The Scourge of Europe

Unless you have been under a rock for the past year, Europe is in financial meltdown; nations need bailouts, Italian and Spanish bonds have hit record highs, no one believes European countries can pay their debts. Europe is plagued by a scourge of economic pessimism; its source is the shady world of rating agencies.

In recent months, the rating agencies Moody’s, Standard & Poor’s and Fitch have been busy and predatory across the EU. Their most recent target is France, one of the few states to retain a top AAA rating. But these agencies are still downgrading; Fitch downgraded Cyprus on 10^th August, Spain and Italy at the start of August, Greece again at the end of July – it is a never ending cycle. So busy are these agencies that El Periodico has reported that their market value has trebled since 2006 (El Periodico, 14/07/2011).

The same piece in El Periodico points out the problems of rating agencies; they are an ‘oligopoly’ working in tandem with each other, they have a huge influence on unregulated North American based financial markets, they create sub-prime derivatives which were rated AAA until days before the crisis. But the criticism of these agencies are more than economic; the rating they give states affects domestic policy and state spending, by downgrading they send nations into austerity and create unemployment – and all for their own profit.

As Spanish daily ABC noted, “rumour mongering has caused dramatic falls in global markets” (ABC, 11/08/2011). While the second Greek bailout was being discussed, a rumour emerged from Wall Street that Greece had defaulted; the simple questions are who and why? Further, why are these people who failed to predict the recession in the first place having their advice so trusted? They suck at their job, and yet people trust them to do it.

Someone somewhere is making a profit from austerity and poverty. Governments are cutting public expenditure; hospitals, schools and policing (maybe not policing in Greece) because they do not want to be downgraded by these rating agencies. The wellbeing of the economy is so central to government domestic policy that it cannot be left in the hands of the few. The self regulating markets are about as responsible as any other self-regulating body. Look at the internet; give some people total freedom and you end up with 4Chan – perhaps the best example of why self-regulation does not work.

Governments are being held to ransom by rating agencies. They have caused far more pain than any other force. Every time a plan is made or a meeting arranged to save the Euro, or any other solution to the crisis is proposed, they sabotage proceedings; just days after Greece was saved the Euro was in crisis again, countless crisis talks have ended with plans that have been instantly dashed by these agencies “feeling uncomfortable”. Economics should never be tied to how “comfortable” some wealthy speculator on Wall Street feels. Rating agencies offer no obvious benefit to any state and make a living and a handsome profit from poverty. They are idle profiteers of the worst kind. The sooner we shed our economies of their influence, the sooner Europe can get out of this crisis. It is the first thing that the EU must do; get rid of rating agencies. Only in solidarity can our states get rid of them.

The signs are good; recently there have been suggestions that Europe create its own rating agency. It’s still a rating agency, but at least it’s not one based in Wall Street or sympathetic to American neo-liberal ideology which is simply not compatible with European welfarism.

Having said that, an article from the Czech paper Hospodarske Noviny (25/08/2011) headlines that Standard & Poor increased the Czech Republic’s rating by two notches, which is a move that should be welcomed and perhaps puts an end the question over Czech joining the Euro (various comparisons have been drawn to Slovakia as to which nation benefited from joining or abstaining). But the worry in the article is the new criteria in place by Standard & Poor; “which from now on will emphasise the government’s political and economic orientation”. Economics affects domestic policy so intrinsically that this is a worrying move, particularly for any government wishing to take a tough stance on rating agencies, neo-liberal ideology or the markets. Agencies will now consider a government’s political orientation; too hostile to the markets to make them uncomfortable and one’s ratings can easily be dropped. This makes government policy inherently pro-market at the risk of downgrade; essentially blackmail.

Following on from this, it is interesting to note that out of the six socialist governments that started 2011, three have been hounded relentlessly by these agencies and another gravely warned while Ireland and Italy, despite having equally serious problems, have not been targeted so much by rating agencies. Add into this the curious case of Dominique Strauss-Kahn and the stench of conspiracy is hard to purge. But I’m not paranoid enough for that (they’re watching us...)

The EU is accused of lacking democracy and taking sovereignty from the nation state, yet in reality economic sovereignty has already been taken by the international markets; economic policy is not dictated by national governments or by the EU but by rating agencies and unelected forces. As economic policy is so tied to all other policy, governments are caught in the whim of the market. If anything, the EU and the proposed unelected Eurozone central governance will rein sovereignty back to the states and consequentially closer to the people.

The “economic crisis” is really two crises; the first was a recession, the second was a budget deficit which added to existing debts creating a debt crisis. This deficit was largely caused by the recession; it is an economic fact that to get out of recession and avoid depression a government must spend its way out. That is what governments did, and now there is a deficit as a consequence. In short; the deficit saved states from entering depression. A comparable deficit, at least in the UK, is the 1945 post-war from which the welfare state, including the NHS, was built. The austerity which followed included drastic measures such as rationing, but growth and more importantly high employment were created by the building of heavy industry and an export boom. This raises questions about the bigger picture; the service based economy is not stable, Europe must move back into industry and move from consumption to production, from import to export, from relying on foreign trade based on unethical practise and cheap labour to introducing tariffs and creating jobs in Europe. I may be accused of proposing “fortress Europe”, but it is creating a strong, productive and working Europe. Ultimately, politics is all about people; to keep man out of poverty and happy one must provide jobs, and where the private sector is lacking because of cheaper labour elsewhere and their drive for profit above all other considerations, the state must step in. We will always have boom and bust; the bigger the boom the bigger the bust. Ergo, regulate and limit the boom and make the bust manageable, thus less devastating to the citizen.

Governments are not totally blameless for the economic situation. Although the recession caused by the private sector and saved by governments is at fault for a large proportion of the debt, governments were acting irresponsible. In Greece, a parliamentary secretary was earning more than a university lecturer and getting bonuses for turning up to work on time.

But Europe’s economic woes have been exacerbated by unelected, feckless and profit seeking ventures called rating agencies. One by one they target states; first Greece, then Ireland, Portugal, the Baltic states, Spain, Cyprus and now Italy. How many more jobs need to be lost, how deep must the cuts go before someone steps in to step out these agencies?

But what is the solution? We face radical times, allegedly. As a result, radical measures are needed. There is one radical solution; Europe must stand together and flat out refuse to pay the debt. Why are the interests of a few banks greater than the wellbeing of millions of citizens? Why must hospitals and schools close, millions lose jobs for the sake of a few bankers and on the whim of some faceless agency?

Whatever system rises from the ashes, whether that be a unified currency under a federal economic model (ABC 11/08/2011) or the disintegration of the Eurozone back into national currencies (The Guardian, 22/07/2011), the new economic order needs to either control or abandon rating agencies. One fundamental shift in economic thinking is the shift in focus from “growth” to employment. It is employment that eliminates poverty and makes man independent, not “growth” – particularly when that growth only happens at the top yet decline is felt at the bottom. We are potentially at the footsteps of a new world, but we need our politicians to be braver to make it a brave new world, or a return to the serfdom of the markets. The first step is the rating agencies. Under this economic order, there is no room for speculation or cavalier ratings. There is a scourge over Europe; we can, we must eliminate it and until we do, there can be no safe future.

Immigration: The Modern Taboo

Labour has never been a party to shy away from taboo. It was Labour who supported votes for women (a claim refuted by Martin Pugh), who opposed nuclear armament in the 1950’s, who brought in social reform of the 1960’s legalising homosexuality and abortion, and who stood against apartheid. Our strength has come from our diversity and openness to discuss any topic. But there remains one taboo, a topic that is never raised in political circles; immigration.

The explosive topic in Europe at the moment currently occupies the front pages. This is the topic every canvasser fears. This is the topic that for years politicians have been avoiding in fear of being branded “racist” or “intolerant”. Anyone who stands against immigration, particularly on the left, are chastised – just look at the recent case of Maurice Glasman who suggested a temporary cap on immigration. The case is painted black and white; anyone opposed to immigration is nasty, racist and staunchly right wing. In which case it is often best to keep silent.

But this silence has cost us. Immigration was one of the most common topics raised at the doorstep. By not answering the questions, by calling people like Gillian Duffy a “bigot” and walking away, we have allowed populist anti-immigration parties, or the BNP and EDF, to flourish. There needs to be an open and mature discussion about immigration and Labour’s policy towards it.

With this in mind, I am about to commit political suicide and come out of the closet – I oppose immigration. And already I can see my political career sailing over the horizon. Perhaps I should elaborate; I am opposed to non-EU immigration. Which doesn’t make my case a whole lot better.

During the 2010 leader’s debate, the difference between the parties policy on immigration was clearly bore out. The Liberal Democrats wanted an amnesty to all migrants, including illegal ones. A badly thought out policy that sends a clear and worrying message. The Conservatives wanted a limit on the number of immigrants, which is fair enough but failed to take into consideration migrants from the EU, who are a different set of migrants. And then there was Labour’s point based system; in short, it failed. For every skilled worker that came in the country there came also his unskilled wife (in the culture of most migrants the wife is unskilled). Further, the bar was set too low; by “skilled” it was meant cooks and waiters, people to work on trains and selling Big Issues. Since then, Labour has not looked back. Ed’s admitted Labour did not listen to people concerned about immigration, but no actual policy has come about and no one dare speak against immigration. Although the party needs to discuss immigration, it needs to be cautious as this is an issue that can easily split the party, much like the EU and Conservatives.

The first thing that needs to be done is to face up to the reality. Immigration is not only an issue – it is a problem, both for Europe and the nation the migrants come from. There is only so much that Europe can sustain before there is no more resources or before it becomes overstretched. Just look at Italy and the Tunisian immigrants; Italy could not sustain the sudden influx – no job, no resources, no basic provisions.

There are two pragmatic objections to immigration. First, immigration contributes towards a brain drain. Every skilled worker Britain or the western world takes is a skilled worker taken from a poorer nation. This leaves LEDC’s in a damning cycle; they need skilled workers for infrastructure, but all the skilled workers emigrate thus leaving them in need. Mid-90’s Eastern Europe suffered because most the democrats, the people fighting most vigorously against oppressive regimes, the intellectuals all fled west thus their infrastructure, particularly amongst the political classes, remained weak. All too often people focus on the effect of immigration to the host nation while forgetting its effect in poor countries. There are no skilled workers there because they emigrate.

The other pragmatic objection is simply that Europe cannot sustain itself. Immigration is one way traffic, it is the burden of great nations; people are risking it all to come and live here, that’s surely a sign of how relatively great we are. But there comes a point where we have to say ‘no more’. Housing, jobs, school places, burdens on hospitals, resources; these things are limited. If ten million Africans living in poverty decided to move to Britain, at some point the state will have to say “no”. We reached that point a while back. We hear individual stories of people, children, being deported back to poverty or even to face execution, and campaigns are set up against the immigration services with accusations of – but we have to be pragmatic about it. Although politics is fundamentally about people, it cannot get caught up in the individual tragedies or else there would be no rules or order. We have finite resources; that is inescapable.

What I propose is to stop all non-EU immigration to Europe; to set up “Fortress Europe” which encompasses the EU and EU “green zone” (Norway, Iceland, Switzerland, Balkans, Ukraine, Russia and Turkey). Cut unemployment within Europe by reindustrialising and becoming producers instead of consumers, maybe even have a population decrease, while helping other nations develop their infrastructures.

Small social points should be amended; to live in Britain one must work here, to work one must speak English. It reminds me of a tragedy where a child choked to death because his mother could not speak English and so could not call for help. No welfare payments until five years of residency (The point about welfare is interesting, as only £1.5billion is lost to welfare fraud (contrary to Osborne’s £5billion tag – surely more careless than callous) while £45billion is lost to tax evasion, with £5billion alone lost to public enemy number one Philip Green (scum)). Again, to be controversial, our schools and hospitals are not free – we pay for them through life long taxation. Immigrants haven’t, yet they use the services which they have not paid their dues for. These are rather Draconian measures, but at times one must be stolid.

Whatever our solution is to be, it needs to be a united European solution. The PES and S&D favour an open border while opposing “fortress Europe”; pure utopian. As long as immigration is one way traffic it will be a hindrance to any developing nation and a problem to European nations. The paradox for Europe is that it needs to curb immigration, and yet due to an aging population it needs immigrants.

This raises the question of why population decrease is such an undesirable thing. We have to face to the fact that the human race as a whole is over-populated. Thomas Malthus first suggested this; he stipulated that human growth outgrows food production. Malthus did not, however, count upon the industrial revolution making higher crop yields possible. If all our food was organically grown, we could feed four billion people; unfortunately our population is about seven billion. We are heading towards catastrophe; particularly as diseases are being eradicated and wars prevented (callous, I know, but they are natural checks to human growth). At the same time, there needs to be a more philosophical shift in our attitudes towards death. A tragedy, yes, but we all have to go sometime. But we have developed an irrational fear of death and now preserving people until they’re 100 is the aim. Better a short and happy life than a long and distraught one. Our preservation of the elderly and sanctity of life is not stable.

What is the ‘social democrat’ answer to immigration? We put priority on employment and welfare, so as long as there are jobs and enough to go around then we can justify immigration. But once those pools dry out, then what basis is there? We fall to the emotional. Everyone has a story, but we have to draw a line. You show me a petition to keep a migrant facing deportation back to poverty; I say there’s thousands like him, it is his bad luck. We cannot focus on individual tragedies.  If we ran by emotion then we would not cope, resources would run out, no housing or jobs; in immigration, reason prevails. Cold reason runs on the nib of a pen.

What social democrats and socialists, mostly internationalist by nature, should advocate is the improvement of LEDC’s and corporate responsibility. That means we should be fighting for the rights of poorer nations, not taking their skilled workers. Pressuring the free market to become the fair market and offer a minimum wage to workers in India and China, to improve conditions worldwide so that there is no need for people to migrate. We should improve the conditions of nations, not people.

It has become heresy to suggest anything remotely anti-immigration amongst Labour. Why? When did we become the pro-immigration party? We are not a party of an issue, nor an ideology, nor a “wing”; we are a party of the people and if immigration is detrimental to the wellbeing of the working people and society then we should not support it.

What I am arguing is not the Labour should become anti-immigration or adopt my views but that there should be a discussion about it and that we should not hide from this issue which is perceived as fairly serious. How many heads must roll before we have an open and mature discussion about immigration? We must face this modern taboo, not like David Starkey or Enoch Powell but like Glasman or Jack Straw. We need a grown up debate on this issue; it will be painful and at times controversial. But if we do not discuss it then extreme parties profit, as they have on the continent.