Over the next few weeks I shall be straying from the usual investment ideas in my morning missives.
Editor John has given me some leave to discuss some of the issues surrounding the upcoming Brexit vote.
In the first of these, I want to look at systems of rule.
Brexit: the freer we are, the better we do
I'd argue that history gives us a fairly hard-and-fast law: the freer people are, the more they achieve.
The societies which have the most freedom of thought in particular, but also the most freedom of action, labour, capital, movement and so on, tend to be the ones that are the most inventive and innovative.
As such, they tend to be the highest-achieving, the most progressive and the most prosperous. They also tend to be the healthiest and happiest.
Where people are free, they thrive. Where they are not, they languish. The obvious current example is Korea. The south dramatically outperforms the north because it is freer than the north.
Freedom takes many forms. In many ways we are now freer than we've ever been because there are more possibilities open to us. We can say pretty much anything we like (within reason); thanks to planes, we can get to pretty much anywhere in the world we like; we can drive hundreds of miles in just a few hours; we can communicate with people almost anywhere. For all these freedoms we have technological invention to thank.
The freest societies tend to be those in which power is spread as thinly and widely as possible. To achieve this, some form of democracy is usually best. The other "cracies" don't seem to work as well.
In an autocracy (rule by an individual, such as North Korea), the majority do not prosper. The same goes for theocracies (rule by a religious elite, such as Iran) and stratocracies (rule by the army, such as Thailand or Egypt). In these systems people's possibilities are more limited.
How centralisation can stifle an economy
The European Union was born out of the very noble aim of never again allowing large-scale war in Europe to be possible, but the consequence of this has been to centralise power in the form of another 'cracy' – a bureaucracy. Of course, it's nothing like as bad as those countries I've mentioned above, but this centralisation of power has meant many regions of Europe have lost the freedom to make their own choices.
The result has meant economic misery in southern Europe, for example. Limited in the policies they can set – in particular, the setting of their monetary policies –the southern European nations of Portugal, Italy, Greece and Spain have been hamstrung.
Without control of their own currency, they have been thrust into a deflationary depression. We now have 39% youth unemployment in Italy, 45% in Spain and 49% in Greece. In this 21st century time of plenty, this is quite unnecessary. These economies should all be thriving.
Something similar has happened to our own fishing industry. EU regulation has led to all sorts of barriers to progress, and this once thriving industry has been destroyed.
When the EU sets its rules, it's not like the bureaucrats are getting their feet dirty – visiting remote locations across Europe to make sure that each region has its own rules that suit that region. Rather you get an inflexible, one-size-fits-all code for the whole continent. Regulation can often prevent change and so a local industry languishes.
The UK is currently thriving relative to the rest of Europe, because it has been able to escape some of this centralisation of power. We still have the pound, so we can determine our own fiscal and monetary policies.
But even in the UK, centralisation is a problem. What suits London does not necessarily suit the rest of the UK, for example. London, it might be argued, needs higher interest rates, while the rest of the UK may not.
A heavily regulated society – even if that regulation is well intentioned – does not beget innovation. In fact, I would argue that most regulation hinders innovation, as it hinders change.
The internet has unleashed a technological and creative revolution. Had it been regulated, such invention would not have been possible. But the innovators were way ahead of the regulators.
If Alexander Fleming had cleaned up his workstation – and I imagine current regulation, whether from the EU or elsewhere, would declare that he must – we would not now have penicillin: the discovery which revolutionised medicine and saved millions of lives was a happy accident. You can't regulate for invention. It is a contradiction.
It takes two to trade – but that's all
Trade is no different. I don't need the approval of someone in Brussels or Westminster to conduct the business I conduct. I just need the agreement of the person I'm doing business with. When we both agree, we trade and we both benefit from that trade. When the time comes, we both pay the appropriate taxes.
Looking at things from a self-interested, British point of view – for me, the choice between EU rule by officials in a bureaucracy and our system of parliamentary democracy is an easy one.
Of the two, our system, for all its many failings (and there are many), is preferable. We don't want to be further enmeshed in a EU project that is so restrictive. When our economy hits rougher times – and that time will come – we must have as much freedom as possible to make our own decisions and set our own policies. We are more restricted if we vote to remain.
The evidence of history is irresistible. Freer countries always outperform their more heavily regulated neighbours. Let us vote, ignore personal political prejudice and vote in favour of the system, which gives us the most freedom. That might entail a rocky period of re-adjustment, but any such period will be brief. Then we will thrive and prosper.
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• Dominic Frisby will be performing his show, Let's Talk About Tax, at the Edinburgh Festival this August.