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Letters to the editor

17 December 1999

If Britain does join the Euro, what would be the likely effective parity between the pound and the French franc? Are there any insurmountable difficulties to prevent Britain withdrawing from the EU but continuing to use it as a trading bloc only?

Frank Smith

The likely parity would be the one that had been established in the markets for the previous year or so. The idea is that one should join the Exchange Rate Mechanism before joining EMU and that this would stabilise the rate for a long time at a level by implication the markets find acceptable. At present plainly this rate would be over 10 Francs to the Pound.

Leaving the EU and replacing it with a trade relationship with the other EU members is clearly perfectly possible. I have calculated that if we left the Common Agricultural Policy and abolished the Common Tariff and the EU Customs Duties, we would benefit because our average import prices would fall by more than our average export prices -we import more of these protected goods from the EU than we export to them. For this very reason they would wish to keep our market open to their goods; also they have large investments in the UK which need access to the continental market. They would therefore wish to maintain free trade with us. Similar arrangements are made by the EU with Switzerland and Norway. One would also expect that the freedom of capital and people movement would be agreed. Politically there would be bitterness and controversy; but once it became clear we were going to do it, pragmatism as above would take over.

Patrick Minford

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3 December 1999

Dear Professor Minford,

I understand that a few years ago, a common currency was proposed rather than a single currency. By this, I mean a double currency, whereby countries could use the shared currency around the EU and still maintain their own currency for their home nation. This idea was soon abandoned, I imagine for political reasons, i.e. it would be far less likely to lead to a single European state.

Would a double currency have any detrimental effects economically?

Or would it be a dangerous step, as once we begin using a dual currency system we may be more likely to abandon sterling?

Was this known as the "hard ecu" ?

Yours sincerely,

James Wild

Dear Mr. Wild,

Thanks for your letter. This idea has been around for a long time- it first surfaced to my knowledge as a proposal for the Europa, a 'parallel currency', for a group some two decades ago which included Michael Parkin and Roland Vaubel. More recently as you say it resurfaced as the 'hard ecu' 1990 proposal of the British government - the idea being that the value would be kept 'hard' by excluding the effects of any devaluations by individual currencies (see also hard ecu entry in the encyclopedia).

A parallel currency works through competition to replace individual national currencies; however it would be most unlikely to replace national currencies that behaved reasonably well (i.e. with low inflation) because domestic residents will use the currency everyone else uses for their domestic transactions (money is a 'network good' - i.e. you use it because everyone else does). Hence it would only penetrate non-domestic transactions at best - but even these would be conducted in the currency of those at the receiveing end, i.e. their own domestic currency. In other words its prospects would be poor - essentially this is why the UK proposed it and why the EU opposed it. It would have done no harm of course either and would have introduced a bit of competition into the currency market, making governments more cautious about inflation (the original Europa idea) - but it would certainly not have advanced the political aims of those who proposed the euro.

yours sincerely,

Patrick Minford

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18 November 1999


Dear Mr Minford,

Thank you for providing this informative site. I am hoping to persuade my brother that Euroscepticism is a position that is coherent in its economic argument as well as from a democratic constitutional perspective.

Thus I would like to know, do you feel that Gordon Brown's five economic tests for membership of euroland are achievable?

Also should there be further economic tests?

I personally feel that we will eventually enter the eurozone. The government will go for a long term approach and will win due to the fact that most people see it as just an economic issue. Sorry for my pessimism but I am regularly astounded by the amount of young people who do not understand this issue and see it as just one of getting along with our fellow Europeans. They almost always fail to see the democratic and constitutional implications.If this prevails all the federalists need to do is wait.

Yours Sincerely,
James Wild.

p.s. I expect you are a busy man I do not mind waiting for a reply.
p.p.s. Is your official title Professor? And are you the Prof. A.P.L Minford listed in "Freedom Today" as a council member?

Dear Mr. Wild,

Thanks for your letter and kind words.

In answer to your main question, I think it will not be possible to meet the five tests in the foreseeable future. As explained in the euro-know page, there are many economic difficulties; and these are what the five tests are concerned with. What it all boils down to is

  1. the dangers for a relatively free market Britain in being forced into a high-cost uncompetitive zone and being 'harmonised' with it- this argument particularly concerns the City whose interest is one of the 'tests' on its own.
  2. one size fits all monetary policy when we are increasingly 'divergent' in our economic cycle and close to US and broader global cycles.
  3. worries about the continent's fiscal problems particularly with pensions which within the euro we might be under pressure to alleviate.
The chances of these tests being met will rise with one of two trends occurring:
 
  1. we become increasingly harmonised by New Labour reregulation.
  2. the continent becomes increasingly deregulated and flexible.
Both these possibilities cannot arise in the near or even medium (5 years) term.

Yours sincerely,

Patrick Minford

p.s. yes I am the professor referred to!

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4th November 1999

Dear Mr Minford,

What do you believe are the aims and influence of the Bilderberg Group?
Do you think that it is behind the moves towards a single European state?
I understand that Mr Blair has denied his reported attendance.
The Britain in Europe member and federalist Tory MP Kenneth Clarke has attended a number of Bilderberg meetings. Can we imply anything from this?

Name and Address Supplied

The Bilderberg Meetings are highly secretive and a point is made of not reporting what is said there. They are regular conferences of influential people in the west - apparently not including the Japanese. A sociologist's (Mike Peters) account of it is to be found on www.bilderberg.org; this site is hostile to the Group, on the grounds that its is engaged in a globalising conspiracy by big business and western governments; also that it has been and continues to press a programme of European integration. Since the Group's meetings are deliberately wrapped in secrecy, there is no way of knowing what the agenda of its organisers is. However, I really cannot see why in a free world any group of people should not be allowed to meet as they wish and have discussions, secretly too if they so desire. It is up to free peoples to take notice or not of any 'conspiracies' to persuade them to do things.

yours sincerely,
Patrick Minford

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30th October 1999

Dear Mr Minford,

I have found your site to be excellent for an assignment I have recently undertaken. I am new to the Internet and I liked the layout and the clear explanations.

I was wondering if you could help me with my assignment by asking you a few questions. I appreciate your help and understand you will probably be an extremely busy man so if you are unable to help thanks anyway for taking the time to read this e-mail.

Here are the questions.

  1. What economic reasons may explain the relative decline in the strength of the euro against sterling, if any?

  2. And to what extent do the reasons from the above question as well as the exchange rates of the euro and sterling this year, justify Britain's decision to remain outside of the European Single Currency?
Again, thanks for your time, and I hope to hear from you soon.

Yours Sincerely

Craig Proudfoot

Dear Mr. Proudfoot,
Many thanks for your kind words about the site.
In answer to your two questions:

  1. The weakness of the Euro has been due to two main factors according to our analysis. First, there has been the cyclical position of the Euro-zone, which during early 1999 and since autumn 1998 has been in a quite sharp slowdown, partly related to the Asian Crisis and partly to high unemployment especially in the Big Three (France, Germany and Italy). This has caused low interest rates relative to the dollar and pound economies' interest rates; lower interest rates reduce the return on putting your money in a currency and so it falls in value as less money flows in.
  2. Second, there has been a lack of confidence in the supply-side policies in the Euro-zone; that is, effectively policies for greater labour market flexibility to bring down unemployment. The relevance is that when market participants see continued high unemployment they fear that politicians will push for currency devaluation and loose monetary policy. Under the Maastricht Treaty the EU Council of Ministers has the power to set the Euro exchange rate and so this is a real concern. Furthermore even if this did not happen, high unemployment causes higher state deficits and worsens the outlook for pension deficits as many people are 'early retired' and people are less willing to pay higher taxes to pay for the pensions. These problems of rising public debt create fears of possible future defaults on public debt with a consequent unwillingness to invest in the currency.

  3. These developments are relevant to our joining the euro in the sense that they are symptoms of underlying problems- as discussed on this webpage. Weakness of the currency as such is not a problem for us- many perfectly sound currencies go through periods of 'weakness'. But as the discussion under 1 shows some of the reasons for euro weakness are the same ones we should be unwilling to join- the euro area have a different cyclical pattern from ours; the lack of labour flexibility that if we are made to 'harmonise with' threatens us; and the worries about state finances on the continent.
Yours sincerely,

Patrick Minford

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27th October 1999

Dear Mr Minford,

I agree with your point that political unity in the USA was only achieved through civil war.

However I feel that you are too pragmatic when it comes to national sovereignty. If qualified majority voting is the transfer of powers normally held by an elected government or an elected parliament, to an unelected European Commission, then it cannot be democratic.

You yourself say that qualified majority voting is a sacrifice of our national freedom, but to me and I'm sure to many others, this means sacrificing some of our democracy. Nations are best run democratically and sovereignty lies with the people and power is delegated to their democratically elected representatives in parliament. If one "pools sovereignty" then one is taking it from the elected government or parliament and handing it over to a bureaucratic elite.

The EU president Romano Prodi wishes to extend majority voting. This shows that he believes that the easy accessibility to markets for big trans-national corporations is more important than democracy.

The Labour MP Tony Benn describes democracy as being held by "gossamer threads". This is very true, democracy is a fragile thing. The oligarchy of majority voting may be mostly benign (although hugely wasteful) at the moment but its creeping regulation destroys small businesses, bankrupts farmers and overturns our supposedly independent judiciary.

I believe that our former prime minister may regret that she ever agreed upon qualified majority voting at all. Majority voting is not democratic co-operation it is undemocratic legally enforced agreement, perhaps better described as EU coercion.

Also, I disagree with your correspondent Mr Tang as he appears to believe that the Euro is purely an economic decision when its prime purpose is the political union of the EU. Surely the Euro will mean the end of British economic independence or put it another way, the end of democratic control over our economy. That is a whole lot more than a purely economic decision. Our independence is something Britain has fought many wars over.

Yours sincerely,

James Wild.

Dear Mr. Wild,

The political element in the EU is indeed predominant, never more transparently so than today- hence of course my reply to Mr. Tang.

However, on QMV the point is that it is still only a Treaty arrangement, which we entered into because we thought it to be in our interests. We can always abandon any such treaty; it requires only a repeal of the European communities law (of the early 1970s) which makes EU law binding on Parliament and courts. In that sense we remain sovereign; we have merely (to date) allowed some limitation on our actions to further our wider interests.

Yours sincerely,

Patrick Minford

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26th October 1999

Dear Professor Minford,

Would you advocate joining the single currency, if it did not have implications on our tax regime and self government. I can live with losing the pound, provided our free labour laws and right to vote for our own policy makers are not tampered with. The euro will become a much stronger currency with the U.K. inside of it and I believe that this would assist in the free flow of capital and labour in euroland. What I cannot tolerate is Brussels putting up huge barriers to entry in the labour and pensions market. Am I right in saying it's not the single currency that's the problem, it's the baggage that comes with it?

Ken Tang

Dear Mr Tang,

The baggage that comes with it is certainly a very big problem. It is true that if one could imagine a Euro project in which the Euro-area was entirely reformed and deregulated, with flexible labour markets, it would be much more viable and have no implications for our way of doing things in the UK, including our constitution. (There would still be technical problems: a single Euro interest rate would not work for us, and the issue of bail-out of their state pensions would still be there.) Unfortunately that is to imagine something quite different from what is on offer where the whole idea is to insist on integration, and use the Euro as a tool to force political union. So basically your point is correct- but unfortunately those who say we should assume the baggage goes are out of touch with the project that we have.

Patrick Minford

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25th October 1999

Dear Mr Minford,

Thank you for your encouraging response to my suggestions. I hope the term and concept of co-pluralism will be used. If the word is thought to be ugly, alternative words for the same concept could be used i.e. conpluralism, compluralism or unipluralism. I don't mind as long as we can describe the concept.

The motto of the USA (as seen on their coins) is E Pluribus Unum. I'm not a latin scholar but I believe it means "out of many is made one", or words to that effect. Of course this describes how many cultures have been united to become one nation. I feel that this is impossible within the EU. America was made up from many peoples but the predominant culture was English speaking, therefore there has always been a linguistic unity within America. Also the US does not have within it historic nations. The states may have had independence before joining the US, but their separate cultural identity was fairly shallow and for many the pre-colonial attachments were stronger. The only way that the EU could form a cohesive EU culture would be if differences were ironed out and the EU was to become more of a bland uniform state with a single language. I do not relish this prospect.

I'm sure global communications will bring cultures together and in many ways this is positive, but I can't help feeling that there will always be a desire for local distinctiveness and local accountability.

What the world needs is the opposite of "e pluribus unum". Not, from many are made one, but, from one are many and shall remain so.

Finally I'd like to ask, do you feel as I do, that both "qualified majority voting" and the idea of "pooled sovereignty" are inherently undemocratic aspects of the European Union?

To me "pooled sovereignty" is impossible without giving up some of our democracy. It is something which encapsulates the ideological argument between eurocracy and democracy.

Yours sincerely,
James Wild

Dear Mr. Wild,

I basically agree with your points about the US. The only caveat would be that US unity was brought about by a civil war, one of the bloodiest wars in history. The South was in effect conquered by the North. If that had happened in Europe...

QMV and pooled sovereignty are sacrifices we make of our freedom of action supposedly when our national interest requires it,. For example Margaret Thatcher agreed QMV for the Single Market, thinking we would benefit from resulting free market forces in EEC. Unfortunately it was used for harmonisation, arguably reducing the play of market forces. It was also used to advance the social agenda through e.g. the working time directive under Health and Safety, a QMV single market head. Thus she, and we, feel conned.

It is not that such sacrifices are necessarily wrong but that they must be calculated carefully. When the treaties we sign for them fail to deliver net benefits, we can and should withdraw from them. In that sense we always retain our sovereignty.

yours sincerely.

Patrick Minford

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23rd October 1999

Dear Mr Minford,

Recent correspondence has looked at the inappropriateness of terms in use at the moment, describing the pros and antis, in the European integration debate.

Well I have invented a term that I would like to offer to academics and politicians to use.

I see the argument over integration needs to be one at both an intellectual level and a populist level.

This I hope is a contribution to the former.

The phrase is co-pluralism. I see it as a term to describe the ideal situation concerning international relations. It means the plurality of nations co-operating and trading freely without encumbrance by supranational mega-states (i.e. a European superstate). Abiding by international rules of the UN rather than laws formulated by undemocratic mega-states (or superstates). It is a form of internationalism.

As a concept it would also be opposed to democratised mega-states should they ever occur. The mega-state (or superstate) is less democratic than the nation state because it has a much lower democratic-quotient than the smaller nation state. The concept of democratic-quotient is not one that I invented, that honour belongs to a certain novelist. The democratic-quotient is the influence of one persons vote within a certain size electorate. As a hypothetical example, the highest democratic quotient would be in a village and the lowest would be in a World state. The latter would allow such a small democratic-quotient that democracy would be negligible. Thus even a democratised EU (should it ever occur), especially an enlarged one would have a lower democratic quotient than the UK. Put simply, smaller states are more democratic than larger ones, especially superstates. Co-pluralism is not an entire political philosophy just a way of describing a situation where responsibilities are devolved to the smallest level. It is a way of stating that one supports the idea of the nation, but also the idea of international co-operation at a global level. Often, eurosceptics are called "nationalists" merely because they believe in independent nations. Unless I am mistaken, to believe in the necessity of nations does not make one a nationalist.

Mega-states (or superstates) also have another draw back to democratisation. This is cultural disunity. A representative government cannot be formed in the EU's European Commission because the parties do not share a common programme of policies. In Britain for example, we can vote for the Conservatives and not the European Peoples Party or we can vote for the UK Independence Party and not the Europe of Democracies and Diversities party. The EPP and the EDD are made up of very different parties. If the EU was a real democracy we would be able to vote for the same party in each country and the winning party would make up the European Commission. This is very unlikely to happen because of the huge cultural disunity within the EU. It is inevitable that parties will be split along cultural cleavages, therefore even in a democratised EU real democracy is impossible.

The next time a eurosceptic is called a nationalist, he can reply "No, I'm a co-pluralist." The resulting "what's that?" question could be answered by simply saying "I believe in the continuing existence of democratic nation-states and international co-operation rather than integration."

What do think of these phrases and concepts?

Is it waffle, or does it make sense?

Yours faithfully,

James Wild

Dear Mr. Wild,

Thanks for this thoughtful letter. I think the idea of co-pluralism is a good one. Essentially, supposing we now have a world in which international co-operation under evolving rules is possible, then the need for regional blocs is reduced if not eliminated; in their place one can envisage increasing 'circles' of co-operation, within which democratic answerability can be maximised. The nation-state is the basic building-block of democracy, as you say. (I tried to set out some ideas that are along similar lines in my book 'Markets not stakes', chapter 2; and in a recent short speech to the October 21 Centre for Policy Studies debate on Europe Michael Portillo made essentially the same point.) What is happening is that many of us are beginning to understand that the European Union is an outdated response to a world that has changed- one that entails serious costs for its participant countries.

Yours sincerely,

Patrick Minford

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21st October 1999

Dear sir,

why (in simple terms) would it be bad for us to join the single currency?

yours,

Gemma Taylor

Dear Ms. Taylor,

Briefly the reasons are:

  1. The euro is a programme for moving towards a single euro-state. The British want democratic self-government.
  2. The 'one-size-fits-all' euro interest rate would not suit the UK which behaves differently from the rest of the euro area.
  3. The looming state pension deficits in the other main EU countries could put pressure on us, if in the euro, to contribute money to avoid one of them risking default; a default by a euro-member country is disruptive to the credit standing of other members.
  4. To make the euro work the current euro-area is demanding harmonisation of taxes and regulations. As the UK is a lower-tax and quite deregulated country, this would make us less competitive, damaging UK jobs and growth.
More details in my 'Letter from the Editor' and 'Questions and Answers' on this site.

Patrick Minford

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20th October 1999

Dear Mr Minford,

I have thought of some more to add to the list. How about pro-integrationist and pro-federalist for euro-enthusiasts and pro-independence and pro-co-operation (a bit of a mouth full) or pro-cooperative (as opposed to coercive integration) for eurosceptics?

Name and Address supplied

I like them too!

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20th October 1999

Dear Mr. Minford,

I consider the biggest problem that eurosceptics face is that the media in this country is biased towards the euro, EU integration and Blair's government.

The press is entitled to be biased as it is a supposedly free press but only The Daily Telegraph and The Daily Mail are not on-message to Blair's spin-doctors. This is not a level playing field.

The Express was not so long ago a Tory newspaper, now it is as Blairite as is possible. With the noble exception of Peter Hitchens.

The Independent now only criticises Blair by asking him to do more of the same only faster.

The Mirror might as well be re-titled Pravda.

The Guardian is pro-euro and Blairite and its sister paper, I believe is run by Will Hutton, a confidante of the Prime Minister.

Of course, the Times and The Sunday Times may oppose the euro but so far they have generally criticised Hague and view the euro as just a matter of economics, rather than, a constitutional and political matter.

Likewise The Sun opposes the euro but helped Blair win the 1997 election by supporting New Labour during the run up to the General Election.

We may have the ballot in this country but media manipulation and compliance in this country constantly neuters real democratic debate.

The broadcast media on the other hand are legally obliged to be fair and balanced in their reporting. However I conducted a bit of research and in my opinion, the BBC, ITV and Channel 4 reporting of the Conservative and Labour party conferences were astoundingly biased. Also, daily broadcast news reports constantly take a federalist or pro-integration stance. When a question concerning Europe is broadcast a number of biased tactics are used. These include:

  1. When a Conservative is required on a panel a pro-euro federalist Tory is used.
  2. When a group of politicians are asked about the EU, the pro-pound eurosceptic is always outnumbered by pro-euro integrationists.
  3. The supposed great divisions within the Tory party are over-emphasised and encouraged, however all Labour eurosceptics are ignored. Labour has its own divisions on Europe but the broadcast media do not show them. Alastair Campbell does not like it.
  4. UKIP and the Greens are not given the air-time to which they deserve.
  5. The broadcasters and interviewers constantly take a anti-pound pro-integrationist and anti-Conservative stance.
A fairer way of interviewing politicians on the euro would be for Conservative eurosceptic to be joined on a panel by either a Labour eurosceptic, a UKIP member, or a Green. This would balance the usual two euro-supporters against one eurosceptic tactic used by the BBC and ITN.

Also broadcast journalist should not show bias by giving their own opinion. Most broadcast journalists are Labour or lib-Dem supporters and so their personal political bias comes out in their reporting.

This would mean that they would not suggest that leaving the EU is "extreme", that Conservative policy amounts to supporting "withdrawal" or reiterate Blairite policy in what is supposed to be balanced journalism. All of these presently happen to an alarming extent.

What is required, is a new organisation entitled the Campaign for Fair Broadcasting to give pro-democracy, pro-independance, eurosceptic position a fair chance. It should also look out for the current left-wing bias in the broadcast media.

Name and Address supplied

Your remarks about bias are undoubtedly right. But the right way to deal with it under a free press is simply to explain the arguments; eventually (as with the ERM) the views presented will change. No broadcaster likes to seem a fool.

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20th October 1999

Dear Mr Minford,

I was wondering if you could tell me about some earlier plans at European unification.

Specifically I was wondering whether Winston Churchill's comment proposing a sort of "United States of Europe" was principally meaning that a new state was needed as a bulwark against communism. If so, then of course, his comment is no longer relevant.

Also I understand that he did not include the United Kingdom within his proposal. Was there a particular reason for this? When did he say this?

Secondly, I have a love of old political cartoons and I recently bought an original 1940 copy of "Europe Since Versailles" by the famous cartoonist David Low. One of the cartoons dated September 13 1930 depicts a yacht with on board the French Prime Minister Aristide Briand (steering), the British foreign minister Arthur Henderson, the League of Nations (both seated passengers) and lying on the fore deck are Germany and Italy. The sail has "United States of Europe" emblazoned upon it and on the mast is a sign saying "DANGER passengers must remain in statu quo" (meaning status quo). The caption reads "Trial spin on Lake Geneva". There is a short explanatory passage which states "Then Briand of France talked of European federation. Germany hinted that a revision of treaty settlements should be an accompaniment. Hint not taken. Subject dropped."

I've been looking for further information of this but so far have not found any. Do you know anything of Briand's plan. Is there any relevance of this situation to our present one?

Name and Address supplied

Churchill's full speech is on the site under 'speeches'. He did not include the UK and I believe he meant a USE would stop another continental war. Sorry, the Briand story I know nothing about - Rodney Leach's encyclopaedia may be helpful though (it has an entry on League of Nations for example).

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19th October 1999

Dear Mr Minford,

What do think of the term pro-european and anti-european?

To me they are misleading misnomers.

One can be anti-euro and pro-european and anti-EU and pro-european.

I feel that these terms actually limit the debate and by this fact, the use of them to describe federalist and euroeceptic views is
anti-democratic.

Here are some more appropriate terms to describe euro-enthusiasts: federalist, bureaucrats,eurocrats, corporatists,pro-olygarchy, anti-pound, anti-sterling,euro-nationalists, eurocentrics, "little Europeans", Europeanists, supranationalists, neo-nationalists, pro-Brussels and eutopians. Their philosophy is Europeanism, a new form of undemocratic nationalism.

Likewise, here are some more appropriate terms to describe eurosceptics: free-Europeans, free-democrats, pro-free-European, pro-pound, pro-sterling, euro-democrats, internationalists, global democrats, pro-democratic europeans, One Worlders, pro-Westminster, euro-libertarians, and states rightists.

As a philosophy I think euroscepticism can be summed up nicely by the term free democracy.

Anything is better than pro or anti European. To use those is to succumb to the Brussels agenda.

What do you think?

Name and Address supplied

You are absolutely right- I greatly enjoyed your list!

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18 October 1999

Dear Mr. Minford,

In a recent issue of the Guardian claims were made by the journalist Francis Wheen that UKIP had connections with the neo-nazi BNP. It appeared to slander Nigel Farage MEP and I personally do not believe what it had to say about Mr Farage as I have met him and found that he is an honourable man who is not racist and has no truck with extremists.

How can UKIP prove that they are not racist or extremist?

Name and Address supplied

I deplore attacks against people through smears about their supposed past views when the current issue is the topic of discussion. It may well be that all sorts of people agree on something; some of them may or may not be saints but what is the relevance?

As for Mr. Farage's views, past or present, I simply know nothing about them; might I suggest you refer to UKIP (link here) and to Mr. Farage himself. By the way the terms 'neo-fascist'etc are widely used in Europe of all sorts of politicians and I have yet to discover what exactly they are supposed to mean.

yours sincerely.

Patrick Minford

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20th September

Dear Professor Minford,

Congratulations on your Euro-Know web page, which I have just discovered. There are plenty of anti-EMU economists out there, including myself, so it's useful to have a forum for the thoughts of them. Crucial to winning the argument, from my perspective, is to stress the microeconomic problems (e.g. the rising tide of regulations that threaten to undo the progress of the last 20 years in liberalising labour and product markets) as well as the macroeconomic ones. This line of argument, though, tends to bring one to the conclusion that Britain's EU membership itself may now be untenable. Do you agree?

A Slater

Dear Mr. Slater,

Thanks for your letter. There is undoubtedly an ongoing argument about the merits of the UK being part of an over-regulated EU; at this stage this argument is simmering at a low temperature and is far from the boil. The key argument is over joining the Euro which would both hasten and increase the over-regulation on the UK coming from the EU, as well as bring numerous other disadvantages (such as the one-size-fits-all money and the concern over possibly having to bail-out other EU states in fiscal crisis). Once that argument is settled, the other will come to the fore. It is of course always possible that the EU will become less regulated and reform itself; that is really what this other argument will turn on in the end. So it is a matter of dealing with one issue at a time and on the second waiting to see the turn of events, especially on the continent.

Yours sincerely,

Patrick Minford

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19th September 1999

Dear Professor Minford,
 
Congratulations on your excellent "Euro Know" web-site.  Keep up the good work!

We keep hearing talk about the Euro and "economic convergence."  My question to you is what happens if the countries of Euroland start to "diverge" after they are locked into a single currency?   If the strains become too much is it possible for a country to leave the Euro and reinstigate its national currency?

For example, if a country like Italy found the costs of membership too high could it get out?  If Italy tried to leave, what would be the impact upon Italy, the rest of Euroland, and the UK?

We keep hearing about the need for debate on the Euro.  No one really seems willing to discuss the unthinkable.

All the best for your future research on this topic,

Shaun Curtis
Department of Political Science
University of Toronto

Dear Mr. Curtis,

Many thanks for your letter and kind words. On the question of divergence and leaving, there is already serious divergence as you are no doubt well aware - with at one end Spain growing strongly (over 3% p.a.) and at the other Italy and Germany growing weakly (under 1% p.a.) On average Euroland is growing at just under 2%- still fairly weak and causing the European Central Bank to set interest rates low at 2.5%. So far Germany and Italy have gone along, grumbling but not rebelling, and the ECB has bent perhaps a little more towards lower interest rates in deference to their size. However should the ECB raise rates while Germany and Italy continue weak there would be the risk of a backlash in public opinion in these countries. We know the political classes in these countries would not dream of leaving the Euro; but if strong political forces develop in response to changing public opinion - for example, the ex-communists and neo-fascists in East Germany and the far left in Italy, with possibly some populist fascists also - then these classes could panic and shift in order to survive. just as they have had to on immigration. So it is a dangerous situation and a country leaving is certainly not to be ruled out. Leaving can easily - though not costlessly - be done; it is simply necessary for the country's government to announce a new legal tender and the terms for converting all the country's Euro debts into the new currency. There would be disputes with other countries over Euro-debt conversion rates; but ultimately if a country wants out it would settle these disputes and leave. If it did so, it would lead to a break-up of the Euro. Should Italy leave, it is likely that there would be pressure from Germany to reconstitute a 'narrow' Euro around the old Deutschemark area (Benelux and Austria) in case the same occurred again. Should Germany leave then the whole project would collapse, since it is centred on Germany and the Euro is intended to take on the properties of the Dm.

Yours sincerely,

Patrick Minford

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12 August 1999

Dear Mr. Minford,

An American citizen from Dutch extraction, I admire the British attitude of self reliance and staunch British individualism. When the decision was made for the U.K. to join the E.U, it was like a stake through the heart for me. Lovely England (U.K), its proud history and its major contributions to the world history is going to be lost in masses of European plurality. When the Channel Tunnel was opened, the U.K lost its protective borders (granted it is a boon to free travel and exchange Trade and Industry). I am glad that the "euro" is getting a slow acceptance (if at all). If the Euro is accepted, you will have lost your trade advantage and economic stability. Your Economy will rise and fall with that of all other poor performing Continental European (E.U. members) nations (soon to be states).

Am I an isolationist you might ask? Well, maybe I am. My late brother (he was a British subject) and his wife (she is still living) were and are staunch Britishers (if I may use that word) and I honor and value their opinions.

Thank you for letting me address and express my opinion. May the U.K. with its proud heritage be long admired and loved and please don't let your politics cause your country to be swallowed up by that now large entity called the E.U.

Robert Rienstra

Dear Mr. Rienstra,

Many thanks for your letter. It is good indeed to have your encouragement. The more we (as editors) document the stultifying embrace of continental institutions and practices the more we become aware of the dangerous predicament this country has got itself into. It is fundamentally a matter of education; once we British understand the issue properly, there can be no doubt that it will be resolved- it is now most unlikely that Britain will enter the Euro because public opinion is very aware of the issues highlighted in this webpage; what will happen longer term Britain's relationship with the continent will depend on whether the continent pulls back from its current regulative tendencies.

Yours sincerely,

Patrick Minford

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13 July 1999

Thank  you  for  the  EuroKnow  site,  and for  your  articles  in the  "Daily Telegraph".

I'm interested in "one size fits all" problem in Euroland. I check the on-line Irish "Times" and "Independent" regularly for any evidence of the adverse economic effects of a low interest rate in a booming economy, but, apart from house prices, there doesn't appear to be any adverse comment or analysis. I would have expected more comment in the UK press as well, since the Irish experience is so relevant to the question of UK membership of the EMU.

Are there any articles published on the web which cover this issue, in relation to Ireland, or Portugal / Spain, for example?  (Incidentally, on my last visit to Ireland, I was told by a Canadian former banker that Irish bank lenders were giving up to 105% mortgages - surely a recipe for disaster?)

Thanks again, and best wishes,

Barry Johnson
Llangibby, Monmouthshire
 

Dear Mr. Johnson,

You are right that not much work is being done on this issue. The reason is that we have little or no experience of such a situation as the Irish where in the middle of strong overheating an economy switches to a completely fixed exchange rate. Something must give however; presumably it will be the prices of non-traded goods and services, such as housing and labour. Obviously prices of imports and exports (traded goods and services), being set in world markets and translated into Irish markets at the fixed Euro rate, cannot be affected by Irish conditions. So if non-traded product prices take the strain, as it seems they must, then they will rise until Irish costs become so high that the profitability of investing is reduced; investment and growth would then slacken off, unemployment would rise and the boom thereby peter out.

Patrick Minford

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09 July 1999

Dear Mr. Minford,

I see the UK Independence Party is backing an injunction to halt the planned UK gold auctions. Are there any other organizations acting in similar capacity, or is the British public just standing by while their reserves are squandered? I'm writing from the U.S. and, as you may know, our news is heavily censored by the mass media. So please advise if something positive is on the horizon with respect to halting this irresponsible gold sale.
Kind Regards,
Greg

Dear Greg,

Thanks- I do not think there are any others trying. Unfortunately it cannot succeed either, because it is being 'made as a pure portfolio decision' about the composition of the reserves. It would be extremely difficult to prove otherwise, as in fact gold offers a poor return in a non- or low-inflation world. However the reported decision to put 40% of the proceeds into Euro assets may well be questioned on portfolio grounds, may the procedure: announcing the sale in a great blaze of publicity so depressing the gold price both before and during the sale.

Yours sincerely,

Patrick Minford

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