portugal), and those countries will never recover while they are in the euro since their economies will not become German, and they will never be able to effect the internal deflation required by their levels of debt. Unable to inflate the debt away, and due to the mercantilist effects of having an overvalued currency they will never start growing again through exports, so they will eventually collapse. The main beneficiary of this policy has been Germany, which has effectively been running a mercantilist foreign trade policy with a massively undervalued currency. That the euro has been instigated by the elites in pursuit of all the trappings of statehood, while having these empirically determinable negative effects on a vast part of their population, is evidence of the total failure of governance. This failure is a direct result of the undemocratic procedure by which policy is advanced.
Clearly, the political aims of the EU take precedence over the economic. Economic benefit has always been the carrot, but the real aim is control of the resources of the member states by those who would dominate. That means Germany. Actually, it means a rag tag of euro “ex” Marxist, statists (Merkel, Goldman Sachs’ Barroso) and other hangers on Van Rompuy, Verhofstadt and all the like-thinking drones who have self-organised into membership of the EU Parliament). Since democratic accountability would prevent that, the method used to aggregate this power must by definition be undemocratic in order to secure its aim. Since lack of accountability is damaging to the economic wellbeing of the subject, i.e. the member states that the dominators wish to dominate, the entire project has unobtainable aims since the necessary method (unaccountability) is actually antithetical to the stated aims (economic wellbeing). That those who are most enthusiastic about this do not understand this is most certainly true, but the fact that they don’t understand it, is exactly reason for not allowing them to succeed in their aims. If they truly are unaware that their actions can only have a negative outcome and they clearly deny or are happy to ignore the real empirical negative impacts of their choices, then based on this evidence, expecting any good to come of the EU is not rational. Furthermore, based on this evidence, it is completely unrealistic to expect any other pattern from those in control since they don’t know they are doing anything wrong.
So against this backdrop, membership of the single market is entirely destructive to our long-term interests. The cost is simply way too high, and any apparent benefit will continue to diminish, if not ultimately evaporate. You mentioned this in the context of banking and the whole “access to the Eurozone through passporting” issue. Since the entire fractional reserve fiat-currency-based banking system is now largely insolvent, and given the entirely interwoven dependencies of all financial institutions, the UK banking system being, as a result of Brexit, somewhat separated from the EU, could actually turn out to be a blessing in disguise. The banking system as a whole is on seriously shaky ground, “a bed of nitro‑glycerine” to coin a phrase. In any case, the core banking functionality, i.e. guardianship of assets, the ability to transfer funds and make payments, is more akin to a utility. Governments are paranoid of the ATMs drying up (and politicians can also be influenced by money, which comes from … bankers). And this has given rise to a system where profits are private, whereas losses are public, a phenomenon written about by Nassim Taleb among others. But in any case, an industry that currently extracts 8% of global GDP for a utility function, facing a collapse of its creditworthiness while grappling with never-before-seen technological innovation threatening its core function, is actually ripe for a takedown. In the context of the EU argument, the UK would do well to encourage other forms of economic activity. Put another way, continued reliance on an industry facing such threats without giving it the stimulus to become more robust might not turn out well.
And addressing the issue about physical borders, and globalisation … globalisation is happening, it a process, a product of external circumstances, advances in communications and technology etc. It is not subject to democratic control, it is something happening organically within the fabric. This gives more weight to the argument that it poses threats that need to be managed rather than leaving it to do its thing unchecked or even stimulated by removing physical borders, possibly setting off an avalanche of uncontrollable change. Consider this. The abilities of the population as a whole vary, let’s assume it’s some sort of normal distribution, there’s probably a leftward skew. Those to the right are able to benefit from globalisation, those from the left are net losers from globalisation. The majority lose. This was why largely formerly labour voters in the north of England voted to leave. To argue that immigration is good for the economy is a falsehood, since the economy is made up of many parts. The part that is inhabited by the majority suffers. The part inhabited by a minority may do better by more, such that the aggregate is on the whole bigger, but it leads to increased inequality, social division and generally bad things that don’t show up in balance sheets.
So anyway I think we are going to move to micro societies that operate with increased technological capability and communicate on a peer to peer basis. Shared values will come from peer review and enhanced communication. The end of centralised redistributive collectivism started in 1978 (Gǎigé kāifàng) took another step in 1991 with the end of the Soviet Union. So goodbye EU. My guess is that 2021 will be the end.
Oh yeah, and Bitcoin….
READ NEXT: The case for bitcoin (or something like it)
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here.