THERE is something beautiful about the First Amendment to the US Constitution. For those of you who need reminding, here it is: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” Inevitably, like all constitutional provisions, it is subject to interpretation by judges and lawyers (what is “speech”?) but the American system, while imperfect, has done much more for free speech in recent years and decades than the UK legal system. The super-injunctions fiasco – under which courts stop anyone from publishing information deemed private about an individual, and even bans disclosing that the injunction itself actually exists – could not have happened in America.
But there is another, even worse problem: our libel law is not fit for purpose and allows rich companies and powerful individuals to muzzle journalists in ways that ought to be unthinkable in a free society. The government has promised reforms; let us hope its draft Defamation Bill is soon passed into law without being diluted or destroyed by vested interests.
Of course, the media has in the past acted irresponsibly, something for which there can never be any justification. That must end. But if the events of the past few weeks have taught us anything, it is that Britain is now ready for a free speech revolution.
TACKLING EUROPE’S DEBT WOES
IMAGINE you owed you neighbour £100,000 and she owed you £99,000. Instead of both sides struggling for years to meet the interest and capital payments on the money you owed each other, you would simply cancel the debt out, which would leave you having to repay her just £1,000 in cash, a much more manageable sum. That would be the only actual cash that would have to change hands – when it comes to sorting out the rest, a simple, friendly accounting exercise would be enough to eliminate a massive headache.
In a fun but important paper by one of Britain’s most interesting young economists, Anthony J Evans of ESCP business school, this same idea is applied to Europe’s debt crisis. When one country (or banking system) is both a creditor and debtor to another, the obvious idea is to cross cancel their debt. Of course, the real world is a bit more complicated than that, especially given that interest rates and maturities differ – but Evans decided to see how far he could get. Using data from the Bank of International Settlements, and looking at total bank debt in Portugal, Ireland, Italy, Greece, Spain, Britain, France and Germany, Evans found that these countries could reduce their total debt by 64 per cent through the cross cancellation of interlinked debt, taking total debt from 40.47 per cent of GDP to 14.58 per cent. UK banks were able to write off more than 50 per cent of their outstanding debt. Ireland can reduce its debt from almost 130 per cent of GDP to under 20 per cent.
Needless to say, it is not really that easy, as Evans readily explains. The debt reductions would necessitate governments stepping in and negotiating on behalf of banks based in their countries. But it is time to start thinking out of the box – and to find radical solutions to protect taxpayers and salvage the European economies.
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