// archives

European Union

This tag is associated with 69 posts

Universal Basic Income

In a referendum on Sunday, Swiss voters rejected a proposal for a guaranteed annual income for everybody by an overwhelming 78%-22% majority. But the idea was not crazy, and it is not going to go away.

The Dutch city of Utrecht is developing a pilot project for a universal basic income that will launch in January 2017. The Finnish government is designing a trial to see whether giving low-income people a guaranteed basic income destroys their motivation to do any work at all, as critics allege. The idea is not going away because most “real” jobs are on the way out.

The old argument in defence of technological change – that it creates more new jobs than it destroys – no longer holds water. In the 1980s, 8 percent of new jobs created in the developed economies were in entirely new occupations, from call-centres to computer programmers. In the 1990s, only 4.4% of the new jobs involved newly invented occupations. In the 2000s, only half a percent did.

So full-time jobs with benefits have declined – only one-quarter of working-age Americans now have one – and the so-called “gigging economy” has not filled the gap. You may be able to stay afloat financially by doing a variety of “gigs” – low-paid, short-term, often part-time jobs – but you will never make ends meet, let alone get a mortgage..

Industrial jobs were the first to be destroyed by automation, but it soon moved on to the less demanding clerical jobs as well. As somebody said: “Every ATM contains the ghosts of three bank tellers.” And now it’s moving on to the kinds of jobs that it once seemed impossible to automate. Driving, for example.

The driverless vehicles that are now to be found meticulously observing the speed limit (and causing angry traffic jams behind them) on the roads of various major cities will soon be out of the experimental stage. At that point, the jobs of many millions of truck-drivers, bus-drivers and van-drivers will be in jeopardy.

Another huge chunk of the economy will start shedding jobs rapidly as online health monitoring and diagnosis take over the routine work of non-specialised health professionals. A similar fate awaits most mid-level jobs in the financial services sector, the retail sector and “management” in general.

The standard political response to this trend is to try desperately to create other jobs, even if they are poorly paid, almost pointless jobs, in order to keep people “in work” and off welfare. Unemployment is sees as a failure by both the government and the victim.

Yet this “problem” is actually a success story. Why would you see an economy that delivers excellent goods and services without requiring people to devote half their waking hours to work as a problem? The real problem is figuring out how to distribute the benefits of automation when people’s work is no longer needed.

And so to this relatively new idea: universal basic income. The core principle is that everybody gets a guaranteed income that is enough to live on, whether they are poor or rich, employed or not. They can earn as much more as they want, if they can find the work, but their basic needs are covered.

The actual amounts did not get mentioned in the Swiss referendum, but the people who proposed it were thinking in terms of a monthly income of $2,500 for every adult, and an additional sum of $625 a month for every child. It would replace the usual humiliating jumble of welfare payments with a single fixed sum for everybody, so it has appeal for the right wing as well as the left.

In the Swiss model (and in many others) the cost of a universal basic income is about 50% higher than current expenditure on welfare payments, so taxes would be higher. But so would incomes, including those of high earners, since even they are getting the same flat annual payment of $30,000 per adult.

As for the inevitable rise of the “gigging economy”, that then becomes just the way people top up their incomes in order to afford luxuries. If there is work available, then people would still want to do it – but if there is not, they would still have decent lives.

About half the remaining traditional full-time jobs in advanced economies will be eliminated by automation in the next 10-20 years, so this is an idea whose time has come. Then why did the Swiss reject it by a 4-to-1 majority? Mainly because their deal with the European Union means that they have relatively open borders.

Luzi Stamm, a member of parliament for the right-wing Swiss People’s Party, liked the idea in principal but opposed it in practice: “Theoretically, if Switzerland were an island, the answer is yes,” he told the BBC. “But with open borders, it’s a total impossibility…If you offered every individual [living here] a Swiss amount of money, you would have billions of people who would try to move into Switzerland.”

Well, tens of millions anyway. But the solution to that is to control the borders, not to abandon the whole idea. And it will be back.
_____________________________________
To shorten to 700 words, omit 2, 7 and 8. (“The Dutch…out”; and “Another…victim”)

Brexit: What If?

After months in which opinion polls showed a 6-10 percent lead for the “Remain” side in the referendum campaign on continued British membership of the European Union, the numbers have suddenly shifted in favour of “Leave”. The latest Guardian/ICM polls revealed that 52 percent of those polled favour Brexit (British exit from the EU), while only 48 percent want to stay in.

These numbers may even understate the probable outcome if the referendum were held today, and not in three weeks’ time (23 June). “Out” voters are typically older, whiter and less urban than the “In” supporters – and much more likely to vote on the day.

One “Remain” campaigner even fantasised about the ideal poster to motivate young pro-EU Brits to take the trouble of actually bothering to register and then vote. It would show an election queue of elderly, well-dressed white voters, all clearly unlikely to be around in 25 years’ time, and the tag-line would say: “Don’t Let These People Decide Your Future.” Needless to say, it will not decorate any actual walls.

So what if Brexit really does win the referendum? Even if the margin of victory is very small, the decision will in practice be irrevocable. And two things will certainly follow almost instantly.

One is the resignation of Prime Minister David Cameron, whose position will become impossible. It was he who promised a needless referendum three years ago, not in response to overwhelming popular demand but in a blundering attempt to placate the obsessively anti-EU right wing of his own Conservative Party. Then he led the campaign AGAINST Brexit – and lost it.

The other certainty is that Scotland will vote to remain in the EU, no matter how the rest of the United Kingdom votes, and will not let its wishes be overruled by the ROUK (as the rest of the country will doubtless come to be known). The Scottish National Party, fresh from an election victory at home, will call a second referendum on Scottish secession from the United Kingdom, and almost certainly win it.

After that, however, the glass gets darker. The new Conservative leader and prime minister would probably be Boris Johnson, Britain’s answer to Donald Trump. Perhaps no leader could negotiate a divorce settlement with the EU that protected Britain’s vital trade interests, but Johnson, at the head of a party mired in a civil war and with a working majority of only 18 seats in parliament, is least likely of all to achieve it.

Under article 50 of the Treaty of Lisbon, negotiations for the withdrawal of any EU member must be concluded within two years after the country in question says it intends to leave. The big issues would be continuing British duty-free access to the “single market” made up of the other 27 EU members – almost half of Britain’s exports go to EU countries – and continued free movement of labour across national borders

“It will be imperative to stop the Brexit contagion from gripping other countries,” said one EU official, so European negotiators will want to impose harsh terms on Britain in order to show other potential defectors that leaving is not cost-free. Since only 8 percent of EU exports go to Britain (and only two EU countries run a trade surplus with the UK), nobody will go out on a limb to preserve duty-free British access to the single market.

As for free movement of labour, ending it would require the expulsion of at least a million EU citizens currently working in the United Kingdom. Preserving it, on the other hand, would mean keeping the door open to uncontrolled immigration from other EU countries – but closing that door was a key promise of the Brexit campaign. This will not be a friendly divorce, and Britain’s negotiating position is not good.

Meawhile, Scotland would be having its own difficulties. A second referendum would certainly back independence from the UK, but it would not be easy for Scotland to retain (or rather, regain) its EU membership.

Legally, it would have to re-apply, and other EU members (notably Spain) that want to discourage parts of their own countries from seceding will have every reason to make things hard for the Scots. They could end up waiting outside the door for a long time.

As far as the rest of the world is concerned, Scotland would just be collateral damage, and the Rest of the UK would deserve and get very little sympathy when the divorce negotiations turn nasty. What will worry everybody else is the risk to the unity of the rest of the EU.

It is a bad time for Europe. Economic growth is low, unemployment and debt are high, and refugees are pouring in from the Middle East and Africa. Hard-right populist movements like the Front National in France and Alternative fuer Deutschland in Germany, anti-immigrant and anti-EU, are growing everywhere in Europe, and are already in power in Eastern European countries like Hungary and Poland.

The real fear is that the “Brexit contagion” will spread, and that other EU members will also acquire governments that just want out. That’s actually not a very high probability, but nobody wants the old pre-EU Europe back.
________________________________
To shorten to 725 words, omit paragraphs 3 and 8. (“One…walls”; and “Under…borders”)

Europe’s Migrant Crisis

Early next week (April 4), the deal made between the European Union and Turkey to stem the flood of refugees into the EU goes into effect. It will promptly blow up in everybody’s face, for three reasons.

First problem: the EU won’t be able to “process” the arriving migrants as fast as new ones arrive. Migrants are arriving on the Greek islands of Chios and Lesbos at the rate of almost 2,000 per day, and as the weather improves even larger numbers will attempt the short sea crossing from Turkey.

Up to now the migrants have quickly been moved on to the mainland of Greece, but the Turkish-EU deal means that new arrivals will now pile up on the islands in detention camps while awaiting a decision on their asylum claims. Living conditions will become intolerable and there will be protests, some of them violent.

The EU has authorised a force of 4,000 security and migration officials and translators to register the new arrivals and investigate their claims for asylum. Even if these officials had all arrived on the islands (most haven’t), they wouldn’t be enough. It takes time to interview the claimants, write up the claims, make decisions to accept or reject them, and even allow appeals – and meanwhile another 2,000 will be arriving each day.

Second problem: within one or two weeks the time will come for the first rejected asylum claimants to be sent back to Turkey. Having spent all their money and endured great hardships to get this far, they will not go back willingly. It will require physical force to get some of them on the planes or boats that will take them back – enough force that there will be real casualties.

Third problem: by June, as part of this deal, Turkish citizens will have the right to visa-free travel to the European Union. Around one-fifth of Turkey’s population, some 15-20 million people, are Kurds. Since last summer, President Recep Tayyip Erdogan’s government, having broken a two-year ceasefire with the separatists of the Kurdish Workers’ Party (PKK), has been waging a pitiless war against them in the towns and cities of the southeast.

Some parts of Kurdish-majority cities in Turkey now resemble the war-ravaged cities of Syria. The Kurds, as Turkish citizens, will be able to enter most EU countries not as refugees but as tourists – and it would be very surprising if several million of them do not avail themselves of the opportunity. But the EU’s goal in this deal was to stop the mass migration, not to change it from Syrian Arabs to Turkish Kurds.

In practice, things will never get that far. Long before the EU negotiators agree on the details of visa-free travel for Turkish citizens the deal will collapse – because it will automatically be cancelled if the number of returnees reaches 72,000. That’s slightly more than one month’s worth of migrants at the current rate of supply.

The goal behind this weirdly dysfunctional deal was twofold: to cut the total number of migrants drastically – more than a million made it into the EU last year – and at the same time to end the deaths that happen during the sea crossing: 460 drownings out of the 143,000 who tried to cross so far this year. But it simply will not work.

The only way to really seal a frontier is to kill people who try to cross it illegally. After first few hundred deaths most people get the message and stop trying. (The Iron Curtain worked pretty well, for example.) But the EU isn’t ready to do that yet – so how can it discourage migrants from making the crossing?

What if we ship almost all those who make it to the Greek islands back to Turkey, but promise to take one legitimate Syrian refugee out of the camps in Turkey for every Syrian we send back? The Turks will go along with it if we give them $3.3 billion now, promise them another $3.3 billion later, and allow visa-free travel to the EU for Turkish citizens. The deal is win-win all round. What could possibly go wrong?

Well, there are around two-and-a-half million Syrian refugees in Turkey, and most of them are not even in camps. If they have a good legal claim for asylum, why should they wait in the queue? And if they are not Syrian – Iraqi or Afghan refugees or African migrants – where is their incentive not to get in a boat and try their luck?

To its credit, the EU has not yet deployed the ultimate argument: that refugees are already safe in Turkey, a country that is still technically a democracy with the rule of law, and therefore have no right to go asylum-shopping in greener pastures elsewhere. But after this new deal collapses, it will almost certainly come to that in the end.
___________________________
To shorten to 725 words, omit paragraphs 4 and 8. (“The EU…day”; and “In practice…supply”)

Petulance: The English Way

What would you call a country that called for “a structure under which [Europe] can dwell in peace, in safety and in freedom… a kind of United States of Europe” at the end of the Second World War (Winston Churchill, 1946), but refused to join that structure when its European neighbours actually began building it (European Economic Community, 1957)?

What would you call that country if it changed its mind and asked to join the EEC in 1961, a goal it finally achieved in 1973 under Conservative prime minister Edward Heath – only to demand a renegotiation of its terms of membership and hold an In/Out referendum on EEC membership under a Labour government two years later?

What would you say if that country then demanded another renegotiation of the terms of membership under Conservative prime minister Margaret Thatcher in 1984, and insisted on opting out of the planned single currency when the countries of the European Community (as it now styled itself) signed the Treaty of Maastricht in 1992?

And what would you say about that country’s behaviour if another Conservative prime minister, David Cameron, demanded ANOTHER renegotiation on the terms of membership in what is now called the European Union in 2013, and promised ANOTHER referendum once the results were known?

The word “ambivalent” would certainly spring to mind. “Capricious” also has a strong claim to be the right word. But the adjective that really sums up Britain’s behaviour in its 70-year love-hate relationship with the European project is “petulant”.

There’s going to be another referendum on whether the United Kingdom should stay in the European Union on 23 June. Not that Prime Minister Cameron wants to leave the EU, of course. His 2013 promise of a referendum was mainly an attempt to steal votes from the United Kingdom Independence Party, which did indeed want to leave, in the 2015 election.

But Cameron couldn’t walk away from his promise after he won the election, because half of his own party wants to leave the European Union. Jeremy Corbyn, the new leader of the Labour Party, is at best lukewarm about the the EU, viewing it essentially as a capitalist plot that has some positive side-effects. And recent opinion polls suggest that the referendum could go either way.

These are not the best of times for the EU. It has not responded well to the wave of mostly Middle Eastern refugees that began rolling across its frontiers early last year. It is suffering from chronic low growth and high unemployment (although the United Kingdom itself is doing quite well on both fronts). It is becoming clear that the adoption of the euro common currency by nineteen EU countries was a major mistake.

There is therefore a lot of disillusionment about the EU even among its core members on the European mainland, and some people fear that “Brexit” (a British exit from the Union) would start to unravel all the other deals and compromises that went into the construction of this historically unlikely structure. But why are the British always the most disaffected ones?

All the countries on the west coast of Europe lost their overseas empires in the decades after the Second World War, and Britain is not the only one to cling to delusions of grandeur in the aftermath. France, too, has a highly inflated view of its own importance. But the French understand the cost of European disunity much better than the British, because they paid a higher price.

It has to do with the fact that Britain is an island. Almost every other European country except Switzerland and Sweden has seen serious fighting on its own soil in the past hundred years. Many of them have seen it several times, and about half of them have been partly or wholly occupied by foreign troops for long periods. Whereas Britain has not been successfully invaded for almost a thousand years.

Britain is not alone in seeing the follies of the EU bureaucracy and resenting the cost of the compromises that have to be made to keep the enterprise alive. It IS alone, or almost alone, in seeing European unity purely as an optional project, to be reassessed from time to time by calculating its economic benefits and weighing them against its political and emotional costs for Britain.

EMOTIONAL costs? Yes, and this is where the petulance comes from. There is a fantasy, still quite prevalent in England, that the country could have a much more satisfying future as a fully independent player, unshackled from the dull and stodgy European Union and living by its wits as a swashbuckling global trader. To which one can only say: Good luck with that.

This romantic vision is not shared by the Scots, who would certainly break away if English votes took the United Kingdom out of the EU. But an independent Scotland might find it hard to claim EU membership after the divorce, as Madrid would not want to establish a precedent that Catalonian separatists could use to argue that breaking away from Spain would be painless.

Most British leaders have worked hard to manage the inflated expectations of English super-patriots and keep the country more or less on track. Cameron has dropped the ball, and the consequences for both Britain and Europe may be quite serious.
______________________________________
To shorten to 725 words, omit paragraphs 10 and 14. (“All…price”; and “This…painless”)