Everyone knows that the world’s economic woes are soluble. Every leader acknowledges the blessings of free trade, low taxes, sound money and less regulation. Yet their actions, as ever, speak louder than words and somehow achieve the precise opposite.
Take “free trade”. It allows cross-border commercial transactions to take place between willing traders unimpeded by government-imposed barriers such as quotas, protective import duties or subsidies. It allows prices to be determined by the markets and the whole community benefits.
Right now EU trade ministers are attempting to implement the EC’s mandate to negotiate a free-trade deal with the USA. Yet France is determined to veto the talks unless the audio-visual industry is completely excluded. This blatantly protectionist position demonstrates two things: how vested interests intervene to scupper free trade; and an intractable vice within EU rules. What warped logic gives one member the power to veto a deal that would allow the other twenty-seven members to trade freely with the largest economic power in the world?
Lowering taxes remains an impossible dream until public spending is brought under control. Our chancellor’s declarations about the need for cuts and austerity are part of the mythology. Beyond tinkering on the fringes, causing more suffering than benefit, there are scarcely any cuts. Since Denis Healey ran cap in hand to the IMF for a bailout in 1976, public spending has, in real terms, more than doubled.
During the boom years pay demands of public sector unions were benchmarked against the private sector. Yet, when the recession caused private sector pay to fall, that measure was forgotten. According to the Office of National Statistics public sector pay now exceeds that in the private sector by 8.2%, and bringing them into line would save the taxpayer £53 billion a year.
Unbelievably, the EU now sends “ambassadors” to over one hundred countries in which EU members already have embassies. A Foreign Office minister considered their salaries somewhat modest – until someone pointed out that he had been shown the monthly figures!
As for sound money, witness the panic on Wall Street when Mr Bernanke said he foresaw a day when frenetic money-printing at the rate of $85 billion per month might conceivably be “tapered”. He spent the next two months backtracking on his provocative utterance.
Same in Europe: the ECB’s own constitution forbids it to print money to bail out sovereign debt. Only Germany has questioned the legality of the burgeoning cascade of fiat money in the wake of every bailout. But Germany has already lost control of its own money to fools who see inflation as their only salvation.
Every central banker knows that stopping the presses will instigate a corrective purge before long-term solvency is possible: short-term unemployment, lower tax receipts and defaulting bank loans. But they are victims of the supreme law of monetary power: “If you can print money, you will print money.”
As for the sublime objective of low regulation, latest EU rules on energy efficiency will reduce the suction power of vacuum cleaners. Well, why not? After all, we already have light bulbs that do not illuminate, laundry powder that does not remove dirt and now vacuum cleaners that don’t suck.
The madness will end. Seventy brutal years of communism did end. Fifty years of apartheid did end. The Berlin Wall did come down. Everything in its time. As Victor Hugo put it: “The one thing that is stronger than all the armies in the world is an idea whose time has come”.