Democracy and Europe

Democracy in a small enough context can mean that people can individually influence decisions that may affect them. It does not mean that they will get their own way, for of course they may be outvoted, so it may still happen that a democratic decision is imposed on the unwilling. Nor is there any guarantee that decisions will be good ones, for the majority may be wrong just as any individual can be wrong. But at least everyone has a chance to influence the decision. The tyranny of a majority you had a chance to be part of is somehow more palatable than a tyranny you were excluded from altogether.

This idea (sentiment?) has to be abandoned however when the number of people involved is too great. Even before that threshold is passed, decisions may be sufficiently complex that many individuals do not have the knowledge or experience to make an informed decision. They will then probably follow with their vote whomever they feel has the right expertise and commands their confidence. So we quickly arrive at the idea of representative or leadership democracy. If we cannot all participate in every decision, because of numbers or complexity, the next best thing is to have a say in who gets to make decisions. This is the basis of western democracy in its many forms.

The people get to choose periodically who will rule and crucially they get to remove leaders who no longer impress, so that the rulers must always bear this in mind in their decision making. Combined with checks and balances, such as divisions of power and rights of appeal, transparency and openness of information where these exist, this is the way most western states are organised. At its heart is the idea that power depends on and derives from the consent of the majority of the people for a given individual or group to lead, a consent which may be withdrawn if the results are unsatisfactory or unpalatable.

A significant part of the case against the European Union is that it has been deliberately designed to evade such democratic control. Despite the changes in the Lisbon Treaty, the unelected Commission not only holds great executive power and has the duty to enforce EU decisions against member states but has the sole right to propose legislation. Basically, much can happen just because the Commission wants it to happen and nothing can happen unless the Commission proposes it should. True, the European Parliament must now approve the appointment of the Commission initially and has the somewhat “nuclear” option to dismiss the whole Commission by a vote of no confidence. But whatever its supporters may say, this is far from being the same as the way governments are chosen in parliamentary democracies, where executive power goes to those who have participated in and won an election themselves. Besides, if the Parliament does refuse to ratify the commission it opposes itself to the Council of ministers rather than the Commisssion. And once ratified, to a large degree there are no democratic controls on the executive powers of the Commission. Yet it acts in many respects as the European Government. Indeed, it is charged to take its own view of what is best for Europe, in contrast to the council of ministers where national government interests are represented or the parliament which, however inadequately, represents the people directly.

Unfortunately, this is a highly technical issue which does not lend itself to soundbites. But significant reform in this area, possibly even abolishing the Commission or replacing it with a regulatory body without a stranglehold on legislation or wide executive powers, would go a long way to changing popular perception of the EU and making its institutions more accountable and responsive to its people. It should be central to the debate about whether the UK continues to be a member.

After all, that debate should not be about trade and whether membership adds or subtracts on balance from UK GDP, because nobody really knows about that and the putative answers that are touted are all compromised by self interest.

It should not be about whether the UK can again be a great power on its own, because the negative answer to that question is surely beyond debate and only nostalgia keeps the argument alive.

It should not even be about control of borders because as the current refugee crisis shows sheer numbers rather than laws are the issue there.

It should certainly not be about entitlement to welfare benefits which seems to have risen to the top of the U.K. wish list, maybe (is this too cynical?) because it can be settled very easily.

The debate should simply be about the way we in the UK relate to the rest of Europe. It makes no sense to have an antagonistic attitude to our nearest neighbours, we must surely cooperate on as many issues as possible. We must trade with them as much as possible and we need to find joint solutions to many problems, not least security and the environment, which in the modern world a single nation state cannot address in isolation. It does not necessarily follow however that we should all have the same laws, the same currency or the same policies, still less merge our national identities into a supra-national state.

But the combination of the Commission’s powers and the de facto position that it alone represents a European standpoint means that at the heart of all European legislation is a drive towards more and more integration – closer and closer union. It is no use the President of the Council (the key intergovernmental body) assuring the UK government that closer union is not an aim of the EU, nor the UK government interpreting that as an “opt-out” from closer union for the UK. The institutions of the EU and in particular the Commission enshrine integration as an objective and put incremental progress towards it beyond democratic control.

So the question is whether it is better for the UK to stay in the EU as it stands and try to reform it from within, or to leave and try to encourage it to evolve in a sensible, more democratic, non-integrationist direction from without. The pity is that the current renegotiation might have given us a unique opportunity to push for change, but it looks like the chance will be squandered for some relatively minor reform of welfare entitlements. It has to be said that a strategy of reform from within has failed miserably so far – and why wouldn’t it, when the powerful original members are pro-integration? Why then should we expect it to work in the future? Thus the choice is to accept a flawed and ill-founded set of institutions which reduce our freedoms and take us towards a destination none of us want, or leave and try to start again. Neither option is attractive or without danger. But Brexit may be the lesser of two evils.

One thing is certain. A “yes” vote in the referendum will mean business as usual. A “no” might mean that the will of the people is taken seriously in Brussels and Berlin and that renegotiation acquires new urgency even after the vote.

Replacing Trident

This is as much a profession of ignorance as anything else, I realise. But the thing is, I entirely see the old Cold War logic of deterrent nuclear missiles in submarines, targeted against an obvious, similarly armed potential foe, namely the Soviet Union. The submarines were supposedly difficult to find and destroy. In the event of an attack on the UK, which might even destroy all major cities and government institutions, a counter strike was still possible even if pointless, thus creating deterrence by mutually assured destruction.
However, I don’t understand the logic of replacing Trident with a similar setup, even though both our major national parties are currently committed to it. Whom are we deterring? At whom are the missiles to be aimed and potentially fired? If there were a crippling attack, presumably disrupting communications and the chain of command, what would be the submarine captains’ instructions? How would they know what to do?
Is this a classic example of fighting the last war, even if in this case the Cold War? Leaving aside the obvious observation that it is difficult to deter a suicide bomber by threats of destruction, the uncertainties are far too great for the deterrent strategy which worked in the Cold War to work today against terrorists and rogue states. So what are we doing trying to repeat it? Even if the greatest threat is deemed to come from a major power, which one is it and how does the isolated submarine captain know at the relevant time? If it is country X, what is to stop the enemies of country X launching a nuclear strike on the UK in the happy expectation that our submariners will launch their missiles?
Thus we could be made less not more secure by deterrence in modern conditions. Even if nuclear weapons are actually deemed essential options for our security rather than (as one sometimes suspects) the international prestige of our politicians, surely the strategy of missiles under the ocean cut off from outside interference is no longer relevant.
What are we doing? It’s not as if we couldn’t think of anything else to do with the cash, even if it were spent on other weapons. But the political class dare not voice such thoughts because to do so might be attacked as “soft”. So we blunder along into another expensive defence mistake. Plus ca change.

How can we tax multinationals fairly?

Large multinational companies can easily avoid paying tax in any particular jurisdiction, to the degree that many pay virtually nothing in the UK on massive business streams. But tax is and always has been a creature constructed by laws and if there is widespread abuse or unhappiness with the current results the only answer is to consider how best to change the laws. We have inherited certain taxes from the past, in this case most notably Corporation Tax which itself dates back only to the 1960’s. But the rules don’t seem to work for multinationals. Perhaps it is time to consider whether the notion of taxing profit, the net income of a company available to contribute to public purposes among other things, is outdated in an age when companies can choose where and how they manifest such surplus.

Moving profit around the world to minimise tax is nothing new, of course. For decades companies have tried transferring goods, intellectual property rights and licences, expertise and anything else they could think of so that costs appeared in higher tax countries and profits in low tax or no tax countries. For decades some governments have tried to keep up by disallowing each new device as it appeared, while others connived at avoidance by offering very low tax environments so that they would gain revenue at a low rate but on large volumes of diverted profit. The process was like a game, played for high stakes but relatively even sided until about the turn of the century. By then the ability to switch ownership, money, even the location of a sale with a few keystrokes had become an overwhelming advantage. It seems now that the game has been decisively won by the companies.

So if we believe that multinationals should contribute revenue for public purposes, it is no use tinkering with the rules of the game. We must change the game itself. One way to go might be to tax sales revenues rather than profits. Another would be to divide declared world profits according to sales revenues in each country, the so called unitary tax method which some US states tried to impose in the 1970’s but fell foul of international tax treaties. World profits are less understated than country profits because they are what justifies a company’s management to its shareholders and drives the share price on which executive bonuses often depend.

But both of these suggestions suffer from the same problem. When you buy something on the internet from the UK you may without even realising it be dealing with a company in a tax haven (such as Luxembourg) and that is where your purchase is filled. No UK-based company actually sells anything in this instance. The website says “UK” but the small print says otherwise.

So the solution has to be radical to take account of the radical change the Internet has brought about in the way business is done. Here is one idea. The location of the buyer rather than the seller could be legislated to be the determining factor of where a sale takes place for tax purposes. That location is not difficult to detect and police on the internet. Indeed, multinationals themselves could be required to log sales according to the location of the buyer and tax could then be based on “value of goods bought per country”. World profits, for example, could be divided up by this measure, or a new tax could replace tax on profits and be based on it.

This is not a trivial change. It would require alteration or even unwinding of international tax treaties and understandings built up over decades. It would of course be bitterly opposed by multinationals and their apologists. It would be opposed even in the forums which consider international tax matters like the OECD by countries who have done well out of providing a home for tax avoidance. It would obviously only work fully and equitably if it was adopted by many countries, and although it could work perfectly well unilaterally there would be the usual, inevitable and false scares that it would destroy jobs. In fact, it would only destroy jobs in the tax avoidance industry, because the location of customers is one factor even multinationals do not control. Of course, someone would eventually come up with a way to cheat the system (someone always does) but meanwhile multinationals might contribute a little more to the countries they harvest.

Taxing multinationals fairly is thus possible but it is not easy or quick. It requires radical changes in the way the taxation of multinational sales and profits are understood and in the way countries seek to divide tax sources between them. All the more reason to address the problem sooner rather than later, by getting such ideas onto the political agenda.

British air strikes on Syria

I just do not know whether the UK dropping bombs on – or even firing incredibly well targeted missiles at – Syria will help to defeat Daesh, as we are now told we should call the vicious bandits who masquerade there as religious. I do not know whether it will bring peace to that exhausted part of the world. It seems intrinsically unlikely, since three major powers are already blasting away and it seems that their efforts are insufficient, or why else would they be eager for us to have a go? But the intelligence reports and the military knowledge are not something I have at my disposal so how can I make an informed judgement about such a very complex situation? In that I am, ironically, in the same position as most MP’s who voted on the matter, but that happens.

But as I read the reports of this week’s debate in the House of Commons, the principal argument seemed to be the same very bad argument which underpinned our participation in the invasion of Iraq. “Our friends are doing it, we don’t want to be left out or they may think the worse of us.” Killing people to defend others is certainly ethically acceptable in the right circumstances, but killing people to enhance one’s reputation or be part of the in-crowd? I doubt it.

I was left with other serious misgivings, of which two will suffice. First, most people seem to accept that air strikes are only of real use in support of a ground offensive, which makes a sort of sense to a military layman. You can destroy things from the air and you can make life very difficult for those on the ground, but you cannot retake territory. But none of the Western powers is interested in a ground offensive, so a mythical army of 70,000 local “moderate” fighters was conjured up. There is clearly no such army, there is at best a multitude of small rival groups. Even the total number of ground fighters who could be described as “moderate” in their level of fanaticism is probably much smaller than suggested. Many people have pointed this out and it seems now to be commonly accepted but it must have been well known when the case was set out. It was, in fact, a brazen lie.

The second serious objection was to the use of the term “terrorist sympathisers” by the Prime Minister to describe anyone who disagreed with the government case. It is impossible, then, to disagree with the government without sympathising with terrorists? There is no possibility that the government may be mistaken, even on points of detail? This is just nasty, it is bullying of the sort we associate with totalitarian regimes. Logically, it is the weakest sort of argument, nearly always used to bolster a suspect case, the argumentum ad hominem, which translates from Latin to soccer as playing the man rather than the ball. But politically, it suggests a willingness to smear and discredit rather than discuss, a desire not to bother with the real substance of the issue at all. It is the sort of tactic which distorts democracy because it will not concede the essential prerequisite of democracy, that there can be honest opposition. It is one step away from arresting dissenters, and only a few steps away from fascism.

I do not know whether the UK dropping bombs on Syria will bring peace. But I know that the way we came to that decision has made me ashamed of my government and fearful for my country.

Regional devolution

One thing (among many) that Scottish nationalism highlights is that there is very little substance in the idea of English nationalism. Englishness is a synthetic thing, although perhaps no more than the northern variety since Scottish nationalism is often more a question of anti-Westminsterism than local ethnic pride. The North East, the South West, even the polymorphous capital attract stronger loyalties than attach to a mythical St George’s Land, except of course when sport is involved. I speak incidentally as one born in the North East, brought up in Kent and then in Yorkshire, educated in the East of England, who worked in London and now lives in the East Midlands.

Maybe I’m alone in thinking this, but to me the SNP shows a very undemocratic contempt for the people of Scotland. Independence apart, the SNP cannot hope to command a majority for their programme in the UK so they demand a different electorate. If that electorate returns the wrong answer as they did in 2014, the electorate is wrong. They must do it again until they get it right, at which point their decision becomes the irrevocable and timeless will of the Scottish people! But for all that, Scottish independence will inevitably come, partly because of that autocratic logic, partly because UK politicians have not been and still do not seem to be able to think of anything other than to take step after mesmerised step into the swamp.

But before anyone gets carried away with the idea that we should have English devolution to match the next inevitable round of appeasement of Scottish Nationalism, why can’t we think again about regional devolution? Scotland after all is in population terms only middling among the existing recognised regions of the UK – look at the regional population figures. London already enjoys significant autonomy and an autonomous Greater Manchester is George Osborne’s pet project. Why not devolve more powers to the regions – North West, North East, Yorkshire and the Humber, East Midlands, West Midlands, East, South East, South West, London, Scotland , Wales, Northern Ireland – and turn the UK Parliament into a federal parliament exercising whatever powers need to remain at the federal level?

OK, there are many reasons why not. But mostly they have to do with vested interests. First, since the genie is a long way out of the bottle, every region would have to have as much autonomy as Scotland. That is complicated, and would require incredible sacrifice by Westminster for the greater good. But is it really a bad thing? Huge national organisations have very few advantages and always need a regional structure even now – think NHS. They could still exercise powers federally if they saw advantage in so doing. Taxation would vary regionally, which might make income and corporation taxes tricky to administer, but surely rules could be devised to cope. If the taxation problem proved really to be intractable that would be a signal than certain taxes had to be federal.

There would of course be some “post code lottery” problems. But it would be up to regional powers to keep up with their neighbours or face the wrath of their people, so such problems should generally be short term. Westminster would lose power overall, which would be the biggest obstacle, the biggest vested interest and the reason why national parties and politicians would not even like to have this option discussed. It is the reason however why it needs to be discussed.

Then there is the “wasteful extra layer of government” argument. This is a good argument, so why not abolish the county level as a quid pro quo? Already the shires can be heard stirring, too many pockets of power, too many cosy relationships and political careers threatened! Yes, it would be a big change, but after the dust settled? Regions and districts without the middle layer would make a lot of sense.

Another objection is that some regions would be dominated by one or more conurbations. Well, they are! If the conurbations are where the population is concentrated, what principle of democracy suggests the conurbations should not be dominant in their regions? If the fear is that the leaders of conurbations cannot be trusted to understand rural matters, maybe there should be some federal powers to protect rural areas. But there is an immensely patronising assumption built in there.

On the plus side, regional loyalties and traditions are far stronger than any Shakespearean appeal to Englishness. Regions are real. They exist already, not just in the administrative arrangements of many national organisations, including government, but in the hearts and minds of the people who live, say, in Yorkshire, or the South West. Nationalist separatism within the UK is little more than this regional loyalty wrapped in a resentful history. So why not recognise what already exists? In this way separatist sentiment has a better chance of being contained and regional resentments can be recognised and channeled for the good of the region. It is the best option for retaining a United Kingdom, by embracing a federal form.

Many regions chafe now at the dominance of London and the South East. Regional devolution allows, indeed challenges, any region to do something about that, especially if at the federal level all regions are equal in political power. Scotland, Wales and Northern Ireland would have more power than their population numbers justify, but no change there. Westminster, assuming the federal capital stays in London which should certainly be up for debate, would be diminished. But the UK would be stronger.

In the next five years we face an unremitting assault on the integrity of the UK and an attempt by one region to separate on, let us be honest and who can blame them, terms which are as favourable to them as possible – which means as detrimental as possible to everyone else. A federal structure of government based on regions is no Utopia. But it might just create a fairer deal for everyone in the UK.