Sunday, 12 July 2009

Political Economy

In Scottish Universities there is no degree in Economics only degrees in Political Economy of which Adam Smith was the original professor. Oxford take this one step further and give degrees only in Politics, Philosophy & Economics. As the 2010 general election approaches the linkage between the two subjects becomes more obvious. All difficult, i.e. potentially vote losing, economic decisions are being postponed until after the last possible election date.

Thankfully some 'decisions' are outwith the control of our venal, self seeking politicians who put their re-election above all other issues. The markets know taxes have to go up and public spending cut to get us out of Gordon's self created national insolvency. This week McDonalds of Big Mac fame announced they were re-locating their European headquarters from London to Geneva saying "uncertainty over the tax regime was a decisve factor. They join other US multinationals like Proctor & Gamble, Yahoo, Google etc whose European head offices are in Switzerland. It is the tax treatment of intellectual property rights that is one of the main drivers in these moves affecting even home grown companies like WPP & Shire that have gone to Ireland for lower taxes.

The Irish have of course extracted a host of exemptions from the EU on Lisbon as a price for their second referendum that will ensure this outflow of jobs to Ireland from the UK continues. We poor saps in the UK have not even been given a first referendum. Our supposedly EU withdrawal party UKIP could not mount a campaign against the Lisbon Treaty in the UK. They chose to campaign in Ireland and have promised to fight the EU in the pubs, bordellos and restaurants of Brussels to the last Euro of their lavish expenses. Well it beats campaigning on cold wet days in Manchester, London, Newcastle etc.

This is nothing compared to what will happen when the EU takes over financial regulation of the City of London. The new regulations are driven by an unholy alliance of the French, Spanish and Italian Government and a large group of other countries left wing parties who see finance as an evil. Farage grandstands in Brusssels about opposing this. He must be joking! Nobody bothers about the EU talking shop and the EU crats just smile politely and titter at Farage's rants. Nigel Farage has to realise that the place to oppose these reforms is where he can get real support, in the City of London. He is supposed to be a City boy but he does not seem to be able to mobilise the City moneybags. He has no real City contacts and is not seen as one of them.

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