European statism: Regulatory cholesterol that clogs EU's business arteries
EUROPEAN economic weakness has revived concern about the direction of global growth. To some, fleeting patches of good news seem like flashbacks to yet other nascent recoveries that turn into false dawns.
One can wonder whether European growth has suffered a form of arterial stenosis clogging up the works. Clearly something's amiss. Italy is back in recession, and German growth has faltered and France has "stabilised" at zero growth, and is struggling with political impasse.
While many are in a quandary, others identify the supposed cure - government regulation - as the disease, that enervating obesity of complexity that for safety's sake must cover every conceivable risk with smothering mothering scolding, which makes big projects too difficult to contemplate without massive state involvement.
This is the menace of safety. And the electoral successes of anti-EU national parties in throughout the member states, particularly in France and the UK, are symptoms of sullen rebellion - and some hope, revolution against Big Mother.
Risk-taking men who once led the key entrepreneurial enterprises in the past have been replaced by careful, caring people, whose prime concern is that no harm is done in the process of making gains.
But there are those who ascribe the current European malaise to causes they, and the state bureaucracy feel more comfortable addressing, such as the geopolitical situation. The Russia-Ukraine conflict is a plausible cause, although it seems unlikely that the west will go to war over the Crimea which we all thought Russian since we fought them in the Crimean War 150 years ago.
No, it seems the cause of the current European malaise is an existing fiscal and financial weakness which narrows business options along arteries already choked with red tape. But the forces of government, that is, the civil service, the "opposition in residence" sustain the drive to a more regulated world.
Through what can be called the media, academic, bureaucratic complex, they work to create more regulations supposedly for the good of all, though largely benefit a civil service trading on its own account and marginalising elected officials who supposedly control it.
Grant-dependent academics, funded by bureaucrats, come up with data to support fashionable fears. The media amplifies fears while the civil servants fashion regulations, enlarge inspectorates, which necessitates revenue generation through fines, taxes mandates to buy carbon credits. This leads to more grants to the academics with promising fear-mongering projects, which the media amplifies creating more regulations and inspectors.
Today, they clog of the fiscal and financial arteries of Europe, and to a great extent, North America, too. Heavily statist Canada recently surpassed the United States in economic freedom, according to Toronto's Fraser Institute rankings. (The Fraser Institute awarded Hong Kong its top ranking in world economic freedom, with Singapore coming close behind). But it was not that Canada had improved so much but rather that the US had performed so badly, and no longer stands as the the global bastion of free enterprise it once was.
Now comes a massive dose of arterial clogging cholesterol in the form of the low sulphur fuel rule from January 1 affecting both North America and northern Europe. This will make fuel 50-60 per cent more expensive in Emission Control Areas (ECA) than before. This comes from the UN's International Maritime Organisation and has not been passed by any legistature, but attached as amendments to once benign motherhood treaties passed long ago, but have since grown teeth demanding fines and jail time.
The low-sulphur fuel rule will certainly kill several short sea trades in the North Sea and Baltic, not to mention the Port of Montreal, which being being 1,000 miles from the open sea is mostly affected by the mandate to use fuel that costs so much more than standard bunker.
Playing its role in fanning fashionable fears into flame, the New York Times trumpeted a report from an American environmental lobby, and in doing so again pursued the increasing popular practice in journalism of lying without actually doing so.
The newspaper reported a study from Natural Resources Defense Council that solely attacked Chinese containerships for using the most polluting fuel available, implying that "Chinese containerships" were the sole culprits because the report mentioned none other.
This ignores that all ships of every type and from every country burn the same fuel as "Chinese containerships", that is, the cheapest they can get, if they are under no other legal or technical constraint.
What makes this story important is that if left unchallenged by major media - and it won't be - it will be cited by a bureaucrats wanting to impose a new costly mandates on shipping. "Yes, Minister, the danger was reported in the New York Times... So if you would be so good as to sign here, Minister..."
The New York Times reported the study as saying: "Since Chinese port cities are among the most densely populated with the busiest ports in the world, air pollution from ships and port activities likely contributes to much higher public health risks than are found in other port regions."
"Likely contributes?" Not likely, at all. In fact, most unlikely as compared to other non-port cities in China, which generate much more air pollution - and that's according to a Greenpeace ranking.
Of the top 10 most polluted cities in China, the one closest to the sea, and in seventh place, is Jinan in Shandong province, 100 miles from the ocean and more that 200 miles from the Port of Qingdao.
And in terms of ports, the world's biggest container port, Shanghai, was ranked 48th most polluted, Qingdao 47th, Guangzhou 55th, Dalian 57th, Ningbo 58th, Dongguan (adjacent to Guangzhou) 63rd, Shenzhen 66th and Xiamen 72th. No other major port even made the Greenpeace list.
It is important to understand that subtraction rather than addition is the agent of media spin; one creates false impressions by removing elements that might lead readers to reach conclusions other than those desired by the journalist.
So to exploit a popular negative view of China in the US and the west for its communist system, all the more blameworthy for it success and growing power, and to exploit bad feelings about the Chinese "stealing American jobs", the environmental study and the famous daily newspaper targeted China's containerships as the most egregious ship type, when it was no different than any other ship in this regard. But containership deliver the goods American and Europeans once made themselves and can generate greater resentment.
This is lying without actually doing so because if one parses the words and phrases in the report there is no direct falsehood. Containerships did indeed use the cheapest most polluting fuel. The fact that every other ship from every other country does the same, does not make the previous statement a lie.
The study, quoted in the New York Times, perhaps crossed the line saying that these port cities "likely contributes to much higher public health risks", but that might have been stated as an opinion and not a fact.
This is like a famous libel case that was once taught as a cautionary tale to journalists who were inclined to sail too close to the wind: There was once a first mate who disliked his captain and so entered into the log: "The captain was sober today." While the first mate's statement was perfectly true, it gave the false impression that the captain was drunk most other days. The court found for the plaintiff and against the first mate.
One selects Europe as a major because its state of bureaucratic triumphalism and its economic malaise is so severe that it is easy to single out as the most blighted economy in the developed world. It is where political forces are gathering steam to break up the European Union. But the problem is serious elsewhere, particularly in the United States, whose economy is perking up, but also dragged down with the same self-perpetuating bureaucracy that is sinking Europe.
It is time for the industry to oppose rules they do not feel are needed and question the underlying validity of the reasons such rules are made, and case a forensic eye of all expert statement and reports, particularly if the expert stands to benefit from the information he reports.
