Tuesday, 4 December 2012

Epistle to the Eurosceptics

Ever since the banking crisis began to roll, politicians the world over have been caught in a dilemma: how to make the people who vote for them pay the cost of one of the most disastrous policies that they - the politicians - have embraced since the late 1970's: deregulation of financial services. The banking crisis is usually blamed on the banks. But the financial sector could never have even started out on this particular road to hell if the politicians of the great democracies hadn't embraced the sadly flawed notions of  von Mises, von Hayek, and Friedman.

The damage done will probably take a generation to clear up. When we get back on our feet again we are likely to find that some things have gone for ever, such as many public services, the social emancipation and progression that life in the middle-class used to offer, or the idea that the weak and needy in our societies are not necessarily scroungers. Moreover, the relationship between labour and employers is changing back to a harsher model reminiscent of the industrial revolution - and "labour" includes academics and skilled craftsmen as well as the lower skilled. The steady rise in the numbers of  poor in the West is also now becoming visible and is well documented.

More than 50 years after WWII, it is striking how the populations of Europe accept to pay for this mess. Yes, there is plenty of protest, but none of it is particularly organised or constructive. Many European countries with seriously unbalanced budgets are however fundamentally quite prosperous. The austerity they are inflicting on confused electorates has an old fashioned tinge of class enmity about it.

To preach austerity to the poor and frail has become a sign of political manhood in Europe. But the Northern belt of EU states have now sunk their teeth in one of their oldest bug bears: the EU budget and its civil service. And why not? Why should public servants be spared when the people as a whole are suffering? The thing is that the national public services, at least in the "sensible" Northern countries of the EU, are not really suffering at all.

Let's take the case of The Netherlands - one of the most eager cost cutters in Brussels. The Dutch state employs more than one million people for a population of some 16.5 million. 160.000 are "real" civil servants in the sense that they work for government departments.They have received salary increases of more than 10% since 2008. The EU institutions employ 33.000 people for a population of half a billion people. In other words, the EU is run by what is roughly the number of staff employed by an English County Council, or rather less than the 44.000 employed by the city of Paris. The cost of the EU administration is 8 percent of one percent of total EU GDP. The sort of money Icelandic banks used to shift in a day. Real Wages in Brussels have been dropping since 2004 by up to 20%. Contrary to what "certain media" put about, EU civil servants' pay and conditions are average for international organisations and are on a par with Nato, the UN and its many agencies, the World Bank, the IMF, the Council of Europe, etc.

Honestly though, no one today is going to shed a tear over Eurocrats having their salaries and pensions reduced, not with 20% unemployment in Spain and drastic cutbacks in health services in Britain. But that is not the point. The real point is that app. half the legislation of the member states is actually EU legislation, much of it affecting people's jobs and lives. The basic principle of the EU civil service is that you want it to be beyond the reach of national governments as well as beyond temptation to be anything other than totally scrupulous and incorruptible. That is the basis of pay and conditions of all international officials around the world, particularly if they have direct authority. There is also the question as to why it is that the richest member states of the EU - with some of the most highly paid public servants in the world - have gone on a slash and burn spree in the EU budget this year. If they succeed, the number of Swedish, Dutch, German and British nationals drafting legislation and controlling national budgets from Brussels will sink even lower than it is today.

So what's the bottom line? It is that one day your national treasury will be visited by a team of Commission auditors made up exclusively of Greeks, Romanians, and Spaniards. What's wrong with that? Am I a racist? No, but I remember the fuss about Polish plumbers some years ago. I am simply anticipating the reaction of the populist media in London, Budapest, The Hague, etc.

Carel Edwards


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