EU Subsidiarity

I came across this gem today. I had always thought that subsidiarity meant that if something could be done better at the national or regional level, rather than at the EU level, then it would be done at national or regional level. No. Apparently that was me being credulous!

Article 5 of the Treaty on European Union says this: “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.”

So, if something falls within the competence of the EU, such as health and safety legislation, then any action must happen at the EU level. On the other hand, if something does not fall within the competence of the EU, such as defence, then the EU may act if it decides that the proposed action cannot be sufficiently achieved by member states.

The wording is carefully asymmetric, in favour of action at the EU level. The UK is so much better off out!

UK Immigration Changes

The headline from Stuff, in New Zealand, on the Conservative Party manifesto for the UK election is “New Zealand, Australian workers to suffer under Theresa May’s immigration pledges”. This angle has been entirely ignored in the UK press, which does have the feel of a nation turning inwards.

One of the pledges will require UK companies who employ a migrant worker to pay £2,000 per employee, per year to the UK government. That is probably low enough so that current employees are not going to be fired en masse. And, high enough to discourage new employment of migrant workers, including those earning significantly more than the minimum wage.

Incidentally, with around 6m non-UK born workers in the UK, this amounts to a tax grab of some £12bn per year.

There is a problem with the over-supply of low-skilled, low-wage labour in the UK. It is a shame that the Conservatives are unable to focus on that. Other countries will reply in kind. This is a nasty, inward looking measure.

Skills and Training

I have now read the manifestos for the UK 2017 election from the; Liberal Democrats, Labour and Conservatives. I think it would be fair to say that after closing out Brexit, the unifying theme is the unfairness of the workplace. By this I mean the phenomenon of the rich getting [much] richer, while the rest don’t [or worse].

The parties are all committed to raising the minimum wage, with some adding in variants of things like; workers on boards, and binding share holder votes on executive pay. The Labour party has the eye-catching policy of a maximum ration of 20:1 between the highest and lowest paid in public sector and companies tendering for public sector contracts.

However, they all collude in the skills and training “deceit”. That is to say they all emphasise increased skills through training as a way to lift people into higher wage jobs. Clearly, better skills, and the improved productivity that might come with it, are a good thing. However, it does not solve the low pay problem.

The reason for this is that, whilst one individual may train up and move from a minimum wage job into something better paid, the minimum wage job remains. There are whole swathes of the economy which requires low skilled labour; harvesting, hospitality, care, retail . . . That is not to say that all jobs in these sectors are paid minimum wage, but very large numbers are, and will remain so. Changing the bedding in a hotel or a care home, serving a customer in a coffee shop, cutting lettuces, picking items in a fulfilment centre – are all jobs that are not going to be somehow “upskilled”. Yes, some of these jobs may be automated – though losing those jobs raises a shed-load of different problems.

What is needed is to pay the people doing these low skilled jobs better. And raising the minimum wage comes close to being a sledge-hammer to miss a nut. It does not allow for those who would willingly work for less, so those businesses do not exist. And it does not help the low paid to earn more than the minimum wage.

The Lib-Dem manifesto pledge to give workers in listed companies with more than 250 employees the right to request shares, confuses fair pay with ownership. Employees add value [hugely] to companies and should share in the profitability,  without any claim on the ownership of the company.

All the parties manifestos treat capitalism as if it was an immutable law of nature. Currently, the law stipulates that ALL the profit of a company is the property of the shareholders.  That needs to change; so that employees benefit in their pay packets, from the success of the businesses they work in.

New Zealand Immigration

The latest figures show that net immigration into New Zealand was 71,932 for the year to 31st March 2017. This is roughly three times higher, per head of population, than currently for the UK. It is a huge political issue in the UK, but much less so in New Zealand. The issues are eerily familiar to one used to the debate in the UK.

On the one hand immigration places pressure on; housing, roads, schooling, healthcare. It is also widely believed to keep wages down for unskilled labour.

On the other  hand migrant labour is regarded as essential for the construction, agricultural and hospitality industries. And, of course, migrants do raise GDP and increase the tax base.

These figures come from arrivals cards, which is somewhat better than the UK questionnaire sample approach. However, it still requires the person entering the country to honestly declare the intended length of their stay.

A major factor here is the strength of the NZ economy relative to its neighbours. And the net figure is boosted by a lower Kiwi net immigration figure (“returning Kiwis”).

The biggest single source of immigrants is Australia, with which NZ virtually has a “free movement” agreement. So NZ is struggling with an economy that is strong relative to a larger near neighbour, in a way that is strikingly similar to the UK and the EU. Foreign students at NZ universities are also a significant factor, again just as in the UK.

There is a difference with the UK in terms of cultural assimilation, as the immigrants are overwhelmingly Eurasian or pacific islanders, coming into an overwhelmingly Eurasian and Maori population. Any problems in New Zealand are minor compared to those in the UK, where a significant proportion of the immigrants come from a significantly different cultural background, and may not even speak English.

So, New Zealand is faced with a very similar problem to the UK. Just as well that this is not a major political hot potato here; as there is no appetite to restrict the movement of people from Australia, or to prevent Kiwis from returning home! Current proposals tinker with the NZ points based immigration system, whilst everyone waits for the Australian economy to pick up. If only there was a realistic prospect of the EU economy picking up in a significant, sustained way.

Anzac Day

Today is the Anzac day holiday here in New Zealand, and also in Australia. It marks the anniversary of the landing of New Zealand and Australian soldiers – the Anzacs – on the Gallipoli Peninsula in 1915.

2779 New Zealanders died in this campaign, about a sixth of those who served on Gallipoli, which was a military disaster. 44,000 allied soldiers died, along with 87,000 turks, and at the armistice in November 1918 Galipoli was still held by Turkey.

The day is marked here with dawn services of remembrance, at war memorials around the country; prominently featuring current and retired service personnel and their families. This is a major event in the New Zealand calender, whilst armistice day is not. Indeed, so important is the actual date, that the New Zealand government passed a law in 1949 to prevent the national holiday being “monday’ised”. It fell on a Tuesday this year, and Monday was a normal working day; even if many did take it as holiday to give themselves a long weekend.

As much as a day of remembrance for the fallen, Anzac day in New Zealand is also a day when New Zealand remembers its emergence onto the world stage as a significant entity in its own right for the first time. In 1919 the New Zealand prime  minister signed the Treaty of Versailles, giving New Zealand membership of the League of Nations in its own right. Australia was also a signatory, but not, for instance, India. In 1939 the New Zealand government would make its own decision to enter the Second World War.

UK General Election Coverage

Reports in the UK on Theresa May’s announcement that there will be a general election on June 8th has received rather different treatment in the UK than here in New Zealand.

UK newspapers and the BBC stress conflict. Whereas Stuff in New Zealand makes the point that the British Labour party supports the call for a snap general election. Incidentally the Stuff article is not on the front page. You find it fifth article in the “World” section. Discovery of a 3,000 year old tomb in Egypt was third!

Interestingly coverage of changes to rules for skilled immigration into New Zealand are the other way around.

The Guardian states the NZ government line in full, with just a short paragraph near the end to mention the Labour party opposition description of the changes as “tinkering”. The UK reader will probably miss the point that the NZ labour party is calling for more restrictions on immigration than are being proposed.

Meanwhile Stuff leads with Labour party opposition to the changes, calling it a “‘Callous attempt to hold power”.

Is there a tendency for news coverage, in New Zealand and the UK, to look for the sensational in their coverage of domestic stories?

Water

There is concern in New Zealand about companies bottling New Zealand water and exporting it for profit. The concern arises because the water is free. In New Zealand no one owns the water. So there is a legal minefield to navigate before charging for water could happen. This is in the context of a country where mains water, called “town water” here, is far from universal.

In New Zealand it is entirely normal for a private or commercial dwelling to; either collect rainwater in underground tanks, or pump up water through a bore hole. This is not just something for isolated life-styler properties, but is also common for properties in major towns.

The way this is charged at the moment is through the pricing of “consents” to extract the water. However these charges are seen here as covering little more than administrative costs. For instance Coca Cola pays NZ$40,000 to the local council for the right to extract up to 200 cubic metres of water a day!

Interestingly, this particular application seems to have raised the fuss it has largely because the water is being exported. There is the beginning of a coherent resentment at the way Kiwis perceive their country has become something of a plaything for the rest of the world; whether it is bolt holes for the uber-rich, over-development for tourists, or exploitation of natural resources. New Zealand is rightly proud of being open to the world, but it is also proud of its natural heritage. And maybe, just maybe, the latter will be part of a movement that pushes New Zealand First to a better performance in this autumn’s General Election, than currently seems likely.

Elite rules

Ben Chu has it absolutely right when he says; “elite play by a different set of rules than the rest of us“. He is referring to the Serious Fraud Office (SFO) use of its latest toy, the Deferred Prosecution Agreement (DPA). By “Deferred” we mean, of course, “never going to happen”.

It is another example of the one-sided bets that those in positions of authority are able to place. They can commit criminal acts for their own personal gain, in the knowledge that they will not be prosecuted. These are acts that you and I, mere ordinary citizens would certainly be prosecuted for. You and I do not have the protection of the crony corporatist oligarchy that runs the UK.

Ben Chu is highlighting the DPA’s recently agreed by the SFO with Tesco (false accounting) and Rolls Royce (bribery), both on a jaw dropping scale. No executives are to be prosecuted. But he might have mentioned many others; MP’s expenses (theft/fraud), Mid-Staffs NHS trust (death), Banks (money laundering, PPI miss-selling, exchange rate fixing, wanton mis-management . . .).

Is it any different in New Zealand. Well . . . Yes. There is no history here of people in power here making one-sided bets for personal gain. There are some bad decisions, such as the recently opened NZ$630m Kapiti Expressway which is actually extending commuting times due to the bottleneck created where it joins SH1! However, there is no claims that anything criminal has gone on.

Maybe this is why, with national elections due later this year, there is no sign of the New Zealand electorate expressing the kind of views that gave us Brexit and Trump.

Executive Pay

There is something approaching a consensus that executive pay is too high, And the behaviour of Crest Nicholson shows that the corporate sector is in no mood to give an inch.

There is support for various ideas; higher minimum wage, pay ratios, binding shareholder votes . . . and more. Some voluntary. Some legislated. However, maybe now is a good time to take more fundamental look.

All the proposals that I have heard accept the fundamental basis of capitalism, as if it were some fundamental force in the universe. It is not. It is a result of the rules that we make and it is time to examine the rule that shareholders are entitled to ALL the profit that a business makes.

Value in any business derives from; capital, labour and scarcity. Scarcity would be things like; mineral rights, technology, brand, intellectual property. It seems to me that the owners of capital are entitled to a return on their capital, but a return on the labour of their employees as well?

The rules as written just now allow for labour to contract with an employer, and they get what they negotiate. The problem with that is that it is not a fair negotiation, with the glaring exception of the senior executives who are doing a prodigious job on their own behalf. How about if the profit left after the shareholders have had a reasonable return on their capital was distributed amongst the workforce. John Lewis in the UK might be a suitable model.

And why would any company do this? The executives making these decisions will clearly not be trousering quite the packets they do today if a significant amount of the profit is going to the workforce. They would need to be encouraged; and I would think that a different corporate tax structure, for a business with this kind of structure in place, would do the job. It could be entirely tax neutral, with a slightly lower tax arrangement for such companies being offset by a slightly higher tax arrangement for companies with the existing remuneration structure.

Maybe we need other changes as well, but Capitalism is failing and we do need a fundamental re-think.

Douglas Carswell Leaves UKIP

So it has happened. UKIP’s only MP has left UKIP. Those who wilfully misunderstand UKIP may say that he was forced out because he was not racist enough. The truth is more mundane and rather sad.

Douglas is MP for Clacton, which is one of three Westminster constituencies that are in the geographical bounds of Tendring District Council. I was a UKIP member on Tendring District Council. I have met Douglas on many occasions and I have a decent feel for what the rank and file Ukippers in Clacton wanted from their party. My sadness is that, overwhelmingly Douglas and the UKIP membership want the same things.

And what they want is a fair crack of the whip for everyone in the United Kingdom. Yes – that involves leaving the EU [obviously]. And – Yes it involves reducing the numbers of immigrants. It definitely involves reinvigorating our democratic processes and ending the crony corporatist government that has mis-governed the UK until now. It involves taking back control not only from Brussels, but also from Westminster. Government needs to be held to account by servants of the people in a way that does not happen at the moment.

One of Douglas’ favourite aphorisms was that it was the role of an insurgent party to change the political landscape, so that it was in the political self-interest of your opponents to make good decisions. He did that in spades with Brexit. Yes – of course we owe Nigel Farage a huge debt for his tireless service. And – Yes, of course Nigel Farage should have been knighted by now. However, it was Douglas that scared the wits out of David Cameron by leaving the Conservative Party and joining UKIP. Without that action there would have been no referendum promise from David Cameron!

We will have to wait and see how Douglas influences the political landscape in future. However, now would be a good moment to remember that Douglas Carswell alone gave us the Brexit referendum. And we should all be mightily grateful for that.