Referendum lessons

Saltire

Saltire

I was in Scotland during the week in which the Scottish independence referendum was held, driving up from Oxfordshire early in the week and driving back again after the referendum had closed.  As we crossed the border from England to Scotland, there were a lot of NO posters in farmers’ fields and in the larger houses in the more rural part of south Scotland.   We saw hardly any YES posters until we drove through Galashiels where what were obviously council houses were all plastered with them.  It may be easy to draw conclusions from visiting a tiny part of Scotland but I sensed we were seeing a dividing line between richer and poorer; between self-supporting and dependency.  I believe in the Union so was greatly relieved to learn that the NOs had it by a substantial majority.

Greek flag

Greek flag

Listening to news broadcasts on the Greek referendum and reading newspaper reports, I sense a similar divide between the NOs – younger people on low incomes or unemployed and those who have enjoyed Greece’s liberal tax and retirement practices – versus the YESs – the middle and wealthier classes and businesses – who can understand the financial disciplines of the market.

Well, I suppose it is no surprise that the Greek NOs had it by 60 to 40.  Watch the Scottish woman try to build her client dependency base to ensure a Greek answer when there is another Scottish referendum.

But, returning to Greece, the home of democracy, the country is clearly in a pickle and so is the Eurozone.  The Greeks have voted against austerity and against paying back a debt they cannot afford to repay but to which their political masters eagerly agreed.  Should the people of Greece pay a dreadful price for the profligate borrowing and spending and also the many Spanish practices of their country?  Tax appears to be a voluntary exercise for many and retirement seems to be normal at 50 years of age.

However, the European Union cannot escape blame.  Greece should never have been made a member of the Eurozone and was only allowed in by a complete fudge of the financial rules.  The Eurocrats bear a burden of guilt here and it may not stay with Greece alone.  The admission of much of eastern Europe is likely to increase the financial pressure that is inevitable between wealthy first world countries and struggling second or third world ones.  Creating a monetary union without an equivalent political union was never going to work as experts made clear at the time but it has taken the rogue state of Greece to make it clear.   Thanks goodness we stayed out despite the Kenneth Clarks and Michael Heseltines of our world who were so wrong.

So who has to blink first?  Well, it is clear that Greece is determined to deny austerity and expects other European countries to support their lifestyle.  That makes it clear that Greece should never have been in the Eurozone and needs to exit as soon as can be arranged.  Others with the same dependency culture need to do the same.

However, to ditch Greece without the Euro and absolutely broke would not reflect the degree of guilt the Eurocrats should share for letting Greece into the EU club to start with.  I think this means the Eurozone nations needs to support Greece financially into its new drachma world where they will hopefully learn the financial facts of life,  including there is no such thing as a free lunch, a tax system that is mainly voluntary or a retirement age of 50.

 

About Keith R Mitchell CBE

Qualified as a Chartered Accountant in 1967. Pursued a successful career in financial training and publishing until selling his interests in 1990. Elected a County Councillor for the Bloxham Division in 1989. Leader of Oxfordshire County Council 5 November 2001 to 15 May 2012. Chairman of the South East England Regional Planning Committee July 2002 to July 2005. Chairman of the South East England Regional Assembly July 2005 to July 2008. In HM the Queen’s 2007 Birthday Honours, appointed a Commander of the Most Excellent Order of the British Empire in recognition of services to local government.
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