Sunday, 23 April 2017

Brexit: the changing nature of authority

The book I'm reading at the moment, The Emergence of Private Authority in Global Governance by Thomas J Biersteker, has it that the state is effectively legitimised organised crime. This to me is civics 101, ie the state has the monopoly on violence and uses the implied threat of it to ensure obedience. Anything not sanctioned by it is crime.

In a well governed state rules exist for the equal distribution of liberty to ensure that the externalities of commerce do not infringe on the rights of the individual. Very often such rules defend freedoms and extend liberties.

There are though, as Biersteker has it, a multiplicity of authorities. There are some within the structures of the state and some external to it. There are private authorities of varying constitutions like sports governing bodies, religions, private regulators and NGOs, and then there can be other types of authority be it terrorist entities like Hezbollah or ISIS, running a state within a state, or even organised crime.

The modern state is increasingly a model of devolved authorities where licence is granted to recognised authorities to perform the function of governance. Regulation is often a devolved or outsourced function, allowing the core body of government to focus on more general concerns.

The purpose of regulation is to regularise and legitimise disruptive practices. This is done according to risk assessment and assessment of harm - or where such practices are at odds with the morality of the primary authority. One example of a disruptive practice is Uber which utilises a number of different trade practices using new technologies which, while considered to be useful innovation, has externalities to consider and decisions to be made over the classification of their activities. For instance is a driver an employee or contractor?

Uber is cause célèbre of libertarians and is held aloft as an example of the free market in action. They very often overlook the necessity for social provision of public transport and when it comes to vehicles adapted for the needs of the disabled, the market does not always provide and the subsequent saturation of the market reduces slim provision to none at all as regulated taxi firms struggle to compete.

Uber is one of the disruptive practices which are initially tolerated and then brought into the fold through the process of gradual regulation and judicial decision making. They eventually become part of the great ossified machine. But then you have those markets that the core state cannot touch with a barge pole like drugs and gun running. This is effectively the prohibition of markets deemed haram. They remain outside of legitimate authority and those participating lose the protections of it.

What's interesting is that they then become authorities in their own right with their own system of rules, underpinned by the threat of violence. Certainly the drugs trade has its own codes, processes and procedures albeit unwritten. Gang culture has its own social hierarchy and a code of ethics.

In Western cultures the drug problem is not so prevalent that it cannot be managed albeit at a huge cost. Narco-states however lack the resources or indeed the means to incentivise public cooperation. Drug lords can exert power in equal measure to governments not least because of the implied threat of violence but very often because the drugs trade is one of the more lucrative sectors.

This leads to the situation we have today where power struggles are between concentric circles of legitimate authority (with prestige and pedigree) in ongoing struggles against criminal authority. As to what constitutes legitimate is largely up to the people by way of their consent. This is why Hezbollah remains a power within Lebanon and it is why the Central American states cannot tackle the drug lords head-on. They can bring equal violence to bear and have popular backing from those whose livelihoods depend on it.

Many of these problems could be resolved by way of regulation and decriminalisation of narcotics. Since the trade is seemingly unstoppable and governments are increasingly unable to offer their populaces more lucrative work it would a great many conflicts of authority and be a source of revenue rather than a net cost. This though is unlikely to ever happen as those in power are at the mercy of their electorates where religious authorities hold influence. The consequence of this stalemate is corruption and war where the only winners are criminals and tyrants.

Then if we look at Africa and across the middle east we find the balance of power is considerably more tribal. Or at least more overtly tribal. The West is equally so but liberal democracy, to a point, removes the worst excesses of it. Promoting good governance has been the holy grail of the West but such efforts are undermined by the aggressive trade policies of China, India, the EU and the USA. Very often African authorities are bought off in order to look the other way when corporations move in to exploit natural resources from fish to rare minerals.

The lack of good governance then has a knock-on effect worldwide. As much as the illicit trade in drugs has its own well documented effects, one of the lesser acknowledged but massively significant issues is food and medicine fraud. This is why the West, the EU in particular has an elaborate system of standards. Fake medicines found in the EU is around ten per cent whereas in Africa it can be anywhere between thirty and seventy per cent.

Standards and inspection practices form the frontiers of the EU, freezing out unwanted goods but at the same time freezing out lesser developed states from participating in trade. This is one of the core concerns of the WTO and UNCTAD. The latter being especially geared toward economic assistance while the WTO is increasingly focussed on the removal of unnecessary barriers, where it seeks the promotion of global standards.

Due to the global nature of trade and consequently counterfeiting, we see an increasing effort to link up and integrate legitimate authorities. Europol and Interpol as just as much part of the trade infrastructure as the WTO. Meanwhile when it comes to standards setting we see increasingly active private and global institutions exerting their authority. Where global governance is concerned we find knowledge authorities where states without the means or the knowledge to regulate will outsource to them.

In this, the West is fighting an uphill battle against vast criminal enterprises who are always one step ahead of the game, often utilising disruptive technologies to thwart regulatory systems. This is why we are seeing ever more moves to control the internet and promote standards in e-commerce. Good markets function on trust and trust is essential to trade. This is why we also see global standards in consumer rights emerging. All of this is key to the digital economy and this is set to be where the most lucrative tech opportunities lie.

As this blog has outlined, trade normalisation has caused global trade to peak and growth has been stubborn. The challenge therefore is to enhance the profitability of existing supply chains. This blog is a big advocate of trade facilitation and aid investment to that end however, tackling illegitimate trade still remains a priority. As much as fraud hits the margins of legitimate trade it also damages brand reputations and reduces trust in the system.

Tackling this is going to require ever more regulation, standardisation, integration, more globalisation of governance and huge investments. And that is going to be a problem. Certainly we saw from Brexit that there is little appetite for ceding more control and spending more as a electorates do not trust global institutions nor do they see the benefit to spending internationally. The right wing press in the UK has given aid a bad name and it is widely believed that contributions to the EU are a market entry fee rather than the running cost of an elaborate governance system.

Quite rightly, the public suspect that there is an agenda they are not in control of, have very little say in and no real means of holding it to account. The EU as a supranantional authority is one which wields a great deal of power but offers the people of Europe very little control. The irony being that any moves to full democratise the EU to establish it as a legitimate authority would be fiercely resisted. People tend to prefer the nation state as the more visible and accountable vehicle of government. It is tied up in their identity and traditions. It means something to them spiritually - a human need often neglected and disparaged.

Part of the reason the EU despised is because those proponents of this new EU utopia view national allegiances and regional identities as somehow backward. Globalists tend to be metropolitan types who will celebrate any culture other than their own, often treating backward practices abroad as diversity that must be respected. A recent misty-eyed BBC Radio 4 romanticisation of Spanish bull torture is one such example. The finger wagging liberals are the ones most responsible for Brexit. As vile as populists like Nigel Farage are, the condescending (and whiny) metropolitans are worse.

Ultimately at the heart of Brexit is a question of consent. We all recognise the need for authority but if democracy means anything then it is the right to choose. In that regard, some Central American drug lords have more democratic legitimacy than the EU. The creation of the EU is very much a project of the political elites who have concealed their agenda over many years, repeatedly distorting the truth about the nature of EU ambitions.

Essentially the problem with our EU relationship is that it is a wholesale dumping of legitimate authority onto a body that has little legitimacy. The consent it enjoys is by way of its potemkin village in Strasbourg where people foolishly believe the present of a toy parliament and voting rituals in some way constitutes democracy. Most of the major decisions regarding governance of key industries are outsourced wholesale by our own government and are subsequently beyond the reach of democratic reform. A bad compromise remains in place because too many vested interests have a stake in the status quo.

But this is the ultimate challenge of our age. How do we go about the process of globalisation while maintaining democratic process and informed consent? The European Union is clearly not the answer. A regional solution may well have been adequate for the last century but what of the internet world?

On the European Union, Tony Benn said "I can think of no body of men outside the Kremlin who have so much power without a shred of accountability for what they do". Except of course, that is no longer true. There are several entities globally with unprecedented decision making powers, most of which never see the light of day. I would venture than most have never heard of the ITU, Codex or UNECE. As we move ever more toward seamless borders and globalised internet trade, the producers of quasi-legislation are set to become some of the most powerful forums on earth.

In this regard Brexit solves very little. The holy grail of the Brexiteers is absolute sovereignty but this is no longer within our grasp if ever it was. We will find as we leave the EU that we are still compelled align with the EU, if not in law then voluntarily. Authorities can exert power beyond their own borders as we are about to find out. The EU can make rulings on products and services within its own borders and if we wish to trade with the EU then that decision must be observed. This is why we should have given more consideration to Efta.

This is where the remainers strongest argument lies in that our exit from the European Union in some respects reduces our power to influence decisions. What we find though is that the EU is increasingly making decisions not on the content of rules, rather their implementation. As regular readers will know, the trend is toward more decision making at the global level.

This is where the traditional model of governance begins to fall apart. The global trade ecosystem is a nexus of authorities. In setting the standards and rules there are a number of influential forums, but also treaty constructs between private authorities which governments and blocs have agreed to recognise. The removal of the EU as an authority in the UK does not remove its influence and even if it did there are several global accords which have significant influence over our energy, agriculture and banking rules. To name a few.

The players in this are NGOs, corporate alliances, super unions, regulators and nation states. In this we find anonymous subcommittees both in and out of the UN system have considerable power. It is of mind-boggling complexity and is awesome in its scale. This is why people prefer the simplistic narrative of Brussels bureaucrats because it's a more easily digestible world view and presents people with an easily understood bogeyman.

What we find instead of this simplistic, but widely believed, narrative is that sovereignty is massively diluted and authority is distributed to the most competent entity. It is assumed by many that the buck stops with the EU in terms of the transfer of powers but in actuality the EU is just as likely to surrender powers to private authority. Its influence in European law is not fully understood but if you read technical regulations it is there for all to see. It is for this reason I view the EU as an anachronistic middleman.

Increasingly we see that coalitions of the interested are the best way to establish common rules for the whole world, and compulsory allegiance to geographic blocs prevents nations from playing to their strengths in accordance with their lead industries. In this, it is likely that we will never reach the desirable state where technocracy is subordinate to democracy and so we must be active and independent participants, cutting out the many barriers to participation - the EU being one of them.

Out of concern for its own territorial integrity the EU would like nothing more than to remove the participation of member states form global forums and the longer we stayed in the EU the more likely that was to happen. It has made a number of attempts at the International Maritime Organisation to take control. Our interests lie in keeping these such organisations as multilateral forums.

At the very least, while we do not restore absolute sovereignty, we do regain the right to say no and the right to propose initiatives. Even smaller states like Norway can have a dramatic influence on major sectors by way of launching initiatives. They may not have the market size but they have soft power and expertise which is increasingly what matters in the new order.

What the EU seeks above all is uniformity of regulation and to expand that uniformity beyond its own borders. That it has achieved as much as it has is to its credit but I think we are reaching the limits of the possible. Democracy will always be a thorn in the side of the technocrat. There never will be a perfect order. We can only ever hope to bring a level of compatibility to individual sectors - and this will not be defined by geographic boundaries.

For as long as humans continue to evolve and as technology plays a larger part in our world there will always be a fluidity in authority and that which is legitimate does not necessarily stay legitimate. The one construct that continues to serve us well is the nation state. It is the means by which people can exert power over events. Nation states are as much as anything cultural authorities, having their own media and their own distinct conversations and debates. Only through this can there ever be a coherent manifestation of public will.

At the heart of the EU, though, is an anti-human ideology. It sees democracy as inconvenient to its ambitions. You can kinda see their point. Some of the finest minds in the world have spent years devising complex agreements designed to enhance trade only for it to be swatted by a regional assembly somewhere in the Belgium. It would be unfair to say that the EU has not responded to criticisms as to its status as a democracy. Only reluctantly has it allowed for member states to ratify comprehensive trade deals and look where that got it. 

Ordinary people are suspicious of these trade deals not least because they don't understand them. They are shrouded in mystery. This is only to be expected as people have been encouraged not to participate and their only input not politics is the occasional election. Informed consent is not likely in these such conditions. We need more direct democracy if only to get people used to participating in bigger decisions.

For as long as the EU exists it will be an unwelcome decoy distracting us from the many devolved authorities and distancing our own government from them. Without our politicians and peoples being tasked with participating in these global entities it is unlikely there will ever to be a national debate about their existence let alone their output. Brexit at the very least begins that conversation. Or it would do if we had a half way competent media. They are only just getting to grips with the WTO.

In the round there are no immediate economic advantages to Brexit. Even in the longer term whatever compensatory or corrective measures we take will only go some way toward restoring our trade to its present levels. This is as much to do with the ineptitude of those tasked with Brexit as Brexit itself. What matters more though is that Britain continues to set the benchmark for democracy. It cannot do this while it is a passenger inside the EU. Britain must have the right to refuse laws and it must be at liberty to take those measures necessary to adapt to globalisation.

Brexiteers have assumed that the EU is unique in being a heavily regulated sphere and that out of the EU we shed that entire mentality, moving toward a more anarchic arena of trade. This hasn't been the case for nearly three decades and the advancement of global regulation has ballooned since the establishment of the single market. Probably the EU's biggest export is regulation. There has been a realisation of its social utility and its value in reducing barriers to trade. This very realisation has transformed trade worldwide and it is here to stay.

The question is now one of how the UK interacts with the world and making the best of the opportunities afforded by leaving the EU. Before we can speak to that we need to move past the dismal narrative of Brussels being at the centre of the universe. Increasingly we find Geneva should be the focus of our attention - and we are late to the party.

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