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Posts Tagged ‘economics’

Religion and Politics?

Tagged: economics, property, religion, society, wealth

It is a modern assumption that Religion and Politics don’t mix. The American Christian Right are synonymous in secular Europe with a regressive social agenda and intolerance of minorities. Closer to home, reactions to the Archbishop of Canterbury’s recent incursions into politics with his comments on accommodating Sharia law come firmly from the Henry II school.

This is an assumption I share. I may go to church, and I may go to CUCA events, but never the twain shall meet. However I was rather taken aback last Sunday having hauled my caucus to church early in the morning that the day’s sermon was overtly political. More manifesto than Mark.

The speaker was one Dr. Michael Schluter, founder and chairman of the Jubilee Centre, a Christian research group based in Cambridge. In his paper ‘How to create a relational society: Foundations for a new social order’ (published in the Cambridge Papers), he advocates a complete rethinking of our economy and society along biblical lines. This rethinking takes as its inspiration the Jubilee legislation (from which the organization takes its name) as laid down in the book of Leviticus. As he laid out this vision in his sermon, I sat incredulous that our 21st century, post-industrialised, multicultural land should seek to model itself on that of a 5000 year old agrarian society. But as the sermon went on I realized that what Dr. Schulter was talking about was of great relevance today, particularly for Conservatives.

The legislation is designed to maintain the division of land between the tribes of Israel as decreed when they first came out of the desert and settled in the land of Canaan. It requires that every 50th year, the Jubilee year, all Israelis return to their place of birth, and the compulsory selling of property back to the original owner or their heirs. The point of this is twofold. Firstly it ensures that all property is shared equitably and universally. Secondly it discourages geographic mobility, encouraging families to stay together where they have deep roots. This is the relational society, placing the strength of relationships with family and community alongside economic growth and greater equality as the main political aims.

The universal ownership of property is a very old Tory idea. Margaret Thatcher may have re-popularised the phrase “a property-owning democracy” with her council house sales in the 1980s, but it has been a key plank of Conservative thinking since the Second World War, when in 1950 Anthony Eden pledging to build 300,000 new homes a year, and the concept can be found in Conservative thinking at earlier dates. An Englishman’s home is, after all, his castle. The idea is that when a citizen owns an asset in their society, they have a stake in the success of that society and see it as part of their responsibility to further that success. Property is also a wealth-generator- many families have more wealth stored in their pile of bricks than they do in their bank accounts, and more wealth can be created with rising house prices than through the 9 to 5 slog. Homes also are a necessity in creating stable families.

As for the second point: encouraging strong ties to family and place, I believe there is a tension in Conservative thinking. The tension comes from the two largest strands in modern Conservatism, that between economic liberalization and social conservatism. For example, conservative politicians all over the globe preach the benefits of two parent families bringing up their kids with love and devotion but those same politicians want both parents out working every available hour in the pursuit of profit and economic growth. Every hour at the grindstone is one less with the sprogs nurturing them into responsible adults.

Norman Tebbit famously exhorted the jobless to ‘get on yer bike’ and look for work. But for many finding work may mean uprooting and leaving town for distant places where their line of work is more available. This geographical mobility of labour (free movement of labour being one of the key planks of economic liberalism) surely disrupts stable family and community life. I myself remember my childhood where my Dad worked in such disparate locations as Plymouth, Manchester and Dublin to get the work he was qualified to do. The poor man not only got on his bike, but cycled it within an inch of its life. While it was necessary to put money on the table, it obviously made bringing up a young family much harder; and not all families would survive under this strain.

Conservatives are only just beginning to think through this tension. The work of Ian Duncan Smith’s Centre for Social Justice and David Cameron’s leadership has finally begun to think how to redress the balance in conservatism away from Margaret Thatcher’s ‘There is no such a thing as society’ economic liberalism without undoing the great and necessary gains that her premiership had. As the sermon came to an end, I realized that take out the references to God, and Schulter’s manifesto differs little from Cameron’s crusade to mend our broken society, or George W. Bush’s ‘compassionate conservatism’.

What does this mean in policy terms. David Cameron has already talked of restoring tax breaks for married couples and those with children. Dr. Schulter goes further and points to some policies from Singapore. Tax breaks for homes shared with elderly parents, and lesser breaks for those who live within 5km of their elderly parents. With an ageing population set to put greater pressure on elderly care and the health service, encouraging families to act as a welfare unit for the old as well as young is surely sensible. He also points to the John Lewis partnership which will relocate its employees to any store in the country if they wish to be near their families.

No doubt there are many other policy implications which could have great benefits to our society. In future I hope to look past turbulent priests and anti-abortion, anti-gay bible-bashers to see that religion and its adherents have much to give in ideas, time and compassion to build stronger families, safer and more stable communities and a more humane society.

The European Union

Tagged: debt, economics, EU, fair trade, free trade, growth, sovereignty, statism

With the recent European Reform Treaty, it is topical to consider the nature of, and the justification for the European Union. The central point to make here is that whatever justification for the EU that is given, it is either false or not worth it. Indeed, the EU is detrimental to the prosperity of many countries in the world.

The primary reason for the creation of a pan-European economic and, subsequently political, organisation was to ensure greater integration, especially between France and Germany, in order to ensure that war would never again divide the continent. In this respect, if the EU has done anything at all to help, it has been entirely successful. However, would anyone argue that there is still work to be done? Are the Gauls and Aryans primed and ready to battle it out for supremacy as soon as the mystical shroud of political federation, as provided by the EU, is lifted? This may seem trite, but there is a serious point: since even before the creation of a European Community, its work has been done. War between France and Germany was not made obsolete by a form of coalition in the 1950s, but by the destruction and inhumanity of World War Two. As such, Europhiles have always sought new and elaborate justifications for the EU, almost all of which are false.

Rather than repeat thousands of other articles on the same subject and list the different justifications propounded in support of the EU only to refute them, I shall look at one function of the EU and the associated argument in favour of its existence. This is to re-distribute wealth through development aid from wealthier European nations to those that are less developed and to open up their trade markets in order to raise their GDP and living standards. One can argue that Britain itself benefited from this very principle when it was the sick man of Europe before the economic reforms of Margaret Thatcher. However, this great benefit of the EU is undermined by the nature of the Union itself, thereby eradicating any intrinsic benefit derived from redistribution. These problems are: global issues, immigration, and centralisation.

Through the EU, we deal only with the problems on our small continent. In contrast, it is beyond our Eurocentric world that the majority of unacceptable crises can be found. Of course, one can argue that the EU can function as an effective aid organisation to the world. However, this is not possible when the EU implements protectionist economic sanctions. The EU is an oppressive economic bloc, limiting free trade (as well as the scope for fair trade) in order to maintain its economic dominance at the expense of developing world economies. For example, every year the EU destroys tonnes of food in order to keep prices high. Moreover, market competition from outside the EU is restricted. It is only through trade (be it free, fair or otherwise) that individual producers and countries can hope to gain the wealth necessary to prosper.

What is more, when we look at the free movement of people within Europe, we see that aid within the EU is similarly undermined. This is because immigration within the EU removes the population needed for economic growth from the countries that seek development. Those in favour of immigration in Britain tend to point to the (supposed) vast economic benefit migrants bring to our shores. However, paradoxically, are we not being selfish when we call for more immigrants? This is because it impedes growth in the countries these people are leaving. Instead, we privilege our own prosperity above that of other people in the world. As such, those left behind are also left behind in terms of living standards and the opportunity in order to improve their quality of life compared with those living in Britain.

The centralised and authoritarian nature of the EU also undermines the development aid given to less economically developed member states. This is because the terms of this aid is dictated by the western European countries that dominate the EU through majority voting. In this way, the historical and cultural development of the country receiving aid is neglected, and, effectively, suppressed. As such, the benefit of that development aid is undermined. For example, a policy that suits the British economy, dominated by the private sector, may not be suitably implemented on the continent where the social economy is more prevalent. The best initiatives have to take the historical and cultural milieu of a nation into account. This cannot be achieved at a pan-European level.

In conclusion, the European Union’s aim to help development in less economically developed member states is admirable and justifiable. However, the framework within which it is conducted does not work. First, it undermines global development through economic restrictions. Second, development within the EU is undermined by free immigration. And third, derived from its centralised and authoritarian nature, the terms of aid to other countries is dictated by the major European powers, which may not suit the historical and cultural development of the recipient country. As such, one may wonder whether this noble aim of the EU is worth it considering the adverse consequences.

Of course, there are many other arguments in favour of the EU. Examples include better trade between European countries, regulatory consistency, and a political power to counteract the hegemony of the United States of America. However, these arguments seem to suffer from the same problem as that given above: they fail to justify the creation of an additional and cripplingly expensive layer of bureaucracy, whose aims are undermined by its very nature. However, that is for another article to discuss.

Modern Myths

Tagged: economics, GM food, growth, political correctness

I would like to start a new “internet meme”. The topic today is “Modern Myths”. What popular myths do you know? What things do many people take for granted, but are actually false?

1. Full employment/zero unemployment is achievable.
It isn’t. The market never clears instantly, so there will always be a natural rate of unemployment. Of course we should aim to reduce unemployment as much as possible, but I recently found out that some people believed zero unemployment was achievable.

2. Growth is possible without job losses.
It isn’t. There is nothing bad about people losing jobs (except for them, in the short run), because ultimately they can do other things, the economy becomes more efficient, more wealth is produced and everyone is better off.
But I used to think that of course it would be better if growth could be achieved without job losses.
I read recently a very simple argument that growth is not even possible without job losses. For growth to occur, labour has to become more productive. Therefore, a company will be able to do the same work with fewer people. Therefore, job losses.

3. Genetically modified food is bad. “Natural” means good.
I do not quite understand the opposition to genetically modified food. For some reason, people think that “natural” or “organic” means good and “artificial” means bad. Of course there is no link: there are plenty of natural poisons, and natural foods which are bad for you. There are plenty of foods with added chemicals which are fine. Perhaps it is because people do not understand that all food, whether “natural” or “unnatural”, is made of chemicals, which can be isolated and are identical whether grown naturally or synthesised in a lab.
People campaign against GM food trials on the grounds that it could escape and grow in the wild (“contamination”). But this begging the question: it is not contamination unless the food is bad in the first place. Why would it be? Genomes, whether natural or altered in a lab, are fundamentally the same. What is the problem?

The Problem of Fair Trade

Tagged: economics, EU, fair trade, free trade

The issue of fair trade arouses many emotions. However, for all the good it does, many of its successes are mediocre in comparison with what could be achieved by allowing free markets.

Fair trade is very cheap and relatively easy to implement. This is because its aim is relatively simple: to provide a ‘fair wage’ to third world producers. Admittedly, the phrase ‘fair wage’ can arouse suspicion, but, in general, this is a sensible estimate based on standard prices in the place or region the products are being imported from.

A good example of fair trade at work is with coffee; especially considering that many coffee companies now proudly proclaim that they only use fair trade products. A fair wage for the average coffee plantation and its workers is approximately double the price for each bag of coffee beans. To the average coffee shop consumer, this works out at about an extra penny on each cup of coffee. Although this probably seems suspect, when one considers the number of coffee beans in a bag, and the number used in the average cup of coffee, one can appreciate that this figure is correct.

As a result, we can see that fair trade is very cheap for the average consumer, and relatively easy to implement. However, it is legitimate to ask two questions: (1) Is this really the best solution we can provide to help third world producers; and (2) Does the implementation of economic controls maximise the potential economic benefits? The answer to both questions is no.

If we want to provide producers with the best possible opportunity to maximise their economic potential, it is necessary to provide them with free trade, not fair trade. It is a sad fact, but we do not live in the capitalist world that those on the Left blame for many of the world’s problems. The prime example is, of course, the European Union. Its range of protectionist measures, epitomised by the Common Agricultural Policy, undermines the global markets, not to mention ripping off the consumer. Every year, hundreds of tons of food is destroyed in order to keep prices artificially high. At the same time, market competition from outside the EU is restricted. Is it then any wonder that third world consumers do not have the opportunity to earn a decent wage?

Ultimately, fair trade is part of the problem rather than the solution. This is because it seeks to use the same type of protectionist measures that makes it necessary in the first place to provide producers with a decent standard of living. Free trade can ensure that producers get the proper price for their products. If this proves to be too low, the producers can then change their economic activity to meet the needs of the consumer.

As it is, even if producers receive a ‘fair wage’ through fair trade, it does not maximise their potential income, and does not guarantee useful economic activity. What is more, because of the nature of fair trade, it legitimates and provides added precedent for the protectionist economic policy of various countries, and institutions like EU. It is ironic that it is these protectionist policies that make fair trade necessary to ensure a decent wage for third world producers. How can we stand by and let this sort of social injustice continue by failing to allow free markets? It is time that we acknowledged that it is time to dispose of fair trade in favour of real free trade.

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