Tick the box. Or think.

I just had an interesting conversation with my brother.

He is a senior compliance specialist who has worked with the biggest global commercial banks.  He explained the extraordinary cost and consequences of poor administration of the legal framework of the finance and securities industry in the EU.

I was amazed.  His perspective from the City parallels our experience here, in the far countryside of Ireland, of the incompetent reach of Brussels that is killing us all.

It is not that the EU is evil.  On the contrary it is good.  Its intentions are good.  But the system is not working.  It has been corrupted by moral hazard.  Without anyone noticing.  The decision makers have made compromises which they know to be dysfunctional because the bickering of 27 children can only have that result, at best.  Worse it could just stop working.  Worst it could be intentionally evil.

The compliance expert observes that the regulatory environment has become so compromised that its guidelines serve to undermine their own intent.  Financial  laws are devised to maintain transparency and reduce transaction costs.  They must be definitive.  But the laws are written as guidelines to be implemented as interpreted by each country and to be enacted at that country’s own pace.

So in the banking and finance industry, none of the operators know whether they are actually within or without the law.  If the market is booming and voters are happy, the government turns a blind eye to indiscretions. If the market turns (like now) they change their tone and come out with their clipboards and fines and fees and taxes. The rules have changed. All of a sudden they can not tick the box, though nothing has actually changed.  The players lose more jobs and capital than they already lost because the inspectors force employers to cut back and pay fines and fees and taxes.  But players are still ignorant of how the government will implement the laws (guidelines) tomorrow.  So people make it up as they go along.

The example set by the “boss” (the EU) is sloppy and very costly to administrate.  The intent is good.  The process is destructive.  Transaction costs are raised and transparency is reduced.

It is a crime against justice.  But not against the law.

The unemployed parent in the Irish countryside, who is out of touch with Brussels, doesn’t read the paper or watch the news on TV (because he’s digging in the (organic) garden), also feels the steely grip of Brussels around his throat:  His wife is fingerprinted for being Canadian, because the new EU directive says it must be so and the Irish government doesn’t bother to think whether it s the right thing to do.  Then he is told that it is illegal to cut the ivy in his wooded garden (which his family planted) without the minister’s permission or face a € 3,000 fine, but he must protect the oaks around which the ivy grows!  Meanwhile the unprofitable government company next door, which pollutes with toxic chemicals and draws water from the already endangered river, is not on the calling list of the regulator at all

As in the finance industry, EU “inspectors force employers to cut back and pay fines and fees and taxes”.

He then observes that it is the same in the food industry.  Compliance with regulations occurs in the UK quickly, so UK commercial producers must comply.  Then other EU countries’ commercial producers export to the UK, because their not yet regulated industry has lower costs.  The other EU countries keep their premium production to themselves, while exporting the chemical sprayed, container raised, injected food.

The inspectors are decent people like you and me.  Even good people.  But they have all stopped thinking.  Maybe not because they are afraid to lose their jobs.  Maybe, because like their bosses’ bosses at the top of the EU hierarchy, they just have to tick boxes. They do not live in the real world where nature rules.  They live in a world where they must follow a prescribed protocol which was designed to make things easy, but doesn’t.  It does not allow for judgement.  The inspectors have stopped thinking.  The system has stopped thinking.

So everyone loses the opportunity to work.  We lose the ability to eat.  We lose our responsibilities. The state takes away both our responsibility to think and our responsibility to our assets.  We are not permitted to care for our own garden, let alone take an interest in the well-being of the world beyond our front door.

The government itself produces nothing, while it demands 30%, 40%, 50% of the income.  (What do you think is the government’s cut with sales tax, income tax, capital tax, land tax, death tax, …?)  It is a massive administrative overhead.  It is poorly managed.  If your company suffered a 30% administrative burden which generated no income and was perennially the least effective and efficient performer in the market, it would be dead at birth.

We know how to do it differently.  We choose not to.  Can we individually start making the right choice?  Or are we dead too?