European Union wins Nobel Prize for Peace

Surprise.  The Nobel Prize for peace has been awarded to the crisis stricken European Union.

Ironically, the award of prestige has been focused on the long historical role even when the panel of judges appear to be substantially concerned with present political conditions

Reports the New York Times 

Thorbjorn Jagland, the former Norwegian prime minister who is chairman of the panel awarding the prize, said there had been deep concern about Europe’s destiny as it faces the debt-driven woes that have placed the future of the single currency in jeopardy.

“There is a great danger,” he said in an interview in Oslo. “We see already now an increase of extremism and nationalistic attitudes. There is a real danger that Europe will start disintegrating. Therefore, we should focus again on the fundamental aims of the organization.”

Asked if the euro currency would survive, he replied: “That I don’t know. What I know is that if the euro fails, then the danger is that many other things will disintegrate as well, like the internal market and free borders. Then you will get nationalistic policies again. So it may set in motion a process which most Europeans would dislike.”

In announcing the award, Mr. Jagland described it as a signal focusing on the union’s historical role binding France and Germany together after World War II and its perceived impact in spreading reconciliation and democracy beyond the Iron Curtain that once divided Europe and on to the Balkans. “The stabilizing part played by the E.U. has helped to transform most of Europe from a continent of war to a continent of peace,” he said.

I have pointed out that increasing capital controls and rising political tensions from bailouts have led to increasing border controls. 

Nevertheless UK Independent Party’s Nigel Farage has a stirring rebuke on this. 

"You only have to open your eyes to see the increasing violence and division within the EU which is caused by the Euro project" he said.

"Spain is on the verge of a bail-out, with senior military figures warning that the Army may have to intervene in Catalonia. In Greece people are starving and abandoning their children through desperate poverty and never a week goes by that we don't see riots and protests in capital cities against the troika and the economic prison they have imposed.

"The next stage is to abandon the Nation state: the awarding of this prize to the EU brings it into disrepute."

Mr Farage added, " The last attempt in Europe to impose a new flag, currency and nationality on separate states was called Yugoslavia. The EU is repeating the same tragic mistake.

"Rather than bring peace and harmony, the EU will cause insurgency and violence."

Let me add that interventionism, inflationism, protectionism, and all other coming government or political –isms from EU politicians and the bureaucracy will signify as seeds to political and social conflicts. 

If social conflict should arise, the Nobel Prize would further erode its credibility.

EU’s Growing Border Controls Undermines the Principle of Freedom of Movement

While European politicians desperately try to keep the European Union from falling apart, through frantic rescues of insolvent sovereigns and banks, the reality is that their actions have already been gnawing at the foundations of the union: freedom of movement.

Sovereign Man’s Simon Black observes of EU’s growing border patrols:

Speaking of travel restrictions and border controls, though, European authorities seem to have no qualms about implementing them.

For the last several days, I’ve been weaving between northern Italy and Switzerland checking out great places to bank, new places to store gold, and taking in these gorgeous lake views.

Every single time I’ve crossed the border, I’ve been met by rather snarly police on both sides; they’re stopping cars, turning people’s trunks inside out, and causing major traffic problems.

A friend of mine who came up on the train from Florence to meet me for lunch in Lugano said he was stopped at the border for nearly an hour as thuggish customs agents randomly questioned train passengers and demanded to see their IDs.

So much for Europe’s 26-country ‘borderless area.’

Based on Europe’s 1985 Schengen Treaty and 1997 Amsterdam Treaty, you’re supposed to be able to drive from Tallinn, Estonia to Lisbon, Portgual without so much as slowing down at the border.

This is not dissimilar from driving between states in the US or provinces in Canada.

Yet as Europe descends into greater financial and social chaos, leaders are starting to ignore these agreements which guarantee freedom of movement across the continent.

No big surprise, electing Marxists and Neo-Nazis tends to bring that sort of change. Border controls, currency controls, wage and price controls– these are the usual tactics of desperate, insolvent governments.

As times get tougher, they tighten their grip, foolishly believing that they can decree and legislate their country back to health.

In the early 4th century AD after decades of economic turmoil and social strife within the Roman Empire, Diocletian issued his infamous Edictum De Pretiis Rerum Venalium, or Edict on Prices.

In addition to setting a fixed ceiling on over 1,000 products, services, and wages, Diocletian also commanded the death penalty for currency and commodity speculators who he blamed for inflation (as opposed to the steady debasement of the currency).

Obviously very little has changed.

Capital controls usually follow; these amount to the direct confiscation of wealth by a government from its citizens.

Often capital controls take the form of legal requirements which prevent people from moving money abroad, holding foreign currencies, or buying precious metals.

Just yesterday, in fact, Argentina’s central bank formally banned people from buying US dollars– forcing them to hold rapidly depreciating pesos and watch their savings inflate away.

At some point, people finally reach their breaking points and spill out into the streets to be beaten by the police. This is when we see social controls implemented– turning off mobile and Internet infrastructure, curfews, etc.

These tactics have been all too common over the last 18-months.

And finally, if things get really bad, border controls are implemented as a way to prevent a flood of people from leaving. After all, the government needs as many milk cows as it can get.

Here is an example of principles sacrificed at the altar for politics

Yet such self contradictory policies are signs of the growing desperation by the political elites and can be seen as the proverbial writing on the wall for the EU: the ballooning social controls via various despotic measures are likely inflame regional animosity (nationalism) that leads to the breakdown of division of labor and rouse civil strife that amplifies the risks of war.

Through politics, noble intentions backfire.

Restricting Social Mobility Equals Poverty

Economist Bill Easterly commenting on the incidences of ghost towns in the US makes a point where restriction of social mobility leads to impoverishment.

I quote Bill Easterly, (bold highlights mine)

What if we had a law that everybody had to stay in their home state? What if North Dakotans had to stay in North Dakota despite the collapsing economy there? Then wages would collapse and we would have very poor North Dakotans. Happily no one would dream of such a stupid law. Instead we have middle class North Dakotans moving to other places voluntarily, where employers want to hire them voluntarily. And so (former) North Dakotans stay middle class.

For states…but not for countries. We treat migration usually as a non-option if Zambia has an economic decline, so Zambians stay there and get even poorer as the economy declines.

This is the great point made by Lant Pritchett in a classic article and in a CGD book. Why can’t we start treating Zambians like North Dakotans? If their home economy is declining, let them move to other places voluntarily, where employers want to hire them voluntarily. Why do we recognize the right to live wherever you want for North Dakotans and not for Zambians?

I guess the Philippines should be a worthy example.

Had many of our countrymen (kababayan) been prohibited from finding greener pastures around the globe, then we’d be worst off economically considering the relatively unfree political and economic environment that continues to beleaguer us.

That’s why anyone who claims that the exodus of people results to “brain drain” is no less than prescribing poverty for us.

Regional share of Philippine remittances (ADB)

Bottom line:

Freedom should encompass people’s mobility or to move around or migrate in accordance with their perceived interests.

We should allow people to come in, in as much as to go out. Where free markets is about voting with money on products and services, freedom of movement is about voting with the feet.

As Ludwig von Mises wrote, (bold highlights mine)

The principles of freedom, which have gradually been gaining ground everywhere since the eighteenth century, gave people freedom of movement. The growing security of law facilitates capital movements, improvement of transportation facilities, and the location of production away from the points of consumption. That coincides, not by chance, with a great revolution in the entire technique of production and with drawing the entire earth's surface into world trade, The world is gradually approaching a condition of free movement of persons and capital goods. A great migration movement sets in. Many millions left Europe in the nineteenth century to find new homes in the New World, and sometimes in the Old World also. No less important is the migration of the means of production: capital export. Capital and labor move from territories of less favorable conditions of production to territories of more favorable conditions of production.