what you get here

This is not a blog which expresses instant opinions on current events. It rather uses incidents, books (old and new), links and papers as jumping-off points for some reflections about our social endeavours.
So old posts are as good as new! And lots of useful links!

Thursday, November 27, 2014

Time to get off the fence!

Just over 2 months ago, the British political class was panicked into promising further powers to the Scots – and an apparently independent and enobled businessman was quickly wheeled into action by the British Prime Minister to deliver on those pledges -with the help of a committee nominated by the representatives of all five political parties in the Scottish Assembly.
The timetable was incredibly tight – since there is a General Election next May. Understandably there have been a lot of cynics….
But, incredibly, the report and recommendations (which carry the agreement of all parties) has now been published and seems quite radical – with all income tax from Scottish subjects, for example, to be transferred to the Scottish parliament! This is the full report - along with initial press coverage and readers' comments

This has been quite an autumn – with two of the three places I call home showing real spirit – and giving a real example to the rest of the world.

So let’s have an end to people sitting on their hands - and professing cynicism.
What Romanian and Scottish voters have done in the past 3 months is, hopefully, just a beginning……  although the various “electoral springs” of the past 5 years should be a real warning about false optimism.

Those hoping to change the ruling systems and paradigms of power need to do three things
do their homework – particularly (i) read up the history of how others have, over the ages, challenged power and its perversities and (ii) try better to understand the nature of the present global crisis……old solutions do not necessarily fit these times…
- cooperate more – it’s so easy to publish a book or start a website; what counts is how we reach out to others and try to create powerful networks
- show some humilitypeople are not waiting for leaders!! Indeed leadership is utterly discredited…… The comedian Russell Brand has attracted a lot of support recently for his diatribes against global capitalism - here’s an interesting assessment of what he has to offer.

And about time for Bulgaria to stir itself!!!

I'm reminded of a Russian proverb - Don't fear your enemies or friends! Fear the indifferent! You enemies can only destroy you; your friends can only betray you - it's the indifferent who allow your enemies to destroy you and your friends to betray you!!

3 comments:

  1. The proposals seem to me to be extremely dangerous. The most obvious danger is to reduce Scotland to a similar kind of situation as that faced by Greece. If Scotland has powers to raise tax, and a concomitant duty to cover its own expenditure, then it needs to have the power also to borrow to cover any fiscal deficit.

    But, Britain will never give Scotland the right to borrow within a currency union, because that would mean that Britain as a whole would lose control over the expenditure, and debt of the entire state. That is why, before Germany agree to a fiscal Europe for Europe, it requires the establishment of a political union, so that the central state has direct control over the total budget of that state.

    In the past, outside a monetary union, states were able to deal in the short term with their excessive debts by devaluing their currency, which meant that their people paid for those excessive debts by gradually falling living standards, as imported commodities rose in price, and they had to produce more of their own exports - in other words they had to work longer and harder - to bring in the same amount of foreign currency, as the external price of those commodities fell.

    Within a currency union, such as the Eurozone, or like that in Britain, this solution is not possible for capital. Any underlying lack of competitiveness by a national economy, can then only be remedied by some large scale capital investment, which raises productivity levels, and competitiveness within that national economy, or else by a drastic deflationary attack on nominal wages, such as has been seen in Greece.

    The more rational solution for Greece would have been the former. When Germany was reunited, West Germany pumped large amounts of capital into the east, to raise those productivity levels. It wasn't particularly altruistic. At the same time it was able to exploit large amounts of east German labour, and the sooner it raised East German competitiveness levels the sooner it reduced east German debt levels, that were now the responsibility of the federal German state.

    A similar thing happens with Scotland, with the capital investment, and fiscal transfers it receives from England. The solution for Greece is a United States of Europe with a central state budget and fiscal union, which is necessary for a monetary union. For Scotland, or any other part of the UK to move in the opposite direction - other than perhaps London, which would do very nicely thank you from being able to avoid fiscal transfers out, whilst continuing to suck capital in - would be economic madness.

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  2. Thanks, Boffy, for your contribution. Clearly, people have to go carefully - but it has to be understood by our readers that there is one feature at the heart of the 1997/98 Devolution Bill which totally breaches democratic principles - that the Scottish "Government" raises at the moment not one penny of taxation. Its spending on social, educational and infrastructural programmes (and many other sectors) comes from a unified budget allocation from the British Treasury under a formula (Sewell) agreed at the time.
    Any pain can be blamed on the English government - the Scottish government is able to wash its hands of any responsibility....
    From the democratic point of view, therefore, it makes sense for the UK government to make the Scottish government carry political accountability for the choices it makes (eg free university education and residential care of the elderly)

    As I understand it (my university economics education finished exactly 50 years ago) Federal systems (Germany; US) work this way - without the risks you mention......

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  3. The difference in a Federal system is that, because the federal government ultimately stands behind the debt, the federal government also has the final say over the state budget.

    But, as can be seen with the crises run up by US cities this does not eradicate the potential for such a problem. That is why I do not favour a federal system - or devolution - for the UK. More than 100 years ago, Engels pointed out that this was acting as a brake on a rational economic development of the US, and a look at how the Tea Party have been able to frustrate federal fiscal policy at a state level is further evidence of it.

    I would favour a federal United State of Europe as a step forward from the current ridiculous arrangement of nation states supposedly operating in a supposedly single market - which is nothing of the kind, and the current tensions over immigration, taxes and benefits demonstrate it - but only because it would be a step forward, not because it is the ideal solution.

    By contrast, where there is already a single unified state, with a single unified monetary and fiscal regime, it seems crazy to me to want to break it up!

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