The countries that have high taxes and most government planning are always amongst the poorest. Countries which have the lowest taxes and least government regulation are the richest.
The mighty experiment conducted in the names of the reluctant proletariat in post war Europe proved conclusively that planned centralised systems in the East became progressively poorer relative to the freer west. Ultimately their captive peoples cast aside their tyrannical governments. They rose up and voted for some freedom and free enterprise. Since doing so they have started to catch up.
There is no link between a country’s size and its prosperity. For years proponents of European union have claimed that only if we integrate ourselves into a bigger area like the EU will we be able to enjoy the prosperity that comes to large blocs like the USA. Why then did the USSR stay so poor if a large common market under strong central planning with a single currency is what is needed to make people rich? Why did little Estonia or Latvia throw away the great opportunity to remain part of the rouble zone, that forerunner of the Euro? Why are the Swiss richer on average than people in the USA? Cuckoo clocks and chocolate are not their monopolies that allow the Swiss unlimited pricing power.Why is Norway the second richest country in Western Europe, and yet it is not even a member of the EU? Did keeping its own oil and fishing industry help them become and stay rich?
Proponents of the Euro are having an even tougher time making their case that it is essential for our economic health for us to join this big single currency area. Our per capita income is a fifth higher than the Eurozone average on 2002 figures. Sweden and Denmark, the other two EU countries that have stayed out so far are also well ahead of the average Eurozone income level. They grow faster than the Eurozone and do not find the odd foreign exchange commission gets in the way of a worthwhile trade. Ironically the latest figures show that France and Germany have grown their trades with the USA and countries outside the Euro in the EU more quickly than they have grown trade to their partners in the zone! That’s the very opposite of what we were told.
The preoccupation of the UK establishment with looking towards Brussels involves us with sclerotic arguments about European integration at a bad time. It is diverting important attention away from the real challenges of the new millennium. Mighty competitors are emerging in the East in China and India. Within the next twenty five years China will outstrip Germany as the world’s third largest economy, before going on to challenge Japan and then the USA. India too may well surpass Germany in the first half of this century. If the UK stays outside the Euro and does not opt for penal taxes and regulations, she too could overtake Germany well before 2050.
The Institut Francais des Relations International forecasts that the EU’s share of world trade will fall from 22% last year to 12% in 2050, whilst China’s will grow to 24%. The EU itself is projecting a collapse in the EU’s share of world national income from 18% in 2000 to only 10% in 2050. All these figures may prove too optimistic for the EU, although the trend is clearly right.
The EU’s response to all this is perverse. The nations huddle together under the tatty and torn twelve stars umbrella expecting it to shelter them from the Eastern economic hurricane. They should look up and see what is going on.
In the west the USA’s technological mastery grows stronger by the day. The USA, for all its surfeit of lawyers and gunboats, can spawn huge multinationals like Microsoft in a decade. It is able to dominate civilian as well as military computer and communications technologies. It can lead the world in everything from soft drinks and movies to smart bombs and pharmaceuticals. In the last two decades it has seen off the USSR’s threat to its military supremacy, and the Japanese attack upon its civilian electronic dominance. The Europeans get very cross when the USA says that if you did not fight the war in Iraq your companies cannot have access to US taxpayers’ money to help rebuild it. Stamping their feet does not make a blind bit of difference to the reality of US money and US men running the show.
In the east, first in Taiwan, Hong Kong and Singapore, and now in massive mainland China and India, manufacturing and service power houses are emerging. So far they are growing very rapidly by applying technologies made in the USA. Their low wage rates, enormous labour flexibility, improving levels of skills and their willingness to seek out work around the world are giving them a bigger and bigger slice of world trade. The EU either buries its head in the sand and pretends this is not happening, or seeks to use political clout to rig trade rules against the new production centres.
Some Trade Unionists and Labour MPs now ask their government in the UK why they are allowing so many jobs to be exported to China and India. They seek controls on Eastern competition. Labour’s enthusiasm for tackling poverty and unemployment in the developing world does not last long when a country starts to compete more successfully. They are seeking the wrong answer to a worrying trend for the UK. We should not be trying to prevent India or China offering their services or selling us their goods. We should be freeing UK firms more to do what we are best at doing, so we can have well balanced and thriving trade with the emerging oriental giants.
Germany has been sleep walking to relative decline ever since reunification a decade ago. Even she now realises that high taxes on business are part of the problem, not part of the answer. The troubles of the Eurozone are compounded by traditions of high social protection from the state paid for out of current tax revenue, allied to a forecast sharp drop in the working population over the next few decades. The UK does not share this problem.
There is no need for the UK to hitch its wagon to a Eurozone and political continental union which on its own admission will drop far behind the USA and the three main Asian economic powers in the years ahead. If the UK wants to become more prosperous and more influential in the world she must cut taxes, reduce regulation, and learn to compete and collaborate with the American and Asian powers. If she cements herself into a declining Europe she will be expected to pay more of the continent’s bills as they try to keep afloat a very expensive welfare system whilst being shot to pieces by the relentless success of the new competition abroad.
