Not that we want to defend Donald Trump but this is outrageous

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Donald Trump is not, to put it, mildly, quite our flavour of politician. Yet it is necessary to defend him in this instance. What is being proposed is outrageous:

Mr de Blasio's administration was already conducting a legal review into the possibility of severing the many contracts with Mr Trump currently on the city's books. That review was opened after Mr Trump described illegal immigrants arriving in the US from Mexico as "rapists" and drug dealers during his campaign launch in June, when he declared he would seek the Republican presidential nomination. "My impression is that unless there has been some breaking of a contract or something that gives us a legal opportunity to act, I'm not sure we have a specific course of action," Mr de Blasio said on Monday, "but we're certainly not looking to do any business with him going forward."

An ideological Turing test in order to do business with the City of New York? Say something that Bill de Blasio doesn't like or disagrees with and never have lunch in that town again?

The test of whether a politician, a political structure, should have a specific power should be, well, how happy would you be if one of your ideological opponents, one of your enemies, had that power? And this isn't a power that we want someone to have therefore, is it? Our own opinion is that Trump is somewhere between a blowhard and a fool but he does still have the right to say stupid things in public without the government of anywhere discriminating against him. As do we all in our own moments of foolishness.

Shunning people: a defence

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Last week, 30 students descended on Sidney Sussex College, Cambridge, for five days of learning about classical liberal philosophy and economics. At the end of their week, they asked a panel of liberals their views on issues - including, whether it was right to ‘shun’ someone with views you found offensive, distasteful, or more generally, ‘bad’. Sam Bowman, our Deputy Director, said we shouldn’t shun people for having bad views or opinions. When the threat of being shunned exists, you raise the cost of expressing such opinions - which makes it less likely that people will express them. Ultimately, then, these ‘bad’ opinions don’t get aired and addressed - but likely continue to shape the conduct of those who affirm those views, even unwittingly. I have sympathy for this argument - I’m naturally inclined towards anything that helps us challenge people’s preconceptions. The problem is that I don’t think this works.

First, let’s look at market interactions for an analogy. It’s great when the method of production in a given industry varies - we’re more likely to discover which is the more ‘efficient’, which produces the higher-quality good etc, and, most importantly, we’re more likely to enable innovation. But, when I’m buying that good, I’m under no obligation to buy a more expensive, lower-quality version simply in order to ensure that these varied production methods continue. In fact, I would argue the opposite (as part of an ‘ethical capitalism’) - I have the obligation to do my research and pick the best product available, to help encourage production of that strain of good and promote welfare for others. If firms that produced the lower quality good go bankrupt, this is neither my responsibility, nor am I deserving of any blame. I’d argue it’s a similar situation with people with bad views - of course, I subscribe to an argument for humility, and recommend plurality of views as a way to best advance society (as per J.S. Mill). But, also, as Mill says, that doesn’t mean I have a responsibility to ensure this situation - or to tolerate bad views within my personal sphere. I defend your right to be a bigot, but I don’t need it in my living room.

I also think there’s something very dangerous about safeguarding people from the consequences of their actions or thoughts. If you truly affirm X, then you should believe it even when I refuse to be your friend because of it. But to argue that I shouldn’t unfriend you, is to do precisely that - it’s to make me suffer (from association from someone whose views mean I have come to dislike them) for some external agent’s behaviour. In addition, it’s hard to understand how you can have a marketplace of ideas without some kind of currency - and the currency is other people’s opinions. If I affirm ‘women deserve to be second class citizens’, then my understanding of the value that view has been given by those around me is the degree of revulsion/disagreement that provokes from them. If someone cannot be my friend because I have affirmed this, it effectively has been given maximum negative value. This is a clue that perhaps I need to think about what I’ve just said a little closer.

Look at the Liberal Democrat storm, because Tim Farron refused to say that homosexuality wasn’t a sin. He’s refused to affirm a view that I understood to be a staple position of the Lib Dems (and that I wholeheartedly affirm). His supporters have argued that he is still a good liberal (which I don’t deny - he recognises that this is his personal view) and that we should stand behind him. This is a classical example of refusing us the right to shun those whose views we find distasteful or offensive. In this case, I think his views betray an inability to judge which parts of an archaic book should be brought into the 21st Century. I don’t want to associate (personally) with such people, because I think views like his harm people and because I value good judgement (quips about how I’ve just joined the Lib Dems are not welcome here). The extent to which Farron faces disagreement and dislike will provide a currency for his views - it won’t stop him having them, but it provides an invaluable context by which he can evaluate them.

Nobody is under any obligation to disassociate with people they like, with worrisome views. But equally, nobody has any duty to retain relationships with such people. Tolerance is good insofar as it respects others’ private lives, and reminds us to show humility in the face of subjective judgements. But there is such thing as ‘too tolerant’. ‘Too tolerant’ improperly values judgements. It allows people to say horrendous things with no, or few, repercussions. This is market failure in the marketplace of ideas.

To solve the organ donation problem

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Once again we've got the medical trade telling us that more lives could be saved if only more people would donate their organs. We agree entirely that more lives could be saved (and significant sums of money saved too) if more organ transplants took place. But the solution is, at least in part, to purchase organs for transplant, not to continue to rely upon the gift economy.

New statistics released today in the annual Organ Donation and Transplantation Activity Report shows the number of transplants has decreased from 4,655 last year to 4,431 in 2014/15. This is a five per cent decrease on last year and means that 224 fewer people received an organ transplant. At the end of March 2015, there were 6,943 patients on the transplant waiting list with a further 3,375 temporarily suspended from the list, because they were too ill to survive the operation. The NHS Blood and Transplant service is calling for everyone in the UK to discuss organ donation with their family so that they are aware of their wishes.

Of that four and a half thousand transplants, some 3,000 were kidney transplants. And obviously there's not much chance of a live donor offering a heart transplant, but both kidney and liver (and obviously bone marrow) can be done from a live donor. And the obvious way to encourage more people to offer organs while they are still alive is to pay them to do so.

This would save the NHS considerable amounts of money too: a kidney transplant is expensive, yes, but it's cheaper than dialysis over any significant period of time and those with those transplanted kidneys tend to survive a decade or so.

It's worth noting that there's only one country in the world that doesn't have a backlog of people on f#dialysis, dying as they wait for a scarce kidney. That's Iran. It's also worth noting that there's only one country that has paid live donation of kidneys. That's Iran again.

No, there's not a line of people hawking their bodies outside the clinic: the government pays a set fee for a donation on the grounds that, as above, it's cheaper to do that than pay for the years of dialysis. So, given that this is a system that works, saves lives and money, we should be doing it.

And as we so often point out around here, there are some things that are simply too important for us not to have markets in them.

A Budget of wasted opportunity

Tory MPs cheered wildly as Chancellor George Osborne unveiled his budget proposals, and Iain Duncan Smith punched the air in delight as the government committed itself to a "living wage" by 2020.  Yet more dispassionate observers watching from afar sighed in disappointment as the Chancellor took not one of the opportunities he had to reshape the economic and political landscape.

It was a very political budget, and it did not need to be.  Five years before an election, the Chancellor could have left his mark by improving the way in which Britain is governed and taxed.  He could have given the country an economic budget to transform its future, but instead he decided to score political points.

If circumstances limited his scope for action now, he could at least have laid down markers for the future basis of a sound economy attractive to investment and promising raised living standards.  Cutting Corporation tax first to 19% then to 18% is good, but he could have announced his intention to later lower it to the Irish level of 12.5%.  That would have sent a clear signal to investors.

The Chancellor made modest changes to tax thresholds, raising the starting level for the basic 20% rate to £10,600 - well below the minimum wage.  What he could and should have done was to simplify the tax system by having only two rates, 40% and 20%, and cutting out many exemptions.  

His lifting of the minimum wage to £7.20 per hour next year and £9.00 by 2020 used the language of the left's "living wage," for a political coup, but the reality will be lost jobs for low earners, 60,000 of them according to the IFS.  Osborne's calculation is that those in minimum wage jobs will thank him, whereas those who now fail to enter minimum wage jobs will not tag him as the author of their misfortune.

Raising the threshold for the death tax (IHT) on housing to £1m for a couple looks good, but will put more pressure on house prices.  It should have applied to all assets to avoid sucking money into housing, and the level should have been £2m. 

The Chancellor could have helped millions by ending stamp duty on shares.  This would have given pension funds a boost, and increased the capital available to firms to expand and create jobs.  

Instead Mr Osborne's budget plans to raise an additional £9bn in tax revenues by 2020, making this a clear tax-increasing budget.  He could have proposed a tax-cutting, tax-simplifying, spending-cutting budget.  Instead he raised taxes and played politics.  He wasted the opportunity, and there may not be another.

Flux Versus Stasis

Parmenides and Heraclitus were two contrasting philosophers who lived at roughly the same time, about 480 BC.  Parmenides took the view that nothing changes.  He claimed that a goddess had shown him the way of truth versus the way of opinion, and he deduced from logical truths about the universe.  The universe, he said, is a single and unchanging entity, it always was, and always will be.

"Nothing comes from nothing," he said.  Observation shows us the illusion of change because all senses belong to the world of opinion, not to that of truth.

Heraclitus, his contemporary, took the exact opposite view.  Whereas some sought permanence amid disorder and uncertainty, Heraclitus embraced change.  Everything is in flux.  "We step and do not step into the same rivers," he said.  We call it the same river but new waters have replaced those we stepped into.

He taught the unity of opposites.  "The way up and the way down are the same."  And the same is true of other opposites, day and night, winter and summer, war and peace. He did not mean that they were identical but that they changed into each other.  Day replaces night, night day.  Everything is constantly changing. You are not the same person you were.  He denied that "a thing is what it is," because things change.

So the pre-Socratic philosophers gave us two takes on the universe, two opposing mindsets.  Parmenides was for permanence, Heraclitus for constant change.  Heraclitus was for flux, Parmenides was for stasis. 

Now we run forward to 2000 years to the year 1494 when Pope Alexander VI divided the recently discovered New World between Spain and Portugal.  It didn't last, largely because he didn't allot any of it to England, the Netherlands, or any other European nations.

I now propose to divide the world as the Pope did.  Putting on my papal zucchetto, I divide the world into the followers of Parmenides and those of Heraclitus.  It is a division between flux and stasis.

The division is between those who seek the stability and predictability of permanence, and those who are ready to embrace change – even to welcome it.

This is far from more conventional divisions into left and right.  Normally we associate conservative temperament with wanting to keep things familiar and comfortable, and resisting change as unsettling as it is unfamiliar.  Yet if we look about us today, at those who yearn for the world of Parmenides, we find some strange alliances.

Trade unions like to keep things as they are.  They resist new technology and new working practices because they threaten jobs.  They want people to remain in familiar employment as far as possible.  The early industrial revolution featured Luddites, and those who threw their wooden shoes (sabots) into the new machines and gave us the words saboteur and sabotage.

Their modern counterparts regard change as threatening.  It puts their standard of living at risk.  So union leaders, conventionally left wing, are at one with retired Tory colonels in their suspicion of change and their aversion to it.

Now look at environmentalists.  Many of them look back to when we all lived more simply and made less impact on the planet.  They urge us to go backwards, to travel less, to produce less, to consume less, to do less.  Many of them are against growth.

At heart they are deeply conservative, the children of Parmenides.  They yearn for a predictable, static world.

Those who want to keep things the same support such things as protection and subsidy for domestic industry.  They want the comfort of traditional goods produced by traditional methods in traditional places.

The admission of cheaper foreign goods threatens that stability and portends upheaval.  So tariffs are urged to protect domestic producers from competition, while subsidies from taxpayers are urged to keep them in business

Those who want things to stay as they are oppose extensions to Sunday trading, just as they opposed it altogether a generation ago.  They deplore more relaxed moral attitudes and the changing nature of the family.  If the followers of Parmenides today could put their motto in three words, it would be "legislate against change."

The followers of Heraclitus, on the other hand, know that change happens.  Nothing stays the same.  Technology changes.  Human ingenuity and inventiveness find new ways of doing things and new things to do.  As a result, practices change and society changes.  And as society changes, attitudes change and our moral judgements change.  The children of Heraclitus know that change brings upset for some, but they also know it brings progress for many.

Human beings have rational minds.  They think, and when they think, it changes things.  They think of ways to make them less vulnerable to fate and fortune.  They try instead to control their circumstances.  Agriculture enables them to store food against leaner times; buildings protect them from the weather.

At every stage humans have sought to improve their lot, to manage things better than their predecessors did.  But improvement means change, and the price of progress is learning to adapt to change, to ride with its flow.

Those who embrace Heraclitus do not try to sustain industries made obsolete by change.  They do not use tariffs and subsidies to keep the world at bay.

They might use the wealth created by change to ease the lot of those adversely affected by it, or to help them adapt to it, but they don't try to stop it.

Human beings constantly think of new ways to achieve their goals.  They test them, and those that succeed gradually spread, transforming society in the process.  It is constant flux, churn, just like the churn in economic activity.

It works better in practice than legislation does.  If a thermometer shows the room is too cold, it is possible to inform the government and have them send someone round to turn on the heater, but it's faster and more efficient to let a thermostat do that automatically.  That's what a market does – it responds to continual changes, and it responds and adapts to their stimuli.  It's like a thermostat.  Markets are a way of living with change – indeed of using change.

We can divide societies into ones that seek stasis and ones that embrace flux.  Static societies try to sustain traditional practices, sometimes relying on tradition itself and strong social sanctions against deviation from accepted norms.  Often the force of law is used to compel compliance with conventional norms, with prosecution and punishment of those who behave differently.  

Societies based on strong religious norms tend to fall into this category, with divine punishment in the afterlife threatened against those who fail to comply with social norms of this life.  Isolated societies also tend to be more static.  Without contact with other cultures or comparison with them, their ways of doing things are seen as the way of doing things, and alternatives are seen as repugnant, failing to comply with what is decent. 

People in such societies tend to live much as their parents did, with a measured rhythm of life that is repeated in each generation.  There is a psychological pattern, too, in that they do not tend to brim with inquiring minds or intellectual curiosity.  They tend to be as culturally static as they are socially.  Most people know their place and keep to it.

Societies that embrace flux are turbulent.  Changes come thick and fast and undermine stability.  Their citizens compare themselves firstly with other societies they are in contact with, and for some brave minds, with imagined societies.  There is greater social mobility, with people seeking to improve their lot in life, and to pass more on to their children than they started with themselves.  They seek improvement, which necessarily means change.  They set targets and seek to attain them.  They experiment and innovate.  People live lives that are dramatically different from the lives lived by their parents, and incomprehensibly different from those lived by their grandparents.   Their lives are characterized by progress.

The story of humankind can be told as the story of progress – by no means constant, by no means linear, but the story of progress nonetheless.  It took only 12,000 years for us to come out of our caves and plant our footprints on the moon – that's not even a tlck of the astronomical clock.

Everything changes and we either live with that or we resist it.  So now my papal division of the world has divided it between the followers of Parmenides and those of Heraclitus, between those who think things can be constant and those who think that change is the only constant.

Societies that seek stasis limit freedom.  They restrain the right to innovate, to experiment, because this threatens stability.  Societies that embrace flux tend also to embrace freedom – freedom to differ, freedom to change. 

I would like to quote from a movie to illustrate that division.  The movie is "Things to Come," made in 1936 by Alexander Korda and with a screenplay by H G Wells. I do recommend you to see the movie but I certainly recommend you to see the ending.  The closing scene takes place on the balcony of an observatory looking up at the night sky.  They have just sent a capsule carrying people to voyage around the moon.  Cabal's deputy challenges him.

"Oh God, is there never to be any age of happiness?  Is there never to be any rest?

Rest enough for the individual man.  Too much and too soon, and we call it death. But for man no rest and no ending. He must go on. Conquest beyond conquest.  First this little planet with its winds and waves. And then all the laws of mind and matter that restrain him. Then the planets about him. And at last out across immensity to the stars.  And when he has conquered all the deeps of space and all the mysteries of time – still, he will be beginning.

But we're such little creatures.  Poor humanity's so fragile, so weak. Little animals.

Little animals? If we're no more than animals, then we must snatch each little scrap of happiness, and live and suffer and pass, mattering no more than all the animals do or have done.  Is it this, or that.  All the universe or nothing!  Which shall it be?"

Let's Keep the EU Renegotiation Simple

Subsidiarity

Perhaps it is only since Tony Blair gave away so much of John Major’s negotiation of the Maastricht Treaty signed in 1992, that we have realised what a good deal that was and how lucky David Cameron will be, if he can win most of it back.  As it is, his shopping list remains secret but it is most likely too long.  He wants to come back with as many goodies as he can get to justify a “yes” campaign so the longer the list, the more successes can be shown.

That may not be wise: sometimes the rifle is more effective than the shotgun.  This note argues that what we most want is not a ragbag of trifles but the implementation of just one thing: the “subsidiarity”[1] agreed in the Maastricht and confirmed in the Lisbon (2009) Treaties[2].  In other words, returning sovereignty to all member states for those things that really do not need EU uniformity. 

Lord Garel-Jones was the UK Europe Minister during the Maastrict negotiations. In an important speech to the International Institute for Strategic Studies on July15th, he said that the subsidiarity agreement achieved in the Maastricht Treaty was thereafter obstructed by Brussels.  The Lisbon Treaty had a further shot at transferring responsibility for all save that which really had to be EU-wide back to member states. A complex system of “yellow cards” was introduced under which if enough chambers of national parliaments voted to make the issue in question subsidiary, then it should be left with member states, not Brussels.  See the Appendix to this paper for a full explanation.

The download forming the Appendix is the Brussels party line that these transfers of powers are taking place. Needless to say, in reality, Brussels has continued to obstruct the return of any issue to member states in defiance of the Maastricht and Lisbon Treaties.

Most of the reforms the UK are seeking would be met by implementation of subsidiarity, e.g. lightening regulation on SMEs, welfare for cross-boarder workers, social matters and employment rules. If the subsidiarity agreement is honoured, by the Commission and all member states, almost all else falls into place. 

To take one simple issue: why do hairdressing salons need to be regulated by both Brussels and Whitehall?  A further tranche of hairdressing regulation appears to be on the way from the Commission.  Of course, hairdressing salons should protect the health and safety of its customers and employees but that is a generic requirement for all businesses.  In such a competitive and traditional market, with no cross-border trade, why should any further regulation be needed at all, still less both nationally and from Brussels?  Why should we care if hairdressing regulations are the same in Naples and Sunderland?

The EU official view of subsidiarity

Nowhere is the EU hypocrisy in claiming one belief and practising the opposite more obvious than for subsidiarity, except perhaps deregulation.

The EU claims that subsidiarity is one of the three guiding principle of the EU: “In all cases, the EU may only intervene if it is able to act more effectively than Member States.”

Yet its own presentation of the topic looks a little different: “The general aim of the principle of subsidiarity is to guarantee a degree of independence for a lower authority in relation to a higher body or for a local authority in relation to central government. It therefore involves the sharing of powers between several levels of authority, a principle which forms the institutional basis for federal States.”[3] Note the EU’s assumption of superiority and federal government.  And, importantly, subsidiarity has to be justified, not the reverse.

The three levels of authority are EU exclusively, shared and subsidiary.[4]

“The areas over which the EU assumes exclusive competence are:

  • the Common Commercial policy 

  • the Common Agricultural policy

  • Fisheries policy

  • Transport policy

  • Competition rules

  • Rules governing the free movement of goods, persons, services and capital."

The list of “shared competences”, i.e. the EU and/or member states’ areas of legislative responsibility, is exceedingly long and the list of areas for subsidiarity does not exist at all. In practice Brussels casts its net, sometimes with the tacit support of member state civil servants over anything it cares to regulate.

Thus whilst the Treaties and Brussels pay lip service to subsidiarity, it is simply not implemented.

Implementing subsidiarity

Lord Garel-Jones suggested that the yellow cards requiring subsidiarity should be replaced by red cards with no opportunity for Brussels to frustrate the process.  With the majority of EU members, however, now in the Eurozone and calling the shots, enough votes for red cards would be very hard to achieve.  Member states cannot achieve them now for yellow cards.

What needs to happen now it that all the areas of shared competence be apportioned either to the EU’s “exclusive competence” or be deemed subsidiary and left to member states, starting with hairdressing.  Furthermore, the areas of exclusive competence need to be more tightly defined.  One such, transport policy, could be interpreted to mean that only Brussels can make decisions concerned the new UK HS2 train line.   All apart from those tightly defined competences should be deemed subsidiary.

The main problem with the status quo is that the Commission only has to assert its opinion that it should be an EU matter and the Court of Justice of the European Union will automatically back it up, as happened to Germany in 1997.[5]

It would always be possible to add sectors to the uniformity (“exclusive competence”) list at a later date but that should require the “double lock”, i.e. majorities of both the Eurozone and non-Eurozone members.

Recovering subsidiarity would go a long way to satisfying the UK’s wishlist.  Of course the UK would like more, notably protection for financial services, control over employment law and reform of the Common Agricultural Policy which has been so often promised and equally often reneged upon.  With luck, David Cameron can achieve some of that but the brutal truth is that if the UK cannot find at least 14 other member states to agree, it is not going to happen.

Locking in agreement on subsidiarity

Treaty change is not going to happen until 2020 at the earliest, because major EU intergovernmental meetings take at least four years to set up.[6]Brussels may hope the current UK government will be gone by then and be replaced by something more pliable.  Given the EU’s history of disregarding democracy and steaming on regardless, the UK should insist on some form of binding short term agreements to last until a new treaty ratifies them.  One to one treaties between the UK and each other member state provide an answer and are legitimate within existing EU rules provided they are compatible with EU Treaties.  Since subsidiarity is very much enshrined in the Maastricht and Lisbon Treaties it would be hard for the ECR to rule against bilateral agreements implementing it.

These agreements should start from the Dutch government's new philosophy of "Europe where necessary. National where possible" (see here)The bilateral treaties should commit both parties to insist upon:

  1. The revised list of EU exclusive competences
  2. All other matters being deemed subsidiary
  3. Revision the rules for the ECJ so that they follow these agreements and not the whims of Brussels.

Leaving the EU Parliament and Commission out in the cold would do them no harm at all.

Reasons for all member states to implement subsidiarity

  1. The principle was agreed in the Maastricht Treaty and remains “the general principle of European law”. Implementation has been frustrated by the Commission.

  2. This benefits all member states and is not special pleading for the UK.
  3. There is a good reason in 2016 for EU members to agree to this which did not exist in 1991: nationalist parties are gaining strength and unless nationalists are given some red meat, the EU will fall apart.  As well as Greece, look at France (National Front), the “Alternative for Germany” party, Spain (Podemos), the Danish People’s Party, the “Finns Party” and UKIP.
  4. Brussels should be shamed by exposing the gap between their rhetoric and reality.
  5. It would be a major step towards less regulation.  With full implementation of subsidiarity, each sector would be regulation either by the EU or each member state but not both.
  6. Less regulation and more freedom for member states to develop their economic advantages (e.g. financial services) will increase the competitiveness of the EU as a whole.
  7. While consolidating the implementation protocols into a future treaty would be helpful, treaty change is not essential.  The principle has already been established and binding inter-governmental agreements (bi-lateral treaties), which are allowed by the Amsterdam Treaty, would suffice.

Conclusion

Brussels, on past form, cannot be trusted.  Any positive outcomes from the renegotiation need to be watertight and legally binding.

Now we need legal authority to be apportioned either exclusively to the EU and more tightly defined or all other matters be deemed subsidiary and left to member states. Shared responsibilities to be abolished.

Pending a new treaty, intergovernmental (bilateral) agreements should set those agreements in stone.

_____

[1] The concept was invented by the Roman Catholic church to allow some degree of devolution and reached Brussels via the German word “Subsidiaritāt”

[2] Article 5(3) of the Lisbon Treaty: “Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.”

[3] THE PRINCIPLE OF SUBSIDIARITY, p2, Fact Sheets on the European Union – 2015.

[4] For definition and allocation of competences see also http://ec.europa.eu/citizens-initiative/public/competences/faq 

[5] Germany claimed that the Directive on Deposit Guarantee Schemes was not compatible with the principle of subsidiarity

[6] Meetings to make minor treaty changes can be much quicker especially if Germany approves.

____

Appendix - Yellow Cards

“EU law-making is undergoing a profound change in an oddly-shaped annex to the European Parliament building in Brussels. Here, officials working on behalf of 28 national parliaments are helping their members flag up draft EU laws that may fail to respect ‘subsidiarity’. That is the idea that the Union should act only when strictly necessary, and that the national governments should act where possible. The 2009 Lisbon treaty gave national parliaments the right to police subsidiarity through the creation of a so-called 'yellow card' system. This allows a third or more of them, acting together, to vet and temporarily block draft laws proposed by the European Commission. (For legislation in the sensitive area of justice and home affairs, the threshold is only a quarter.) Each parliament has two votes, or one per chamber for the 13 member-states that have bicameral systems. Each chamber that votes for a yellow card provides a 'reasoned opinion' why the EU law in question is an unwarranted trespass on their sovereignty. A yellow card requires 19 reasoned opinions (14 for a piece of justice legislation). The Commission can get around a yellow card by giving clearer justifications for its actions and proposing the law again, perhaps with some changes or caveats added. But if it does, half the national parliaments can still block the second attempt, rather than just a third the first time around. This is the unwieldy 'orange card' (29 reasoned opinions). At this point, if either a majority of governments or MEPs agrees that the orange card is justified, then the legislation is defeated outright.

National parliaments have yellow-carded new legislation only twice. The first occasion was last year when they rejected the adoption of common EU rules on the right to strike (known as 'Monti II'). But last month, parliaments in Britain, Cyprus, Hungary, Ireland, Malta, the Netherlands, Slovenia, Sweden, Romania, as well as the French and Czech senates, rejected a proposal by the European Commission to create an EU prosecution office. (See here for a fuller analysis of the stakes in the European public prosecutor debate.) National parliamentarians' deliberate blocking of a project that has a distinctly federalist flavour marks their arrival as serious players in how the Union is governed. Why?

First, because the Commission has so far treated a yellow card as a virtual veto. In 2012, EU officials withdrew Monti II, albeit while insisting that the legislation did not fall foul of the subsidiarity principle. European Commissioners have even amended draft legislation pre-emptively, such as the 2012 directive on public procurement and another (the IORP directive) on pensions, just to ward off a likely yellow card from national parliaments.

Second, most national parliaments have long had their own offices in Brussels. But the existence of the yellow card regime since 2009 has made this network of offices – cooped up in their shared corridor – more coherent by giving it a common purpose. These officials are getting better at using the brief two-month period allowed for assessing draft legislation to connect the debates in their home parliaments to each other, and to the EU's legislative process. So it is likely that yellow cards will become more frequent in future.

Third, the yellow card scheme is making national parliamentarians more assertive on EU issues. Apparent attempts by Commission officials to pressure wavering parliaments over their EU prosecutor proposal only served to turn more chambers against the idea. And now, one national parliament, or even a single chamber, has a powerful means to signal that they do not fully agree with their own government's European policy. For example, France's government, and its National Assembly, supports the creation of the proposed EU prosecutor. The French Senate clearly has a different take. (The powers of such chambers over EU business could become pivotal if a member-state has a minority government.)

Hence the yellow card innovation is encouraging governments to be more careful about consulting national parliamentarians first – including the frequently ignored upper chambers – before striking deals in Brussels. It may even make the lines of democratic accountability within individual member-states stronger than they were before the Lisbon treaty. And the scheme should demonstrate to eurosceptics in Britain and elsewhere that the checks on EU executive power provided for under the Lisbon treaty are far better than they would perhaps like to believe.

The spectacle of national parliaments acting in concert to limit EU action is aptly symbolic at a time when euroscepticism is rising to unprecedented levels across the Union. But it is more likely that the yellow card system will act as a safety valve for such pressures, rather than a US-style filibuster for those who would like to stymie the EU altogether. Governments could also make a minor, surgical change to the treaties to expand the procedure so that it can be more constructive. For example, new rules could allow a third of national parliaments to request the Commission to bring forward new laws and a half of them could ask for useless or out-of-date legislation to be repealed. Furthermore, eight weeks is only a heartbeat in European politics. The amount of time available for parliaments to consider the Commission's draft proposals should be extended to twelve weeks. (These ideas were recently proposed in a major CER report.)

Twenty years ago, Jacques Delors, then president of the European Commission, jokingly offered a €200,000 prize for a clear definition of what 'subsidiarity', a concept drawn from Catholic theology, actually meant. Lord Mackenzie-Stuart, a former British president of the European Court of Justice, later termed it mere “gobbledygook”. But the actual answer is neither theological nor legalistic. It is being eked out politically, on a case-by-case basis, as some 40 parliamentary chambers across Europe slowly learn how to form alliances, determine what their shared interests are, and – when warranted – take action vis-à-vis Brussels."

Heraclitus v. Parmenides – Flux v. Stasis

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I gave the opening lecture at Freedom Week at Sidney Sussex College in Cambridge last week.  My theme was "Flux versus Stasis," and I contrasted the views of Parmenides and Heraclitus, two of the Presocratic philosophers.  Parmenides took the view that nothing changes in reality; only our senses convey the appearance of change.  Heraclitus, by contrast, thought that everything changes all the time, and that "we step and do not step into the same river," for new waters flow ever about us.

I divided the world between those who seek permanence (the stasis of Parmenides) and those who embrace change (the flux of Heraclitus).  Those who prefer stasis resist change and innovation, and try to keep society following traditional practices, using social pressures and, if necessary, the force of law to sustain conventional norms.  They include people who resist technological change and the changes it brings to employment, as well as those who urge subsidies and tariffs to sustain domestic markets against foreign competitors.

Those who accept that change happens and try to adapt to its flux follow Heraclitus.  Their societies allow experiment and innovation, even knowing that some will be upset by the disturbance they bring to traditional ways.  They allow markets to pulse and flow, reacting to inputs, and adapting to and coping with those changes.  

Stasis societies value order and tend to entrust government to maintain their status quo.  Flux societies value new ideas and look for progress toward their citizens' goals.  It is the flux societies, the ones ready to embrace change and develop its positive aspects, which are most friendly to liberty and the right of people to pursue self-referring goals unimpeded by arbitrary restrictions imposed by others.

The full text of my lecture can be seen here.

Hunting Foxes... Because You Like It

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Last week, a new vote on whether the Hunting Act, the scorn of politics in the early 2000s, should be amended, was thrown out of the window. There was none of the anger that had filled the 400,000 protestors outside of Parliament Square in 2004, nor the 700 hours of debate that had occupied the Commons. Only a smug look from Nicola Sturgeon, as she realised she had outsmarted David Cameron.

Amending and repealing the Hunting Act has long been on the agenda for the Conservatives. Before the 2010 election, there were murmurings that, were a Conservative majority to take power, repeal of the ban on fox hunting with dogs would be looked at.

So let’s look at fox hunting with dogs. The Countryside Alliance declares the Hunting Act bad for the rural economy, bad for rural communities, bad for animal welfare and a waste of police resources’. It is true that reports of malpractice on foxhunts and police prevention take up time and resources. Very few convictions for those hunting with dogs have ever been brought about, despite the amount of evidence which animal rights groups present. ‘Bad for animal welfare’ is somewhat difficult to comprehend, but if they mean that it is bad for animal welfare that poultry might be killed by a fox, before they are killed by the slaughterhouse, perhaps this is an understandable argument. Bad for the rural economy and rural communities is a dubious case to make. Many hunts have seen their numbers grow since the ban. The Burns Report, which examined hunting before the Hunting Act was introduced, registered 178 hunts in 2000; there are now 176. However, although there are fewer hunts, the number of participants has dramatically risen. 20,591 people were subscribed for foxhunts in 2000; around 45,000 now take part regularly in hunts. The demand for foxhunting has certainly not diminished.

Most interesting of all is to examine how hunting affects fox numbers. Perhaps the most reiterated reason which hunting enthusiasts enjoy promoting is that hunting is a form of culling – that without hunting, foxes would be ravaging farming communities. Realistically, fox hunting causes very little impact to fox numbers and likely increases them if anything. Fox numbers are determined by competition. Foxes will move into territories where they find it easier to find food and face less competition from other foxes. This means that there is a constant movement of foxes which cannot be stopped by hunting. Moreover, studies have shown that the more foxes killed in a winter cull, the more that are born in litters come springtime. The greatest regulator of the fox population are the foxes'  social factors themselves: social groups of foxes will defend their territory from other fox groups on a nationwide level. Other factors involve food availability and disease, but these tend to be local issues with little impact.

Fox hunting has very little to do with the actual real numbers of foxes killed. Those who participate should not try to convince both others and themselves that they are a necessity to the protection of farming. It remains their liberty to hunt, but it is for the purpose of their enjoyment, not conservation.

This article was written by Benjamin Jackson, a Research Associate at the Adam Smith Institute. Benjamin is half-way through his Classics degree at the University of Edinburgh.

To put minds at rest: Australia is not going to be the new Greece

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Sadly, some seem not to have grasped the specific problem that is powering the Greek nightmare. Given this failure to understand the underlying cause, we get predictions like this:

Commodities crash could turn Australia into a new Greece

In more detail:

The respected Australian economist Stephen Koukoulas recently wrote of the dangers that escalating levels of foreign debt could present for future generations. Could a prolonged period of depressed commodity prices even turn Australia into Asia’s version of Greece, with China being its banker of last resort instead of the European Union.

No, simply no.

It's true that the Lucky Country has been very lucky, being the major commodity supplier into China as that nation actually built a nation. And that growth is slowing, the prices of those commodities are falling and so the terms of trade that Oz faces are deteriorating. But this will not, cannot, turn that country into another basket case like Greece.

For Australia has its own currency: the one thing that Greece does not have an which is causing that economic grief.

So, imagine that commodities, the major exports, do decline in price, and stay down in price. Yes, Australia as a whole is thus somewhat poorer. And it's likely that Australian wages relative to the rest of the world will therefore need to decline. Greece had to do this by making sure that 50% of young people, 25% of all people, were thrown out of work so that wages would indeed decline. Both Keynes and Friedman were adamant on this point, that nominal wages are sticky downwards and when those two agree you'd better pay attention. Australia, of course, does not need to do that. They can, as Friedman pointed out was the sensible way to do this, depreciate the currency instead. Relative wages change but no one has to be thrown on the scrapheap to achieve it. Indeed, as the value of those export commodities declines the currency will fall quite naturally, causing our price change without any action at all.

That is, Australia simply will not be the new Greece because Australia has its own currency. As Greece, obviously, does not.

Keynesian infrastructure spending might not be the answer you know

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This story of the Don Quijote airport in Spain is instructive about one of the delusions of our times.

Spain's "ghost airport" - that cost hundreds of millions of euros to build and which became a notorious symbol of the excess of the country's bonanza years has been sold to a group of British and Asian investors for just €10,000 (£7,000). Ciudad Real airport airport, in the central Castilla-La Mancha region, has been closed since 2012, despite opening only four years prior to closure. The regional authorities raised an estimated €1billion in private investment to build it. They had hoped it would draw millions of visitors each year to Ciudad Real and the surrounding area, which is known as the home of Miguel de Cervantes’s fictional knight Don Quixote. But the airport itself soon became seen as a quixotic venture, drawing just 33,000 travellers in 2010.

This is of course a symbol of the investment excess in Spain in the boom years rather than of government infrastructure spending in a slump to boost the economy. But it faces exactly the same problem as all other such spending. Whether it is being done to boost the level of demand in the economy or not it is still necessary for the thing itself being built to add value. An airport (and this is not the only one in Spain) that no one wants to use is just a very expensive piece of tarmac with no other actual value. This thus makes all poorer.

Which produces a problem for those who would use infrastructure spending to boost the economy in recession. If the project itself would add value then it should be built, recession or no. And if it doesn't add value then it shouldn't be built, recession or no. There is no room left for the argument that it should be built because recession.