Wednesday 31 July 2019

The Inevitable Demise of the Euro


In a free market, the value of any currency is determined by the demand for that currency for the purposes of trade. If an importer in country A wishes to buy goods from an exporter in country B and the price of those goods is denominated in the currency of country B, then the importer has to buy units of that currency in order to pay for the said goods, simultaneously selling units of his own country’s currency in order to do so. This latter transaction, along with thousands of other transactions just like it, is what then determines the price of the currencies involved. For if more people want to buy goods from country B than country A, then the demand for currency B, along with its price, will rise, while the demand for currency A, along with its price will fall. 

It is for this reason also that, in a free market, trade tends towards equilibrium. For if there is a significant and persistent imbalance in trade, then the currencies of the net importers will continue to decline against the currencies of the net exporters, such that the goods of the net exporters become more and more expensive. This results in the net exporters selling less and the price of their currencies consequently falling until some kind of equilibrium is reached.

This doesn’t mean, of course, that significant and persistent trade imbalances cannot exist. Rich countries with large stores of accumulated wealth otherwise known as capital can maintain trade deficits for decades without damaging their currencies, especially if, like the USA, their currency has a reserve status and is used for international trade in which the issuing country is not a party. However, all such trade deficits represent capital out-flows and eventually even the richest countries will become impoverished by such capital loss, such that the tendency towards equilibrium is restored.

Other than by countries borrowing or printing money in order to continue importing goods they can no longer afford both of which practices, in themselves, tend towards instability and currency devaluation there are only two ways to prevent or forestall this tendency towards balanced trade. The first is through currency manipulation, where the currency of an exporter is held at an artificially low value. In ‘The End of an Era (Part II)’, which you can find here, I described how China, with the tacit agreement of the United States, kept its currency – the renminbi or yuan – pegged to the dollar at between 30 and 40% below its true value for more than twenty-five years. This allowed it to build up a massive trade surplus in manufactured goods with the rest of world, laying waste to large parts of manufacturing industry not just in America but throughout the West, while at the same time accumulating huge capital reserves. 

I said in ‘The End of an Era (Part II)’ that, one day, this would be seen as one of the worst mistakes in post-war history. And I still hold to this view. However, there is another mistake that gets fairly close to it in terms of the damage the West, and Europe in particular, has managed to inflict upon itself: a mistake which relates to the second way in which the tendency towards balanced trade can be thwarted. This is by means of the creation of a monetary or currency union between countries with very differently performing economies, especially with respect to productivity. For if one or more  countries in such a union has a significantly higher rate of productivity than the others, it will either be able to produce goods more cheaply than its neighbours, or of a higher quality at the same price, thus giving it a distinct trading advantage. 

And, indeed, this is what we find in the Eurozone, where Germany, in particular, runs a significant trade surplus with nearly all the other members, who, due to the simple fact that they all share the same currency, are unable to counter this imbalance via the usual mechanism of currency devaluation. Worse still, because goods flow one way and capital flows the other, there has been an inexorable build-up of capital in Germany where it has inevitably been invested in further improving productivity, thereby widening the productivity and trade gap even further.

Nor is the advantage Germany has gained from this confined to the Eurozone. For the value of the euro on international currency markets is determined not just by the volume of demand for it to buy German goods, but by the volume of demand for it to buy goods from the Eurozone in its totally, which, on average, pulls the price of the euro down. As a result, the price of German goods sold to the rest of the world is significantly lower than would be the case if they were still denominated in Deutschemarks, allowing Germany to establish significant trade surpluses with nearly all other western countries, including both the UK and the US, thereby creating even more capital inflows from outside the Eurozone to invest in even greater productivity. And so it goes on.

The real casualties in all this, however, are the other members of the Eurozone, especially those in southern Europe, usually referred to as the Club Med group, whose comparative disadvantage can clearly be seen from the imbalances which, over years, have gradually built up in the Eurozone’s international settlement system, known as Target2: a distributed transaction processing platform managed by the ECB to which all the EU’s national central banks (NCBs) belong, along with all of their affiliated commercial banks, the purpose of which is the clearance of all international transactions denominated in euros. 

To understand how it works or, at least, how it is supposed to work imagine, if you will, a Mercedes car dealership in Italy which places an order for 10 million worth of new cars from Daimler-Benz in Germany. Daimler-Benz duly fulfils the order and sends the dealership an invoice, which the dealership duly instructs it’s bank, UniCredit, to pay. UniCredit then transfers the funds from the dealership account to the UniCredit Target2 account at the Italian NCB, Banca d’Italia, with further instructions as to where it is to be sent. Banca d’Italia then sends the money to the Deutsche Bundesbank, the German NCB, which places it in the Target2 account of Commerzbank, Germany’s second largest commercial bank, which finally transfers it to the current account of Daimler-Benz.

Naturally, this is something of an oversimplification of a process which undergoes wholesale aggregation and ‘netting’ out at each step of the way, so that only the net amounts owing are ever transferred between NCBs. At some point, however though I don’t know when and I don’t know who authorised it even the net amounts stopped crossing certain borders, the electronic border between Italy and Germany being a case in point.

Daimler-Benz, of course, still gets paid. Commerzbank if it is Commerzbank with whom  Daimler-Benz actually banks still credits the corporation’s account with the 10 million. But Commerzbank, itself, does not get any money from the Bundesbank. Instead, it receives from them an IOU, which, coming from a central bank, is probably as good as money. In fact, you might ask what else ‘money’ actually is. In reality, however, what happens is that Commerzbank places a debt of 10 million owed to it by the Bundesbank on the asset side of its balance sheet, while the Bundesbank places a debt of 10 million owed to Commerzbank on the liabilities side of its ledger.

Similarly, no money is actually transferred from Banca d’Italia to the Bundesbank. Instead, the Bundesbank places a debt of 10 million owed by Banca d’Italia on the asset side of its balance sheet, while Banca d’Italia places a debt of 10 million owed to the Bundesbank on the liabilities side of its balance sheet. Finally, to complete the transaction, UniCredit removes 10 million from the account of the Italian car dealership so that the latter does actually pay the money but UniCredit does not actually transfer the money to Banca d’Italia. Instead, it places a debt of 10 million owed to Banca d’Italia on the liabilities side of its balance sheet, while Banca d’Italia places a debt of 10 million owed to it by UniCredit on the asset side of its ledger.

Thus, while no money actually changes hands, the whole system is in balance. The result, however, is that after years of unsettled transactions building up within the Target2 system, as of 31st October 2018, half of the Eurozone owed the other half over 1 trillion as shown in Table 1, with Italy being the biggest debtor at 489.5 billion, and Germany the biggest creditor at 927.6 billion.

Debtor NCBs
€ billions

Creditor NCBs
€ billions
Belgium
5.3

Germany
927.6
Estonia
0.2

Ireland
11.8
Greece
29.3

Cyprus
8.4
Spain
397.5

Luxembourg
223.7
France
25.8

Malta
3.6
Italy
489.5

Netherlands
91.7
Latvia
7.3

Finland
49.6
Lithuania
4.8

Slovenia
0.2
Austria
47.0

Slovakia
10.5
Portugal
78.7

Non-Eurozone
4.2
Totals
1,085.4


1,331.3
Imbalance shown as ‘ECB’
245.7



Table 1: Target2 Debtors and Creditors

Ignoring the question as to how the ECB can appear as a debtor in this system a question to which I have not been able to find an answer despite lengthy searches the real question one has to ask is how, given that Target2 is supposed to be a transaction processing and settlement system, these unsettled accounts could have been allowed to build up to such an extent. And why?

The answer, however, is not straightforward and is the result of a number of interconnected problems in the overall Eurozone banking system.

The first of these is the problem of ultra-low interest rates, which makes it very difficult for any bank to make much of a profit, especially on their primary fall-back or fill-in business of short-term interbank lending, through which otherwise uninvested or unlent deposits in customers’ current accounts on which no interest is usually paid would previously have been lent to other banks at an annualised overnight rate of somewhere between 3% and 4%, thereby generating a steady and almost risk-free revenue stream which more or less covered all the bank’s administrative costs. With the ECB’s marginal lending rate now set at 0.25%, however down from more than 5% before the financial crash interbank lending rates have more or less collapsed, with the result that banks now have to resort to more higher risk lending just to break even.

Yes, they try to avoid this as much as possible and make up for the deficit by charging customers for services that were previously free. But this hardly makes up for the reduction in the safe, regular income which interbank lending used to provide, especially as, being within the Eurozone, there are now other services on which they used to charge commission but which have now gone into steep decline.  This especially applies to foreign exchange services which, for most European banks, have been cut by more than half since the introduction of the single currency. 

To compound this, ever since the crash of 2008, all banks have come under ever more stringent regulations as to how much of their own capital they must hold. This varies between 7% and 10.5% of their total risk-weighted assets depending on their size and the systemic risk they therefore pose to the rest of the financial system. As ‘own capital’ is a combination of shareholder equity and retained profits, their general lack of profitability therefore gives them two further problems. Firstly, it makes it very difficult for them to build up their capital reserves organically through year on year retentions, especially if they want to provide an acceptable dividend to their shareholders. Weak profitability and a poor return on investment then also make it difficult for them to raise additional capital on equity markets.

This then leads to another, even more serious problem. For given their capital requirements and the difficulties they have in replacing capital, the one thing no bank can afford to do is make a loss, or admit it if they do. Combined with more risky lending practices, this has therefore led to a slow but inexorable accumulation of Non-Performing Loans (NPLs), or bad debts on the balance sheets of most Eurozone banks.

There are, of course, rules against this. In fact, they are quite detailed. Any loan on which a payment has been overdue for more than 90 days, for instance, is supposed to be written down to 70% of its nominal value. Any loan which cannot be recovered without legal action should be written down to 40%. And any loan that is deemed unrecoverable is supposed to be written off completely. The problem is that it is the banks themselves that make this assessment. And so they are naturally reluctant to write off any loan where there is any hope at all of recovery, no matter how slight, especially if such a write-off were to detrimentally affect their capital position.

This problem is further exacerbated by the fact that the NCBs, who are supposed to police this area of banking operations, are not inclined to be overly stringent when it comes to the enforcement of the rules. This is because, in addition to their general capital requirements, banks are further required to hold at least 5% own capital against their loan book. That is to say that, whatever other investments they may make, they can only lend twenty times their capital reserves to their commercial customers. This means that if they are forced to write off €1 million worth of NPLs, and consequently find their capital reserves reduced by the same amount, they are required by law to reduce their loan book by €20 million, calling in €20 million worth of good loans, which, if the borrowers cannot instantly return the money, may well turn into bad loans as a result. Indeed, it could well put many firms out of business and have a devastating effect upon the economy. Which is why the NCBs are not particularly exacting when it comes to enforcing the write-off rules for NPLs.

The result is that NPLs have accumulated on the balance sheet of Eurozone banks to the point at which the problem has now probably become insoluble. As a percentage of total assets, what proportion of Eurozone loans are NPLs? Only the banks, themselves, know that for sure. And they’re not telling anyone. Most estimates, however, place the figure above 20%. As even the largest banks are only required to hold capital to the value of 10.5% of their assets, this would therefore make all Eurozone banks insolvent if the NPLs were evenly distributed. Fortunately, some Eurozone countries’ banks have more NPLs than others, with Italy, Spain and Portugal being the worst offenders.

Why this should be the case is hard to say. Some people attribute it to the boom in the building industry before the financial crash, when, all around the Mediterranean, there was a massive amount of investment in holiday villas and time-share apartments, many of which still remain empty or even unfinished. However, looking for specific reasons for the preponderance of NPLs in certain countries is unnecessary. For, statistically, there will always be more business failures and hence more NPLs in poorly performing economies than in more successful ones. And this simply brings us back once again to the imbalance of trade within the Eurozone. 

What this also means, however, is that the state of the banks in some of these countries is truly shocking. Take UniCredit, for example. It tried to solve its NPL problem by creating what is generally known as a ‘bad bank’, a special purpose vehicle (SPV) into which it was going to place all its NPLs in return for bonds issued by the SPV and backed by the NPLs themselves. When the ratings agency, Moody’s, examined the NPLs to assess their value, however, it decided that they were so bad that the bonds issued by the SPV would be below ‘investment’ grade, such that, as a bank, UniCredit could not invest in them or take them in exchange for the NPLs, with the result that the plan fell through. Ironic or what?

What makes this general situation even worse, however, is the fact that the people who count, the customers of these insolvent banks, know that they are insolvent and have acted accordingly. For although the EU has a bank deposit guarantee scheme through which the national governments guarantee deposits up to 100,000, savers in Italy, Spain and Portugal etc. do not believe that their governments would have the resources to honour this commitment should there be a general banking failure.

And they are quite right. Italy, for instance, has a debt to GDP ratio of 132%, the second highest in Europe after Greece, and is only able to continue borrowing money at affordable interest rates due to the ECB’s Quantitative Easing programme, through which Banca d’Italia buys up all the bonds issued by the Italian treasury after they have first been bought by Italian banks. If there were a general banking failure, however, this system would itself fail, in that all of the Italian banks would have gone bust, leaving the Italian government with no one from whom they could borrow money in order to compensate depositors. 

This has therefore led to huge amount of ‘capital flight’, especially from Italy, which, somewhat inconveniently, happens to border Switzerland. What this also means, therefore, is that, with all of the Italian banks’ own capital tied up in NPLs none of which can therefore be recycled and with most of their depositors’ savings having been withdrawn to safer havens, most Italian banks would have now been left with almost no money at all to lend to new borrowers. Indeed, under this scenario, not only would the entire Italian banking system have already collapsed, but the whole Italian economy would have been sent back into a pre-banking era. And the only thing that has prevented this from happening are the unsettled balances within the Target2 system. For what these liabilities effectively represent are unofficial loans from Banca d’Italia to Italian banks which have more or less replaced the withdrawn deposits of their customers, thereby maintaining their overall liquidity. 

Not, of course, that this has ever been admitted to the public. Nor has it ever been talked about in the mainstream media. Yet everyone who has anything to do with Eurozone economics and finance must surely know this. Indeed, it is something which the whole Eurozone banking system has to be colluding in. Otherwise, German banks would be demanding payment of what they are owed from the Bundesbank. And the Bundesbank would accordingly be demanding payment of what it is owed from each of its counterparty NCBs across Europe. And these NCBs would then be demanding payment from their own commercial banks. Except, of course, they know that their commercial banks do not have the money to make these payments and that any demand on them do so would bring down the entire Eurozone banking system. For it is not ultimately Banc d’Italia that lent 10 million to UniCredit in my little example above; it was Commerzbank. In fact, as shown in Table 1, German banks have lent a total of 927.6 billion to counterparty debtor banks across the continent: 927.6 billion which can never be repaid and which therefore constitutes the largest portfolio of NPLs in the Eurozone. And it is thus German banks which are now the real threat to the system.

Even though it is little reported outside of the financial pages of a few quality newspapers, most people will be aware of the problems which Deutschebank, for example, has suffered over the last few years and which would appear to be coming to a head. Last quarter, it lost over 3.6 billion and recently announced 18,000 redundancies in an attempt to return to profitability. Of course, not all of its problems are due to the billions of euros it has lent to other banks at zero interest rate through the Target2 system and which it has little chance of ever getting back. It is mired in mismanagement and riddled with corruption. However, lending so much money on an indefinite basis without return certainly hasn’t helped its position. 

So what is the solution? Well, it’s quite simple. The banks of the countries that are debtors within the Target2 system need to be recapitalised. They can then write off the NPLs on their balance sheets and pay off their debts. The trouble is, of course, that this would require an investment of around 1 trillion. And, quite frankly, these banks, with their poor profitability, dodgy accounting and other liabilities which they have almost certainly hidden, simply aren’t worth that much. Indeed, it is very unlikely that any commercial enterprise would even consider taking over and recapitalising any of these ‘zombie’ banks. Otherwise, they’d have already done so, not just with the blessing of the governments involved but with their eternal gratitude.

So what about the governments, themselves? What if they were to nationalise these banks and, themselves, invest in them? After all, it is the obvious solution. Apart from the fact that it is against EU rules, however, the problem with this is that it would very probably be as destabilising to the euro as the collapse of the banking system itself. 

To see this more clearly, consider again the situation of the Italian banks. They owe 489.5 billion through the Target2 system. So it would require at least this much to recapitalise them and clear their debts. To do this, the Italian government would therefore have to raise this money by issuing additional treasury bonds to this amount, which, for want of anyone else with that kind of money, Banca d’Italia would eventually have buy up, printing the necessary euros to do so. This then would add a further 489.5 billion to the Italian national debt, taking it from its current 132% of GDP to 169%, only a little short of that of Greece.

This would have two effects. Firstly, given that Italian treasury bonds are already only rated as Baa3 by Moody’s, it would almost certainly drive them down to a level at which they would be rated as little better than junk, forcing institutional investors including other NCBs to sell them and making it almost impossible for the Italian government to raise any further monies on bond markets. Unless the Italian government then immediately balanced its budget by increasing taxes and reducing public expenditure, this would therefore force Banca d’Italia to go on printing euros in perpetuity in order to service the Italian government’s ever-burgeoning debt, thereby raising the question as to whether the euro really was a single currency and whether a euro issued by Banca d’Italia really was the same as a euro issued by the Deutsche Bundesbank.

Indeed, this is a question that is already being asked and is why, in January 2013, the EU required all members of the Eurozone to sign a Fiscal Stability Treaty (FST) that requires all signatories to reduce their debt to GDP ratios to 60% by 2030: something Italy will find it very difficult to do even with its current debt level but which would be absolutely impossible with a debt to GDP ratio of 169%.
This, therefore, leaves the EU with just one other option. In order to recapitalise the Club Med banks and clear their debts in the Target2 system, the creditor nations will, themselves, have to raise the money and gift it to the debtor nations.

Indeed, this is something that has already been suggested by Bob Lyddon, an economist with PwC, who sees it as the most likely solution to the problems he foresees arising out of the Fiscal Stability Treaty itself. In a recent paper entitled ‘Why the Eurozone’s Fate Makes an Immediate Brexit Vital’ he argues that, even at 132% of GDP, Italy’s debt level already makes it more or less impossible for it to achieve its FST target. He calculates that in order to reach a debt to GDP ratio of 60%, Italy would have to run a fiscal surplus of 8.44% for the next ten years, both raising taxes and cutting public spending in order to do so: something he argues would be politically unacceptable to the Italian electorate.

Unwilling to commit political suicide, the Italian government would therefore have no choice but to refuse to comply with the treaty, leaving the EU with just two options. Either it could force Italy out of the Eurozone, upon which it would almost certainly default on its Target2 liabilities, thereby bringing down the entire banking system along with the euro itself; or it could oblige the more solvent EU member states, including Germany, Luxembourg, the Netherlands and Finland to come up with the money to pay down the debts of the Club Med countries for them.
The problem with this, however, is that it would again require around 1 trillion, an amount which the less indebted members of the Eurozone could not raise without making themselves over-indebted, thereby making the situation even worse. Bob Lyddon’s fear, therefore, is that the EU would consequently demand that some of the money 230 billion, to be exact be paid by the UK under the ‘contingent liabilities’ clause in Mrs May’s ‘withdrawal agreement’, were this ever ratified. He therefore recommends that the UK make an immediate clean break from the EU, leaving it without any residual treaty obligations. 

While I believe this recommendation to be prudent, however, I do not believe that the impossibility of certain countries achieving their FST targets is what actually constitutes the real danger in all this. This is because I cannot see the other potential contributors to this solution actually being willing to go along with it. After all, according to Lyddon, German tax payers would have to fork out 303 billion to make it work, French tax payers 239 billion. And I just cannot see them accepting this as a price worth paying merely to preserve the single currency. Instead, I believe that the EU will be forced to find some other solution, such as pushing back the date for compliance with the FST to 2050 for instance. After all, this is what the EU typically does when it has an intractable problem: it simply kicks the can down the road for another couple of decades. 

The one instance in which I can see the EU pressing for this wholesale capital transfer solution, however and, indeed, the member states actually going along with it is in the event of a catastrophic collapse in the banking system. 

What might trigger this, I cannot say. However, the Eurozone is so fragile and is so full of cracks and vulnerabilities as I hope that I have already demonstrated that there are literally dozens of ways in which a cascade failure could be precipitated. And it is at this point, I believe, that the EU would call on the less indebted member states to transfer capital to the more indebted, not in order for the latter to pay down their debts but in order for them to recapitalise their banks. 

The way it would work is like this. The less indebted countries, including Germany, the Netherlands and Finland, would borrow up to 1 trillion from their commercial banks, even though many of these banks might not technically have this money at the beginning of this process. (I shall explain below). They would then gift it to the likes of Italy and Spain which would use it recapitalise their insolvent banks. These banks would then write off their NPLs and discharge their Target2 liabilities to their countries’ NCBs, which would then pay off their debts to their counterparty NCBs. These counterparty NCBs would then be able to discharge their liabilities to their own commercial banks, thereby providing these banks with the necessary funds to lend them to their governments so that they can be gifted to the recipient governments in the first place. This, of course, makes whole series of transactions circular and would mean that it would all need to happen instantaneously. But where banks and money are concerned, almost nothing is impossible.

The result would be threefold: the insolvent banks of the Club Med countries would recapitalised; the unsettled balances in the Target2 system would be cleared; and banks like Deutschebank would now be owed money by their national governments instead of their NCBs. As these latter debts would now be in the form of treasury bonds, however, they could be legitimately bought up by the relevant NCBs under a renewed QE programme, thereby restoring liquidity to the lending banks.

The only losers in all this would therefore be the taxpayers of the gifting countries, whose governments would have accrued an additional 1 trillion in combined national debt, thereby very probably forcing them to put up taxes and cut public expenditure. If they actually understood this and had any say in the matter, these taxpayers would therefore almost certainly demand that the EU immediately start dismantling the Eurozone in an orderly fashion in order to prevent the whole thing happening again. In the current state of our politics, however, the sad truth is that taxpayers have no such voice and, in the above scenario, would almost certainly be prevented from having any idea as to what was going on. In the mainstream media, indeed, the problem, if it were discussed at all, would almost certainly be blamed on a few greedy, ‘fat-cat’ bankers, while prominent Europhile politicians and EU bureaucrats would very likely be credited with saving the system they nearly destroyed.

At no point, of course, would any blame be attached to the euro, which is the one thing the European establishment cannot allow to fail. For without the single currency, there can be no prospect of the EU ever becoming the single European super-state, thereby bringing the entire European Project, as it is currently conceived, to an end. And no one in the EU is as yet willing to let this happen.

So does this mean that the euro can actually be saved? I’m afraid not. It just means that the EU will go on trying to keep alive… until it can’t, and that when it eventually does collapse, as it inevitably will, it will have even more appalling consequences than if its dismantlement had happened in a more orderly way. For in any battle between political ideology and reality, reality always eventually wins, usually at the cost of much human suffering. And that is what I fear the inevitable demise of the euro has in store for us.

Tuesday 16 July 2019

The End of an Era Part III


Democracy is essentially about the self-determination of a community: about people coming together to agree among themselves who should sit in government over them; to what laws they will abide; how these laws should administered; how this administration should be paid for; and what rights each citizen should be accorded under the law. 

In accordance with this principle of self-determination, it follows, therefore, that all democracies are necessarily bounded, in that only those who are members of the community have a right to participate in the determination of their government and laws, outsiders or non-members being excluded.

Of course, there is a limiting case in this regard in which the community in question comprises the entire world. And, surprisingly, there are quite a few people in the world today who would actually like to see some form of world government brought about. However, there are two further characteristics of democracy that would almost certainly make any such government unworkable or preclude it from being democratic.

The first of these is the fact is that democracy does not scale well and generally works best when the community over which it operates is of limited size, my own hometown of Saltburn-by-the-Sea, a small seaside resort on the north east coast of England, being a perfect example. 

Being a seaside town, Saltburn quite naturally attracts a good many tourists, especially on sunny summer weekends when the beaches and promenades are crowded with people enjoying a day out. This, in turn, provides an enormous amount of business for the many shops, restaurants, ice-cream parlours and café-bars which the town would not otherwise be able to support and which help make it such an attractive place to both visit and live. In fact, a few years ago, Saltburn was chosen by the Sunday Times newspaper as the best place to live in the whole of England. In order to preserve this happy state, however, the local council has to spend a considerable amount of money each year on the town’s many amenities and features, especially the Valley Gardens, which run along each bank of our eponymous ‘burn’, the summer plantings which decorate the upper promenade and the town’s main square, as well as on the street cleaning and litter bin collections that keep the town in pristine condition. The result is that local politics is almost entirely dominated by these very concrete and practical issues, with some people wanting to divert more money elsewhere while others are fearful of falling standards and a consequent loss of revenue.

And something similar is probably true in the case of just about every other small town throughout the country. The only difference will be in the kind of issues being debated, which will naturally vary from place to place depending upon the individual circumstances of the towns in question. It is precisely this natural variability in the practical concerns of local people, however, that hampers the easy transition of democracy from one scale to the next, forcing it to change its underlying focus as the area over which it operates increases in size. For as one moves up from local to regional and eventually to national government, the number of practical issues in which every member of this ever expanding community has a common interest inevitably decreases. As the size of the democratic constituency grows, the result is that politics in general becomes less concrete and more abstract, less about which flowers to plant in the hanging baskets outside the station and more about principles, ideology and values.

And this brings us to the second characteristic of democracy that would make a world government at least a democratic one more or less impossible. For democracy also works best when the community over which it operates is not only limited in size but largely homogeneous, especially with respect to principles, ideology and values. In fact, in highly heterogeneous communities it is not uncommon to find that democratic elections actually cause unrest, revealing deep divisions within the diverse populations involved which, once brought to the surface and made the focal point of a democratic vote, can lead to protests, rioting and even civil war. 

Even in a relatively homogeneous country such as the UK, for instance, we have seen how ideological differences over Brexit have polarised society, dividing families and former friends, and giving rise to levels of animosity I have never witnessed in this country before. It is difficult to see, therefore, how democratic elections, especially of the kind in which people vote directly for the government of their choice, could be held across a single electorate as culturally and ideological diverse as the entire planet, comprising, as it does, progressive liberals in both Europe and North America, traditional Roman Catholics in countries as otherwise diverse as Brazil and Poland, Chinese communists, Israeli Jews, and a whole raft of Muslim sects in countries as far apart as Turkey and Indonesia. Indeed, even an assembly composed of delegates from each of these countries would find it very difficult to form a government, the differences in their values and ways of thinking making any kind of political compact almost inconceivable.

What this means, therefore, is that the largest workable democracy one is ever likely to encounter is almost certain to be found at the level of the nation state. And among nation states, the most workable democracies are almost certainly those with largely homogeneous populations, bounded by a common language, history and culture. Yes, there are democracies which do manage to contain multiple disparate populations often as a result of ancient conquest or political union but unless these merged entities have found some common purpose or higher ideal to unite them, they are seldom without their tensions. For even where there is no open conflict and there are always plenty of these wherever there are significant linguistic, cultural or historical differences between different sections of the population the call of independence will always be hard to resist. Just look, for example, at the Catalan separatist movement in Spain or the Scottish Nationalist Party in the UK, neither of which is ever likely to be satisfied with the current status quo, no matter how many referendums are held and lost. For even when a political union of this type is successful and has been so for over three hundred years, as in the case of the United Kingdom, the desire of a people for freedom and self-determination is fundamental to human nature.

From a wider perspective, however, what is even more important is that these ethno-states, as such largely homogeneous  national entities are generally called, are nearly always politically stable. For as long as they are not riven by ideological differences along some other axis such as that based on class, for instance there is generally very little reason for internal conflict. If they are also left unmolested from outside and are prepared to reciprocally respect the sovereignty of their neighbours, there is consequently very little reason why they should not enjoy both a stable and peaceful existence, thereby also making the world, itself, a more stable and peaceful place. Indeed, a world comprising hundreds of small, democratic ethno-states, each respecting the sovereignty of their neighbours, might well be the ideal solution to the world’s political constitution.

The problem with this, of course, is that, historically, such respectful neighbourliness is not what most ethno-nation states have generally accorded each other. Far more commonly, they have competed for resources in ways that have led to lasting enmities and continual if intermittent conflicts. Ever since the end of World War II, as a consequence, the world has not been inclined to trust such ethno-nation states to live in peaceful cohabitation without external constraints. Indeed, based on the assumption that it was just this kind of ethno-nationalism rather than any of the other vices of Nazi Germany that plunged Europe and the world into the most destructive conflict either had ever known, the prevailing political consensus has not only been that nationalism, as an ideology, should be suppressed with the peoples of Europe, in particular, being taught to see themselves as Europeans, rather than as Italians or Danes but that the freedoms and powers of nation states, themselves, should be curtailed or held in check by international institutions such as the UN and the EU.

The problem with this, however, as I hope I managed to demonstrate in my opening paragraphs, is that, due to the size of the populations over which they were designed to operate and their consequent lack of homogeneity, neither of these institutions ever had any chance of being democratic. By surrendering some as-yet unknown measure of our sovereignty to these institutions, what this meant, therefore, was that the leaders of the western allies, meeting at Bretton Woods in the autumn of 1944, effectively traded democracy and self-determination for peace and security, thereby actually giving up some of the very freedoms for which the war in Europe had been fought in the first place.

Not, of course, that this contradiction at the very heart of the post-war political consensus would have been particularly obvious in 1944. Indeed, I doubt whether many of the participants at Bretton Woods would have actually been conscious of some of the more unfortunate consequences of this policy which they were laying up for future generations, not least because many of these consequence did begin to make themselves manifest until some decades later, especially in the case of the EU, which, during its first incarnation as the EEC, had its powers and competencies strictly limited by the six founding member states which each had veto over its direction, policy and operations. The result was that, in those early years, the member states were still largely in control.

Even when the membership was expanded to first nine and then twelve, it is likely that the balance of power between the Commission and the Council of Ministers still lay with the latter. It was only when expansion, itself, became the wholly predictable policy of the Commission and the membership mushroomed to twenty-eight, thereby necessitating the abandonment of the veto in favour of majority voting in most areas, that the Commission clearly gained the upper hand. For in a council of twenty-eight members, it is very difficult for any one single member, other than perhaps Germany or France, to steer the consensus in any other direction but the path already laid down by the Commission which sets the agenda.

Even more importantly, with each expansion of the union and each consequent change in the underlying treaties, the power and competencies of the Commission grew. 

The first big change, of course, was the introduction of the Single Market, which required the harmonisation of standards across Europe in order to prevent non-tariff barriers being erected between member states. This led to a step-change in the number of directives and new regulations being issued by Brussels, which member states had no choice but to adopt without reference to national legislative bodies and therefore without any democratic influence or control over the process. Laws were effectively being imposed on member states by EU decree. 

Even more insidiously, what this new freedom to act autonomously also then set in motion was a phenomenon one might call ‘bureaucratic creep’: the incremental expansion in managerial functions that afflicts all large organisations including commercial corporations and which is initially perceived as an entirely reasonable response to increased demands and changing circumstances, but which eventually leads to a top-heavy and increasingly sclerotic bureaucratic establishment which largely exists for its own benefit. 

In commercial enterprises, this phenomenon is driven by the two fundamental needs of all senior management:

  1. to know what is going on in their organisation, and
  2. to control it, so as to ensure that both policy and strategy are being followed, that avoidable mistakes are indeed avoided and that the correct or most optimal decisions are being made at every level of the organisation.

The first of these requirements leads to various forms of data collection and report generation. The second usually gives rise to:


  1. a system of directive issuance, which is largely to no purpose as very few of the directives are ever actually read;
  2. a process for the creation, amendment and propagation of procedures, usually laid down in some sort of ‘Quality Manual’, often many volumes thick, defining how every function within the organisation is to be performed, and
  3.  the establishment of a decision-making process, usually implicit or embedded in some form of organisation chart, accompanied by individual job descriptions detailing roles, responsibilities and levels of authority.

Now, of course, in small companies, this will all be very minimal. As corporations grow, however, the amount of data collected, reports generated and procedures issued also grows, sometimes close to exponentially. 

Importantly, each report requested or new procedure imposed will be perfectly reasonable and sensible in itself, avoiding or removing problems that have been found to impair the organisation’s overall performance. Collectively, however, this incremental accretion of management tools not only leads to an ever-increasing overhead in management staffing levels but to an ever-decreasing level of operational efficiency, as the organisation’s decision-making processes and ability to adapt to changing conditions become ever more cumbersome. The result is that, eventually, the corporation ceases to be able to compete with younger, leaner rivals and either goes out of business altogether or is radically reformed, often by new owners bringing in what is commonly called a ‘turn-around' manager: a hard-nosed and generally rather thick-skinned character who will strip out entire layers within the existing management structure, radically simplify the reporting procedures and decision making processes and generally shake up the organisation’s entire culture until it is once again operating with youthful vigour. At which point the downward slide will then start all over again.

For this is not an anomalous process. It is something that happens to all organisations, including or even more especially governments, which seldom go bankrupt and are seldom, therefore, forced to act in such a ruthless manner. Even more importantly, the reporting structures and procedures created by government administrations are not just those which apply internally to the administrations, themselves which are subject to the exact same problems described above but comprise a whole new layer of regulatory instruments covering every aspect of the economy that government departments oversee, and which accumulate incrementally just like internal procedures, thereby not only making government itself that much more cumbersome but the whole economy.

Take the house building industry, for instance. In Britain, as I suspect in many other countries, we don’t build enough houses to meet demand. With a population growing at around half a million people per annum, we need to build around a quarter of a million new homes each year, but only manage a little over half this number. As a consequence, house prices are constantly rising, putting home-ownership beyond the reach of many first-time buyers and creating a housing problem which the government is constantly told it has to solve.

With demand as high as it is, the question one has to ask, however, is why the house building industry is not, of its own accord, seizing the opportunity to increase supply: a question which suggests that at least part of the problem is not market-related and is due rather to the mountain of building and planning regulations that have accumulated over the last few decades.

Again, it is important to stress that none of these regulations, taken on their own, would be considered unreasonable or without purpose. After all, no one wants to live in a house that is likely to collapse on them. It is just that the accumulation of these regulations eventually leads to a situation in which the cost of building houses especially affordable houses suitable for first-time buyers simply renders  many otherwise feasible projects non-viable. 

Nor is the building industry unique in this regard. Regulatory overheads in the agriculture and food industries, for instance, probably add as much as another 30% to the cost of the food we eat: an added cost which, without hefty import tariffs to protect them from foreign competition, would also probably drive many British farmers out of business.

Indeed, it is this that most differentiates governmental bureaucratic creep from its corporate version. For whereas the cost of an over-managed business falls entirely on the business itself, the cost of governmental regulation does not fall on the regulators but on the regulated: on producers and consumers. Moreover, there are always more things to regulate and more regulations for which one can make a reasonable argument. As a as consequence, there is nothing to stop regulators from continually adding more regulations until, of course, they have regulated the whole economy into a state of stagnation and collapse. For that’s what regulators do.

Fortunately, if one lives in a democracy, one can prevent this. Indeed, it is one of the principal virtues of a democracy that it is able to restrain this tendency in all administrations by removing the existing government and replacing it with one which typically promises ‘to cut red tape’ and reduce its own size.

Not that this is ever easy, of course, not least because when the new administration takes office and looks at each of the existing regulations individually, they will all seem perfectly reasonable and perhaps even essential. If one is a turn-around manager in government, therefore, one has to be even more ruthless than in business and generally ends up being hated as a consequence. It’s a bit like trying to help a friend declutter their house by getting rid of old junk which they continually fight tooth and nail to hold on to. The chances are that you either won’t be able throw out very much or you won’t still be friends at the end of the day. 

The problem becomes even more intractable, however, once one reaches the level of the EU. For as a result of the Single Market, it is the EU which now produces most of the UK’s regulations, over which the British electorate has absolutely no say. More to the point, it cannot change or remove the EU government. Yes, there are European parliamentary elections. But the European Parliament does not have its own legislative agenda; it merely debates directives put forward by the Commission. Prospective candidates for the European Parliament don’t even publish manifestos as they don’t know what the Commission’s programme for the next parliament is going to be. As a result, voters, if they vote at all, do not vote for what they want to see the EU government doing most people have absolutely no idea but simply in accordance with their own domestic political allegiance. 

European parliamentary elections are thus purely a democratic fig leaf for the unelected oligarchy that actually runs the EU: a group of largely self-selecting bureaucrats whose principal purpose is not to serve the peoples of Europe or even the member states, but to promote and progress the ‘European Project’, an internationalist programme which, ever since its inception, has had the long term objective of dissolving Europe’s warring nation states and turning them into a single European entity, governed not by its discrete peoples who, having voted for both Mussolini and Hitler in democratic elections, are never again to be trusted with such power but by an enlightened, benign technocracy, designed to regulate Europe into perfect harmony until, of course, they eventually regulate it to death. For that’s what unelected, irremovable regulators do. 

Again it’s difficult to pick out one single regulation to illustrate this. For looked at individually, they all seem perfectly reasonable. But consider, for instance, the recent EU directive on car safety which will come into force in 2022 and which will require all new cars to be fitted with a device that will issue drivers with warnings and automatically slow the car down if it exceeds the speed limit on any particular section of road. The justification for this, of course, is that it will save lives though how many can only be guessed at. The quite considerable cost, however, will fall squarely on European motorists, none of whom have ever voted for this or were even offered it as a policy in a potential government’s programme for office. It is simply something that has been decided upon by our enlightened and benign guardians.

Never mind that such a measure takes responsibility away from drivers and raises all kinds of legal questions about who would be liable should the device fail and someone be killed as a result. Never mind that instead of encouraging a responsible attitude towards driving and a greater degree of respect for other road users, it may actually encourage greater recklessness. Never mind that it will add to the cost and complexity of all motor vehicles and therefore represent yet another sub-system that can go wrong. The more salient and important fact is that it is simply not necessary. There are other ways of improving road safety. This is regulation for regulation’s sake, government for government’s sake: a directive introduced purely to demonstrate that the EU is both active and effectual, and to thereby justify its existence and enormous cost. 

Indeed, looked at in this way, it is a wonder that anyone would actually support such an unnecessary, uncontrollable and largely parasitic institution. The fact that so many people are so passionate about wanting to remain within its secure embrace can only be explained, therefore, by assuming that after seven decades of being told that nation states are dangerous anachronisms and that the future lies in more open and global structures, the peoples of Europe have largely come to accept this internationalist ideology. They truly believe that without our international guardians to keep us from doing ourselves harm, we would revert to the state of lawless savagery that so bedevilled the twentieth century. Indeed it’s why I believe that in Britain the issue of the UK leaving the European Union has been so emotionally fraught. For there is clearly a large section of the British public who truly regard advocates of Brexit as not just wrong but as ignorant, immoral barbarians who would destroy civilization itself. 

Of all the unfortunate legacies that have come down to us from Bretton Woods, however, this has got to be the most pernicious. For not only has this belief in our inherent savagery given rise to the self-dismissive misconception that civilization, in the sense here intended that of ‘being civilized’ – is something that has to be bestowed on us from outside rather than something that emanates from ourselves it has also led us to believe that it is this internationalist ideology, itself, that is the basis of our currently civilized state, rather than our own innate reason and morality and the singular form of democratic government to which Europe and Britain in particular uniquely gave birth during that period in our history we now justly refer to as the Enlightenment.

That this was also a period of social upheaval, revolution and widespread bloodshed may well, of course, lead some people to conclude that our modern, internationalist approach to solving problems is not only far more civilized but, in that, much to be preferred. As civilized human beings, we no longer see honour or value in either killing or dying for what we believe in. And yet without the sacrifices of our ancestors I very much doubt whether we would now have the luxury of such fastidiousness. For freedom and self-determination are seldom given to people; they have to be fought for in ways that very often entail acts which, to our modern sensibility, would now be regarded as   unacceptable. Indeed, it could be said that parliamentary democracy, itself, could never have come about except through violence, as demonstrated most aptly, perhaps, on a cold, grey morning in January 1649, when Britain became the first country in post-medieval Europe to execute its king, cutting off the head of our then both head of state and head of government in an act so previously unthinkable that it not only destroyed forever the concept of ‘divine right’, upon which all previous wearers of the crown had staked their claim to legitimacy, but sent the country into a fever of intellectual activity as we cast around for some other foundation upon which government could be validly based. For in all the political chaos that followed Charles I’s death with sundry different group, from the ‘Diggers’ to the ‘Levellers, setting up different rules for their own distinctive communities in different parts of the country the one thing upon which more or less everyone agreed was that some form of government was necessary, the alternative at least as described by Thomas Hobbes in his seminal work ‘Leviathan’, published in 1650 being generally regarded as too unpalatable to be contemplated. Indeed, so ‘solitary, poor, nasty and brutish’ was this lawless ‘state of nature’ as Hobbes depicted it with the strong continually preying on the week such that no productive work could ever be undertaken for want of any reward that Hobbes, himself, was prepared to countenance even the most totalitarian form of absolutist government in order to avoid it: hence the name ‘Leviathan’.

Fortunately, in this, Hobbes was in the minority. In stark contrast, for instance, John Locke not only regarded the imposition of order by force as little better than and, indeed, little different from the anarchy Hobbes intended it to obviate but, even more importantly, he saw in the state of nature a state of freedom which, while precarious, also had its attractions, which any reasonable person should only therefore give up in exchange for something of equal or greater value. If a free people were going to submit to the authority of the state, he consequently argued, it should only be on the basis of a negotiated settlement: a social contract between government and the governed in which the governed agreed to forego certain freedoms, such as the freedom to prey upon their neighbours, in return for certain rights and protections, not only from the reciprocal predations of their fellow citizens, but from government, itself, which would therefore have to forgo the very absolutism Hobbes had advocated and, itself, abide by the rule of law.

As well as changing the very nature of government transforming it from an institution wielding absolute power into one which was as much circumscribed by the law as the governed themselves Locke’s approach also had two further advantages. Firstly, it based governmental legitimacy on consent. For only by consent could the social contract be agreed. This, in turn, then more or less entailed than any government had to be democratic. For only through some kind of democratic process could such consent be given. 

Even more importantly, however, Locke’s whole political philosophy effectively turned the search for a new form of government into a process rather than a one-off event: an ongoing dialogue or debate over what rights and protections citizens should be accorded in return for what freedoms they should be required to foreswear, a dialogue which, in the case of the United Kingdom, has been going on the for the last 350 years, as is indeed reflected in the very peculiar nature of our constitution. For while it is often said that Britain does not have a written constitution, it is not the case that we don’t have any constitutional laws. It is just that we have been writing them one at a time as and when needed.

Take, for instance, the Habeas Corpus Act of 1679: an act which came about during the latter days of the reign of Charles II when, fearing that the king’s brother and likely successor, James II, would try to restore the absolutist monarchy of their father, parliament decided to enshrine the ancient writ of Habeas Corpus in statute, thereby ensuring that the new king would not be able to use arbitrary arrest and detention as weapons against his political opponents in the confrontation that was surely on its way. So hurriedly drafted and poorly thought-through was the act, however, that it had to be amended not just once but on four subsequent occasions, in 1803, 1804, 1816, and 1862. 

In a world in which the written constitution of just about every democratic nation contains a Habeas Corpus article or clause, this may seem slightly shocking. Given the stark simplicity of such a fundamental law, how, you may ask, did the British parliament fail to get it right so many times. This, however, is to view history through the lens of all the experience we have since gained and ignores the fact that sometimes mistakes are necessary so that we may learn from them. Indeed, even the United States, which had the benefit of more than a hundred years of British mistakes to learn from in the drafting of its constitution, still needed to amend the original document on several occasions in the years that followed. For no democracy ever comes ready and complete out of the box. Like the law itself, it is a living thing which grows and develops organically. It’s why it requires work, passion and commitment, and why, too, the citizens of any country which has managed to build and maintain such a monument to their perseverance should be justly proud of their achievement, as well as jealously protective of the privilege it consequently bestows on them to live in a free country where no one need fear the knock of the secret police at three o’clock in the morning.
 
It is for this very understandable reason, therefore, that after more than a decade in which a number of countries in Europe had lost this freedom while many other countries around the world had never enjoyed it the participants at Bretton Woods and the founding members of the new United Nations which followed from it, should have wanted to extend the rights inherent in any democracy to all the peoples of the world. What they failed to understand, however, is that democracy is a learning process that people have to go through rather than a gift they can be given: a misconception which was then unfortunately made to seem not just reasonable but morally justified when, in 1948, the UN published and proclaimed the Universal Declaration of Human Rights (UDHR), thereby giving quasi-legal substance to this entirely deluded concept to which so many people are now so committed.

To call the UDHR a delusion and a dangerous one at that will, of course, shock many readers. After all, this declaration is now widely regarded as one cornerstones of our post-war civilization. The question one has to ask, however, is upon what basis these universal human rights are supposed to be founded. For as both Hobbes and Locke understood, there can be no rights in a state of nature, only freedoms, the most fundamental of which is the freedom of the strong to prey upon the weak. It’s why no reasonable person would prefer such a state of lawlessness to democratic government under the law. For it is only under such a government that rights by which I mean constitutional rights can not only be conferred, but protected and enforced by a democratically founded judicial and law-enforcement system, without which any talk of rights is just fanciful nonsense.

Not, of course, that the UN was unaware of this. It’s why, in an attempt to compensate for this deficiency, it asked all its members to sign the UDHR, giving it the semblance of an international treaty even though it was not legally binding. To further buttress this simulacrum of legality, a number of international courts, including the International Court of Justice and the European Court of Human Rights, were then also established. With only the most tenuous connection to the democratic consent that makes any legal system legitimate, the problem which all these courts have faced, however especially when dealing with individual offenders, such as those accused of war crimes is one of establishing upon what authority they have the right to try anyone at all. Indeed, the usual stance of those accused of such crimes is simply to refuse to recognise the authority of the court.

Not, of course, that most infringements of human rights are committed by individuals, this particular ‘crime’ being almost entirely the preserve of governments. As such, it is therefore almost irrelevant whether the accused actually recognises the court’s legitimacy, especially as the principal corrective these courts hand down is not and cannot be imprisonment but rather an admonishment to the government in question to mend its ways, followed by sanctions and ultimately regime change at the hands of the world’s unofficial policeman the USA should the government fail to comply. Indeed, for all the lofty idealism surrounding the UDHR’s introduction, it is likely that its principal purpose all along was to provide the international community with a pseudo-legal weapon with which to bludgeon misbehaving nation states into acquiescence. It is the very failure of this policy, however especially in the Middle East that most clearly demonstrates that democracy, along with the rights that only exist within a democratically agreed legal framework, cannot be imposed from outside. They must come from within. If the people of a country cannot see the logic and morality of Locke’s philosophical argument, trying to impose his solution on them especially through the agency of US military force only leads to resentment and the kind of reaction we have seen from disaffected nations all across the globe for the last fifty years.  

For the simple truth is that people have to find their own way. Indeed, it’s what we mean by self-determination, which is the fundamental human drive upon which democracy and all our constitutional rights are based. Trying to force democracy on people is thus, in itself, a contradiction and yet another symptom of the whole contradictory ethos that has dominated our internationalist politics in the post-war era.

Even this, however, is not yet the most detrimental consequence of the fallacy of human rights. For if trying to impose democracy on a people is both contradictory and likely to prove counterproductive, foisting human rights on a country that has already spent the last 350 years developing its own constitutional rights can be even more damaging. For it undermines the democracy that is already in place, especially if any of the human rights in question have already been debated by the national parliament and rejected for one reason or another, thereby giving precedence to the choices and decisions of an unelected panel of the United Nations while setting the democratic deliberations of national assemblies at nought.
Worse still, because human rights have regard to the whole of humankind rather than a single democratic community, they can actually be at odds with the interests of individual communities. And although you may say that the interests of the many should take precedence over the interests of the few, that is not how you may see it if you are one of the few. Indeed, to a free people, used to making their own decisions concerning the rights and obligations of their community, this may well smack of tyranny.

Take, for example, the UN’s recent ‘Global Compact for Safe, Orderly and Regular Migration (GCM)’, which was adopted by 165 countries, including the United Kingdom, in December 2018, and which not only gives every citizen of the world the right to live in the country of their choosing, whether or not they were born there or have any affiliation to it, but obliges the receiving country, not only to facilitate this migration, but to provide the new arrivals with somewhere to live, a basic income and all the social service available to the native population. Not only is this something I doubt whether many people in the UK would have voted for had they known about it which very few people did or do, this fairly obvious infringement of the British people’s right to self-determination having received very little attention in the media but it quite clearly poses an existential threat to the very distinctive democratic community that is the United Kingdom, as was very probably the intention.

Indeed, it would now appear that the policy of our international guardians is not only to make nation states a thing of the past by eliminating borders, but to eliminate democracy as well, as without borders, or the ability of a democratic community to say who is part of that community and who is not, democracy simply cannot exist. As the post-war era thus both comes to an end and reaches its culmination, we have also come to a crossroads. The question is whether democracy and nation states really are to be consigned to history, leaving all power in the hands of  a globalist technocracy, with all the dystopian consequences this may entails many of which, such as the curtailment of free speech and the encroachment of a culture of surveillance, we are already beginning to see or whether individual democratic communities still possess enough freedom and desire for self-determination to fight back.

Either way, however, I believe that the post-war era is coming to an end. For either the internationalist experiment will be rejected and we shall return to something much closer to the patchwork of independent nation states we knew before the war albeit, I hope, without the imperialist tendencies and desire for hegemony over our neighbours which then cost us so dearly or our three hundred and fifty year old democracy will continue to be eroded until it is nothing but a façade. Yes, we shall still go through the motions. We shall still hold elections when people can be bothered to vote, that is but in the brave new world which the decisions made at Bretton Woods will have created, we shall all know that, as then, the real decisions are made elsewhere.