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Vladivostok: the edge of the Belt and Road

IMG_8141Vladivostok is a city of 600,000 in the Far East of Siberia. Russia grabbed it opportunistically in 1860, back when the Qing Empire had been enfeebled by the Opium Wars and the vicious Taiping Rebellion that left 20 million dead. Russia quickly consolidated its grip expelling the Chinese and transferring people from Ukraine and Belorussia: first by land and ship and by rail once the Trans-Siberian Railway was built.

Even though it’s only a stone’s (or perhaps a Scud missile’s) throw from North Korea, there’s no hint of the East in the local gene pool. Lonely Planet calls it San Francisco of the East, I suppose, because of its steep, low hills and wide roads, but the gaudy, mid-19th Tzarist buildings in the center, ringed by newer Soviet concrete blocks make it look more like Aberdeen or Edinburgh.

IMG_8149I’ve long wanted to go to Vladivostok. The word Vladivostok conjures a far-away, mystic place of exile like Timbuktu, Mandalay or Coventry. Over summer I read A Day in the Life of Ivan Denisovich vicariously commenting on many drafts of my son’s school essay. In the book the bleak Siberian gulag is set in a vast open terrain and a bitterly cold climate. The book gets the vast, openness right. Far East Russia is 20 times bigger than UK, but its population of 6 million (and declining) is but a tenth of UK’s.
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I came to the city to attend a WWF meeting about the Belt and Road Initiative. In a sense this Chinese policy is a reversal of 19th century balance of power. The Trans-Siberian Railway was totemic of Russia’s colonisation of the East; BRI’s signature investments are a series of railway lines and maritime routes linking China to Europe, Africa and Asia. Once upon a time all roads led to Rome, today Xi Jinping’s big idea is for Beijing to assume a similar co-ordinating role in the world’s nervous system.

Certainly you smell Asian money everywhere. Our hotel had Chinese, Korean, Japanese TV channels and a single English one (checkout the excellent RT state sponsored propaganda channel: my fave is the witty show Redacted Tonight). The menus and museum proffer information in Cyrillic, Chinese and Kanji scripts, Roman letters is fast vanishing.


IMG_8158I found the contrast between Hong Kong and Vladivostok jarring. The flight is only four-hour but you land in an alien environment. Everyone on the plane was young, Slavic and athletic looking, or they were me. The lack of diversity is at least in part due to Russia’s anti-tourism policy, you couldn’t invent a more Byzantine process to get a visa. The other big difference is Vladivostok has space to burn. There’s no jostling for territory on the roads, pavements, lifts, or restaurants. You can finally stretch your wings. Instead of Hong Kong’s fastidious maintenance of its infrastructure we have Russia’s worrisome neglect. Outside the center’s conference-friendly ambit roads are cratered and the paint on the old buildings peeling. A funicular rattles and creaks as it climbs from the touristic shore – where you can explore the inside of Submarine S-56 – to the hill-top’s viewing point. The people have so much environment, trashing it doesn’t seem to matter. Unlike Hong Kong’s 24/7 work culture, Vladivostok is more interested in having fun on the beach, going for a beer, playing football with the kids.

IMG_8131I liked the phlegmatic can-do-ness permeating the culture. Channel surfing you can catch Putin looking inscrutable and insouciant, not harangued and shifty like a Hong Kong politician. Instead of a shopping channels, I found a DIY channel where the presenter showed us how to repair a broken pair of glasses with glue and Sellotape (you too can sport the Michael Foot look).

But the trip left me curiously depressed. Vladivostok’s pocket museum reminds us that over the last 35,000 years the fertile lands were denuded of mammoths and the other megafauna by the aborigines: Udege. These were conquered by dynasties of Chinese, white Russian, communist USSR, Japanese finally reverting to Russia. Does wildlife have a chance within Xi Jinping’s Ecological Civilisation? My excellent WWF colleagues helped rescue a tiny Siberian community of Amur Tiger from extinction, as part of our wider Tx2 programme. Can the WWF network reverse the millennia long trends for development to obliterate wildlife and worsen climate change? I hope so.

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The Black Olive: The Impact of the Highly Improbable

olivesA long time ago, in a former life, far-far away I remember tasting a succulent, savoury black fruit. I seem to recollect buying them in jars – from all good purveyors of food. I would add them to salads, pasta, maybe in mischief even to a curry. They were known as black olives.

But if such things still exist, surely I must be able to find them in Hong Kong too. Few cities are as obsessed with food and shopping (though strangely not cooking) as Hong Kong. I searched the supermarkets near  my home and office. Obviously a Mediterranean fruit would not be a staple component of the Cantonese diet, but surely some stores would sell them.

No olivesI went to one after another supermarket. Food sales in Hong Kong is a cosy duopoly shared by Dairy Farms (Jardine-Matheson) and PARKnSHOP (Lee Ka-shing) who between them account for 94.6% of food sales. (This is a fake-statistic because next to no business-intelligence is published in Hong Kong. There is no lovely Kantor World panel, nor any pesky CMA haranguing retail with competition enquiries. It’s approach to competition could have been dreamt up by John D. Rockefeller and Ayn Rand).

Perhaps, in the spirit of Nassim Taleb, the probability of a store selling olives is astonishingly non-random, like wealth or prowess at writing Canned olivesbest-sellers. Maybe 99.999% stores don’t stock olives, and one store sells has cornered the market. That would be very Hong Kong. I came tantalisingly close in one large retail chain. Next to a jar of green olives, was a can of black olives.

But every new condiment shelf was like the last. I was starring in Groundhog Day but instead of Sonny and Cher singing I got You Babe every morning I déjà vu-ed shelves of pickled vegetables, soya sauce laid out precisely like in the last shop.

But this tale has a happy ending. Hong Kong is one of the only countries in the world outside the UK where M&S still manages to make a profit. It does this by air-freighting all their lovely food-stuffs to Hong Kong circumventing the duopolies stranglehold on local suppliers provisioning their competition. The store in Central had jar after jar of black olives. I bought two.

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When cash becomes paper

demonetisationOn 8th November hundreds of millions of people were startled to find their country had inflicted a grievous act of self-harm which would throw society into disarray. If they had bothered to switch on foreign news, they might also have noticed the US presidential election polls were closing. Continue reading

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The unbearable lightness of Toblerone

tobleroneEarlier this week my son told me about an end-of-year costume party he was going to attend themed around all the horrors of 2016 and asked how he should dress. His friends would no doubt dress up as Trump, Farage and Boris Johnson. I suggested he should honour His Royal Purpleness, or perhaps  David Bowie – both great in terms of wacky clothes. Then, my son mentioned dressing up as a Toblerone to commemorate its tragic downsizing. I assumed he was being frivolous, but he insisted he genuinely mourned its shrinkage. He said lots of other confectionaries and snacks were doing the same thing.

In a sense, the shrinking chocolate bar does represent a truly existentialist threat to capitalism. Maybe I wasn’t properly appreciating the historical significance of its loss of heft. Every quarter poor Mondelēz International has to spin a yarn to its shareholders on how it plans to grow dividends. Ideally it would like to sell more chocolate at a higher price. But the company also owns Cadbury’s, Oreo, Terry’s and the handful of brands not owned by Mars and Nestle. As result of this concentration in the market, a proportion of extra sales will cannibalise sales of its own brands.

How to grow sales? The market for chocolate must surely be geographically saturated. I’ve seen its products in the tiniest village store in Philippines. I feel guilt every time I buy a medium sized bar of chocolate, so there’s zero probability of my upsizing to the larger bar, or heaven forbid buying two bars when I want a sneaky mid-afternoon snack. This is nothing to do with income or price elasticity. Doubling my income, or halving the price would not induce me to consume more. My body is rejecting the more chocolate with a Maslowian physiological insistence. Are we hitting peak chocolate? So what is capitalism to do?

So with stagnant sales all a firm can do is improve productivity or reduce portion size and hope customers don’t grumble. But productivity growth in manufacturing cannot keep growing indefinitely – factories have already been mechanised, supply chains squeezed. And the size of the product can’t keep on shrinking.

So maybe capitalism’s success at producing an abundance of goods, with a miniscule workforce through a handful of companies means that capitalism will eat itself. I wonder what will be left behind.

Perhaps my son should dress up as Fidel Castro.

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Hong Kong’s LegCo elections

On 4th September, sandwiched between the Brexit vote and the US elections, Hong Kongers have the opportunity to vote in the four yearly LegCo elections.

Hong Kong’s democratic processes are a hangover from its colonial days – the first election took place in 1995 two years before handover. UK graciously offering HK a tantalising taste of democracy, after having denied it to for the preceding 150 years.

HK’s legislature currently has 70 members, half of them are elected from five geographic constituencies, and most of the rest either by business sectors (like industry) or professional bodies (like accountants), so-called “functional” constituencies. A myriad of different political parties are fielding candidates – with seemingly more parties than there are constituencies seats. The parties loosely fall into the pro-Beijing “Establishment” camp which controls LegCo and the pan-democrat “Opposition” camp.

IMG_5769This year, the opposition is being split by the entry of eight, young localist candidates emboldened by the Occupy movement that want constitutional reform (which is code for the un-constitutional secession from Mainland). The well-known Umbrella movement leader Joshua Wong is still under 21, so cannot stand. You can get a flavour for their politics from the leaflet. They have a long litany of grievances against the Mainland: that Hong Kong takes in 150 Mainland immigrants a day (randomly chosen by ballot, unlike other countries that select by thickness of wallet), there is a weakening of Cantonese culture, particularly through greater teaching of Mandarin at schools and meddling in domestic HK politics by the central communist party. Their biggest fear is that HK will become just another Chinese city and lose its unique identity. At the time of writing one of the candidates had his candidacy invalidated because he refused to sign a form agreeing Hong Kong is an inalienable part of China.

Altogether 89 candidates are contesting the 35 geographic seats, and 65 candidates are contesting the functional seats. Two of my friends are standing in the election. One is already a LegCo member he’s a renowned pan-dem lawyer whose interests include environmental and social issues. He is seeking re-election for the accounts functional constituency. The other is a district councillor, originally from the Netherlands, but settled on HK for many years and who is making his second stab at the elections.

The candidates sometimes hang around the MTR stations. I spoke to Cheng Kam Mun one of the young localists about what policies he stood for aside from freedom from the Mainland, but drew a blank. His campaign is only really fought on one axis – opposition to Mainland China. This is a shame because there is so much more young politicians like him could and should get hot under the collar about.

Ricky_WongAs someone who spends more time listening to LegCo debates than is healthy I have a lot of sympathy for the young people’s views that politics is not representing their interests. They characterise all villainy as emanating from Beijing, but there are baddies closer to home, too. A couple of weeks ago I listened to the debate on the medical bill. The Bill aims to make it easier for foreign qualified doctors to practice in HK, and also to increase lay representation on the medical complaints board. The bill was successfully filibustered by the “expert” LegCo member from the doctor’s functional constituency. Another debate on a proposed scheme to introduce premium taxi franchises was roundly attacked by LegCo members for upsetting the existing interests of taxi drivers and taxi license owners. The least bland politican is “Long Hair” Leung Kwok-hung who has been almost impeached, physically thrown out of the chamber and imprisoned for his implacable views but who genuinely cares about worker rights and minimum wages and is one of the few people that visibly represents the common man in the chamber. The other person to look out for is Ricky Wong. He is a successful businessman, more Bloomberg than Trump, and is running on a get rid of CY ticket but also favours Hong Kong business becoming more hi-tech and competitive, and breaking the grip of the current business interests.

I asked young members of my team  famous people they would most like to have a heart-to-heart conversation with. Their choices were mainly global. One person said Chris Patten. The reason they gave was because they wanted to hear how Patten made decisions especially how he traded off different people’s interests. A second colleague said they’d love to spend time with Bill Gates or the person that set up Facebook. Both these figures had been at the heart of technologies that so changed everyone’s life. A third person said Tsai Ing-Wen, the then President–elect of Taiwan. Tsai is the first female head of state in Taiwan, and perhaps also the Sinophere.

Anyway I’ll simply be observing the elections. Temporary residents like me aren’t allowed to vote.

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…What just happened yesterday?

BorisTrumpStill can’t get my head around yesterday. In all my adult life yesterday is only the third time I’ve voted for the winning person / option (the other two were voting for Maya in the Camden Council  elections).  Usually whatever I vote for loses. Maybe I should campaign for Trump to avoid this.

 

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Why I finally voted leave

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I posted my “Leave” vote on Tuesday. Thanks for the tens of responses to my earlier post people sent me either by email,  posted on Facebook or on this website. All but three counselled Remain. I was, in fact, going to vote “Remain” right until Monday evening. This was a mainly through reading the anti-smoking campaigner Clive Bates’ cogent article . His basic case is: no matter how much you despise the EU (and does he despise it!), leaving it you remain exposed to its idiocies without any ability to improve it. Also the style of Brexit that Boris Johnson will adopt, should be become PM in a few months’ time, would – pandering to CBI and other powerful interests – be the Norwegian option. So Clive’s solution is to Remain and be the permanent grumpy sod that stops any further craziness taking place. Trouble is, that’s exactly what UK officials have been trying to do for five or six years, and it hasn’t worked.

And I don’t think the Norwegian option is going to fly with UK voters. I have no idea what the UK settlement with the EU will be like, should we leave. But I doubt if it’ll be like Norway’s. Like Tolstoy says: “All happy families are alike; each unhappy family is unhappy in its own way.” We have to negotiate our own divorce terms. Even if Boris personally might have no problem with uncontrolled flows of workers from other EU countries the people that voted for Brexit won’t be able to accept it. I hope the accommodation on trade in goods looks a lot like now, for  a few years. Firms in the EU and the UK will want to maintain trade links. So yes, many in the EU might want to give us a good pistol-whipping – but devising a harsh pistol-whipping takes more effort and skill the the EU Commission can realistically muster.

So what made me change back to “Leave” at the last minute? Three things:

I enjoyed reading The Labour Case for Brexit. (Incidentally if you never experienced a political vacuum then take a look at the Liberal Leave website: remarkable not in what it says, but in that it exists at all.) The Labour Case has good essays by Gisela Stuart who was involved in negotiating the Lisbon Treaty back in the day, and Bryan Gould a New Zealander and former UK politician. Stuart argues that a vote to Remain will be interpreted as endorsement of the EU’s current agenda for deeper political and diplomatic union and that a remain vote is actually a vote for a much expanded role of the EU. Gould argues that the EU through focussing so much at the internal market, has neglected outside commercial opportunities – a dumb tactic given the Asiatic shift of the world economy. There’s also an interesting article by Roger Godsiff about how the rules on workers’ rights in the UK and how with the exception of rights for part-time workers all were initiated in the UK before the EU, or there is no EU requirement for them.

Second source was the Vote Leave site. This isn’t the most edifying of resources for the undecided but there are some interesting stats on the shrinking share of the EU in terms of global GDP and its faltering efforts to conclude trade deals.

The third source was nothing to do with the Leave campaign but a depressing email I received on the Consumers International mailing list about the anti-democratic capitulation of the EU in its deals with big business. The issue is endocrine-disrupting chemicals; these substances are found in pesticides and are added to plastics to make them soft. They are linked to low sperm count, and certain cancers. There has been an agreement since 2013 to ban EDCs and the Commission was tasked with creating the list of banned substances. And then it stalled. Industry has provided a sacrificial list of “low potency” molecules it is prepared to see banned which excludes endocrine disruptors it wants to continue selling. They’ve hired fake experts to make their case. The same tactics the tobacco lobby used to halt regulation of cigarettes. The impact assessment containing the evidence is secret, even member state Governments aren’t allowed to see it. At the moment we have the unedifying site of the unelected EU Commission being taken to court by France, Sweden and the EU Parliament for failing in its duty to openly debate with stakeholders and regulate business in the public interests.

In a way this episode illustrates what’s good about Europeans, and what’s wrong with Europe. I am glad that France and the Scandinavian countries have been so active on this issue within the EU. Their behaviour shows the readiness of progressive Governments to react swiftly to challenges thrown up by science and politics. But equally it’s dismaying to see the slowness and complacency of the EU institutions in responding to the needs of its people, and the larger failure of democracy and civil society to engage with Brussels. We are not sufficiently European in our identities to be governed at the EU level. And in my opinion, until that changes, the EU should remain just a free trade area and limit its activities to setting EU wide standards.

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I’m a left-leaning environmentalist and (I think) I’ll be voting to leave the EU. Here’s why.

Brexit

Do you know the name of the President of the EU? How about any of his 28 strong Cabinet? Me neither. (Ans: Jean-Paul Juncker and the UK nominee to his Cabinet is the famous-to-his-mother Tory politician Jonathan Hill). Europe politics is defined by its anonymity, and its considerable power wielded in near silence.

My first experience of work, in the early nineties was as an economist in UK’s Ministry of Agriculture. At the time EU was swimming in lakes of wine and buried in piles of unwanted cereal, beef, butter & milk powder, even tobacco. These were bought from farmers above the world price and disposed of, or stored at huge cost. One particularly noxious bit of analysis I did was rebadging unwanted cereals as ‘food aid’ which EU would dump onto world markets. The consequences on farmers’ livelihoods in developing countries was disregarded, such was the overarching priority to rectify EU’s short-term budgetary crisis caused by the glut. Gladly the surpluses are now gone, sadly the dispossessed farmers in Africa and South America are probably still living in some urban slum. I found those years a scary demonstration of EU’s lack of accountability to civil society and the capacity of powerful lobbyists to guard entrenched interests against the global good. The farming lobby was more adept at influencing Brussels thinking, Civil Society was simply less cunning and more parochial in the way it organises itself. WWF’s European office budget has a budget of around £3m (15% from the EU Commission). Its UK office has a budget of £61m, £9.4m of which is spent on campaigning. This isn’t a criticism of WWF. At least it publishes information on spending by its Brussels office. Others don’t bother. It probably reflects how donors want their money to be spent: more on conservation less on lobbying; more within the UK, less within Brussels. Few appreciate that agricultural & fisheries policy, and many conservation directives are made at the EU level. Our identities are largely national; we expect power to be wielded in London not Brussels (or Strasbourg, depending on which week of the month it is).

One of my projects, as a consultant at ECOTEC, was carrying out an evaluation of structural fund spending in Yorkshire. The incredibly prescriptive rules meant that instead of asking ex-miners from Yorkshire about their preferences, the ‘big picture’ objectives agreed in the Brussels sausage-machine were imposed. The rules meant spending couldn’t be on drug-rehabilitation, housing, public services or income support. Instead projects had to aid tourism, high-tech and any other favoured sectors which the latest nonsensical horizon scanning had dreamt up, had to be match-funded and big-ticket. It was great work for consultants like me but did it actually help the poor taxpayers in Yorkshire. Who knows? Here is a meta-evaluation by ECOTEC of the benefits of structural funds at around that time. The report tactfully concludes the sums of money distributed by the EU’s structural funds were not large enough to have a measurable effect. Bear in mind that ECOTEC was very much a passenger on the EU gravy train and earned well over of 50% of its income from the EU. I enjoyed great jollies flying around Madrid, Athens and Brussels on fun pan-European research projects that never achieved anything apart from educating me on how to build economic models of renewable energy economics.

So what is the EU government actually does and what affect does its actions have on the environment? Membership of the EU impinges on us in a small number of discrete ways. Here’s my list:

  • Direct financial spending by the EU and contributions to the EU
  • EU directives standardising product safety rules
  • Single market rules impacting on Government spending
  • Environmental regulations

I will mainly restrict discussion to environmental and agricultural issues.

Direct spending

UK contributes around £12.9bn to the EU (after its rebate) and receives £4.4bn – a deficit of £8.5bn. As a relatively rich country – I don’t think UK should begrudge the fact it is a net contributor to the EU budget. And the level is contribution is quite small compared to overall spending – just 1.5% of UK’s Government £730bn annual budget. By way of comparison the US Federal budget is is £2000bn, a third of total public spending. The problem with the EU budget is not its size, but its composition.
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Of all the things the EU could spend money on – why is 41% of the budget still being spent on supporting farmer incomes? Why not incomes of security guards, or waitresses? They’re pretty lowly paid too. Maybe in 1957 when when the EEC was created supporting agriculture made some sense – but it hasn’t for decades, and yet the EU is so incapable of reform that 60 years later we still support ownership of agricultural land.  And the way the rules are crafted is pernicious – support is £300/ha for arable land. But it drops to £200/ha for woodland. And there is no support for holdings of less than 5ha. Perhaps the UK could do with more traditional woodland landscapes and less cereal but the rules encourages maintenance of the agricultural land rather than the re-wilding of land George Monbiot so brilliantly writes about in his book Feral. Perhaps as a result the territory of Hong Kong has more biodiversity and a greater share of genuine national park than UK.

About a third of the EU budget is spent on helping reducing regional inequality. Historically, and quite correctly, UK as a rich country has received only a small share of structural funds: recipient regions include Northern Ireland, Highlands, West Wales, Yorkshire have. The bulk of money was spent in the Portugal, Ireland, Spain and Greece countries, and more recently in the Central and Eastern European (CEE) countries. The transfer to Poland is worth around €500 per person per year. But stepping back a little why do we shower these particular countries with money? Do British feel really have such a close affinity to CEE nations. For historic and familial reasons many people in the EU – myself included – have closer links with nations in African, Asian and South America. I would rather money be spent on global development issues rather than within the Club of Brussels.

EU single market regulations

EU sets product standards to ensure goods can be freely traded within the single market. These standards primarily govern product safety, but also environmental considerations, covering allowed emissions from road vehicles, and energy labels on electrical appliances. These often get parodied and lampooned in the press. In my own experience I think these have been a resounding success. They have forced manufacturers wanting to sell into the 500 million people EU market to adopt tough health & safety and environmental performance standards. Here in HK I cite these standards to officials and regulators. The Euro V standard is used as a benchmark performance standard for road fuels sold in HK, a surprising externality from the EU’s excellent standard setting work!

So no complaints from me on this score.

Government procurement rules & State Aid Rules

EU rules on public procurement and state aid have a huge impact on member states budgets, dwarfing the direct contributions into, and from the EU. The rules are set up to force government to open up tendering Europe and prevent subsidising local firms in a way that distorts EU competition.

This means that the 14% of EU GDP attributable to Government contracts covering waste services, contracted out health and education services, publicly funded infrastructure have to be offered on open tender across Europe. These rules apply to relatively small tickets items of 200,000 or more. Around 160,000 tenders a year are published on the Office Journal (OJEC), around 10% of these are from UK / Ireland. The rules greatly protract the awarding of contracts that are annoying to tenderer and firm alike. This complexity is off-putting to many small companies and are routinely won by big firms with specialist departments that know the ropes.

State Aid Rules forbid member governments from paying more than €200,000 support over three years to any firm without prior approval from the EU. Approval is only given if there is market failure or a general economic interest argument to the State Aid.

But what exactly is wrong with Government’s using taxpayer money to help their nation’s businesses? Why should the EU Commission’s KPI to ever extend the single market override a nation’s prerogative to stimulate the development of sectors or local firms. Policy makers are fond of saying Government is bad at picking winners. This is a point of view, not an empirically confirmed fact. Read Ha-Joon Chang’s excellent books which highlight how the Asian tigers like South Korea grew using levers like procurement and state aid.   Major contracts like building rolling stock for London Underground can help retain jobs in deprived areas. They can stimulate restructuring of the economy helping a depressed region pick itself up. Why should Government sit around twiddling its thumbs while the EU Commission opines about the public interest merits of support for an ailing business or industry?

The State Aid and Public Procurements rules are an affront to the reason why people elect their Government. Maintaining the jobs and livelihoods of its people is one of the basic functions of our elected Government.

Regrettably, WTO rules impose similar, but thankfully weaker, restrictions on Government to support its local economies. Also its enforcement powers and institutions are much weaker than the EU Commission’s.

EU’s environmental regulations

Through its environmental directives the EU have a pervasive impact on UK regulations. For instance, the Industrial Emission Directive and its predecessor directives have been applied to emissions from power stations and factories. Similar Directives apply to emissions to water, bathing water, waste going to landfill. Brussels also sets targets for the share of renewable energy production and energy efficiency.

Proponents of the EU argue UK will repeal these environmental policies given the chance. I am less pessimistic about UK citizen’s sense of priorities. It is important to recognise that many of the environmental targets are not negotiated and set by the EU but by broader regional groupings of countries. Air emissions targets are agreed by the UN-ECE in Geneva, covering not just Europe but also North America. I was fortunate enough to involved first hand in these discussion in the 1990s. The UN-ECE oversaw excellent science based targets looking at the damage caused by acid rain, and then set necessary reductions in targets. EU’s directives are merely a mechanism for implementing increasingly stringent environmental UN-ECE targets.

Similar pan-regional bodies exist for protecting fish stock in the North Atlantic (ICES) and marine pollution (OSPAR). Countries like Iceland have adopted different and more successful policies to manage fisheries than the EU – making use of tradable quotas and banning discards of by-catch.

While much EU environmental regulation is effective, some is not. But EU’s decision making process to correct inevitable errors is sclerotic, and its ability to reform itself pitiful. The graphic below shows the ignominious failure that is the EU-ETS. After eleven years, and three phases the EU, still fails to set meaningful ‘caps’ on emissions and permits member states and emitters with vested interests to continue emitting carbon with near impunity. Yes, EU’s share of renewables in electricity generation has grown over recent years, but this has been at the expense of gas and nuclear, not of coal! This relative growth in coal use is testament to the failure of the EU-ETS.

EU-carbon-prices-have-been-low-since-2008.-Chart-courtesy-of-European-Environment-Agency-and-Intercontinental-Exchange.-Used-with-permission.And worse, the EU’s ineffective policy on carbon emissions crowds-out progress on a genuinely effective policy like carbon taxes. I am highly supportive of George Osborne’s carbon floor price. This is a top-up tax on the EU-ETS which steadily rises over time. It provides the electricity sector a strong and unambiguous future path on the price on emissions guiding both fuel choice and investment decisions. Instead of embracing policies that work, to his shame the EU climate Commissioner continues to speak against the carbon floor prices because the EU does not have legal competence over taxation. Never mind that it works, its problem is it wasn’t invented here!


So that was my list of reasons why I think UK should leave the EU. Many of these arguments aren’t so much reasons for UK leaving per se, but reasons for the EU either ceasing to exist, or doing much less. It’s what I’ve believed for most of my professional life.

Eighteen months ago I moved to Hong Kong and my perspective has shifted. I recognise the EU Commission does some things well like: setting product safety and environmental standards, allowing free movements of goods and people, and much of its environmental regulations. It does other things badly.

Though I don’t feel particularly European and have only the haziest recollection of who Jean Monnet is – I do recognise and appreciate the EU super-state is a fairly benign institution. The same cannot be said for China. Over the past fifty years, through the repression of its people the State has killed many people. The world’s most potent super-power US has also caused its fair share of misery over the past fifty years bombing, imposing sanctions, or overthrowing tens of regimes. The EU super-state has never shown that sort of murderous repression to its own or other country’s people.

One source of nervousness about leaving the EU is whether UK’s departure will cause a disintegration of the EU and leave China and US as the only superpowers. I prefer the European way. My other source of disquiet is what a UK outside the EU will look like. Listening to pro-Brexit campaigners I am repelled by their arguments. They are often anti-immigrant/refugee, pro-small Government and pro-free trade. This isn’t my agenda.

Where are the political leaders like Tony Benn who used to champion the progressive case for leaving the EU? Though I don’t much like the EU, remaining seems less less bad than having the UK led by the present pro-Brexit leadership. Hopefully over time the xenophobes and libertarians will be replaced by a more benign leadership, but I do worry about the current absence of the progressive pro-Brexit voice.

This isn’t a great reason to vote Remain, but one I bizarrely and unexpectedly find myself being drawn to. June 23rd…what should I do? Do please offer your own thoughts.

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What do you call a collection of Teslas?

IMG_5480The first Tesla I saw was wrapped around a lamp-post near my home in North London. The attending, couldn’t-be-more-amused, policeman, said the owner’s wife had taken it out for a spin not appreciating the beast’s acceleration. I couldn’t work out from his poker face whether he was trying to be funny.

I took the photo of Tesla’s high speed charging station at the Science Park in Shatin. The power lurking underneath those hoods is astonishing. Each Tesla Model S is packing between 328 and 532 horse-power, my mountain bike parked alongside is just 1/3 hp.

Last year 2200 Tesla Model S’s were sold in Honk Kong, about half of all the electric cars and quite probably 4%-5% of all private car purchases last year. Hong Kong’s excellent public transport system means that private cars are a luxury rather than a necessity. One important reason why the Tesla is so successful over here is that electric vehicles enjoy relief from Hong Kong’s progressive first registration tax on cars which starts at 40% and rises to 115%. The other big perk is that Tesla / HK Government has installed free superchargers, like the one in Science Park, at 10 locations around Hong Kong. Also, even the most nervous driver will find it  hard to get range anxiety about the battery going flat between charging points when the longest distance it’s possible to drive before you either fall into the sea or hit China is fifty miles.

Not visible in the photo is a long line of Tesla’s queueing for their free juice. Maya and I asked the person at the head of the queue why they bothered to wait for a recharge. Surely after forking out more than half a million dollars (HK) to buy the thing – he could afford to pay for the electricity. The impossibly handsome, impeccably groomed, and globally accented young owner shrugged nonchalantly. His apartment manager like many others in Hong Kong did not allow residents to use the charge vehicles in the garage citing the ubiquitous, and infinitely flexible excuse Health and Safety. Anyway it wasn’t so bad waiting 20 minutes in a queue with excellent on-board entertainment and a nice cup of coffee. What he did begrudge were people who left their car charging in a bay and gone off for a meal. Their Tesla was near-fully charged in just 20 minutes.

Poor dear – I thought. I’m sure even private Learjet owners must’ve their grumbles.

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Buddhist economics

bud-econ(1)Nice blog by a staffer at Bank of England on ‘Mindfulness economics‘.

Small is Beautiful had a disappointing chapter on Buddhist Economics;  Dan Nixon has done a better job than Ernst Schumacher! Also some useful links to Mark Carney’s Tragedy of the Horizon speech and about the how climate catastrophe is viewed by myopic markets the debates on secular stagflation about how to retain the world’s economic mojo when growth rates and interest remain persistently low.

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