23 August 2015

Visualising government benchmarking data

The New Zealand government has released their most recent Benchmarking Administrative and Support Services (BAAS) data. What is interesting about this data is the ability to analyse spend, not at a highly detailed level, but certainly in more detail than previously possible. The information is provided in Excel. What is interesting is what you can do with the Excel data for analysis and, better, display of information graphically, to derive meaning.

I highly recommend taking a look at how this, relatively high-level, information can be presented.

Before discussing they need for a more detailed taxonomy, I'll make the following observation: The information is available in Excel, against a single set of line-item names, and columns for periods and spend. It is simple, it is easy to use and import, and absolutely ZERO specialist XBRL knowledge is required to import, analyze and gain meaning from that data. There is much to learn from such initiatives.
The need for a more detailed taxonomy
The need for a more detailed taxonomy of ICT and other government expenditure
Financial reporting and analysis provides value only when used to compare performance against either targets, benchmarks or competitors. Fundamental to the ability to perform effective analysis is the presumption that all reported line items are equivalent across reporting entities. Equivalence of meaning is the critical point, and without adequate definitions, there will be no clarity. Therefore, there needs to be an agreed taxonomy of reporting terms, at sufficient levels of deconstruction to allow the reporting of exactly the information that the entity wants to report, at the level of detail they want to report, linked to a definition that is accepted as the only definition for the reported level of information. 
Granularity is also required to ensure that there is minimal overlap between reported items, and little opportunity to report items in one of multiple categories or line items. When considering a Balance Sheet (for example) the first and most obvious question may be "is the reported item an Asset or a Liability?" It cannot be both, or either. Cash is not a liability (unless you are a bank), as is Property Plant and Equipment. Likewise, Accounts Payable and Long Term Debt are liabilities. There is no overlap, and therefore the information, unless you are Worldcom, should only be reported on one side of the ledger of the other. 
How does this relate to BASS? While there are over 800 line items in the BASS spreadsheet (many are either summation or calculated lines and not actual reportable line items) there can be overlap or alternative interpretation of how and where information will be reported. This reduced inter-agency or entity performance and expenditure comparisons. 
Too often interpretive differences in the meaning of scope of potential meaning of a reported line item can lead to multiple entities reporting the same line item, while defining the detailed content differently. For example one agency could include a software charge as 'Software' while another records it as 'Outsourced' because, while the agency licences it, it is only used to enable an outsourced service. Neither are necessarily wrong. Such use of a common element with slightly different interpretation increases the complexity of comparatives, and increases the amount of manual intervention required to gain meaningful insights from what is theoretically the same information. 
Any taxonomy does not need to be complex in and of itself, but it does need to represent an agreed set of line items and associated detailed descriptions. The ICT section of the BASS reporting framework have approximately 125 line items, many of which are summation items. 
What is required for effective reporting is not an ever expanding list of potential line items against which to report, but a set of line items elements with very clear definitions. For example, the US-GAAP "Generally Accepted Accounting Principles" taxonomy (in XBRL, which I do NOT recommend) has over 18,000 possible reporting elements, growing every year. In addition, companies can add additional custom items, only increasing the complexity and reducing comparability. Imagine if each BASS reporting entity could choose to add line items. 
Instead, keep the list as tight as meaningful, and clearly define the boundaries of each item. In this way is it is possible to reduce the ability to select from any of a number of items depending on your individual interpretation. The benefits? Simplified reporting, greater clarity, and easier comparability between entities, and greater value in the information reported and analysed.

09 July 2015

Why Everyone Wants a Grexit

All the wrangling and grandstanding in Europe today has one purpose; to force Greece out of the Euro while convincing all other countries to stay in the Euro. The Germans and the Troika want Greece out, even though they cannot say it out loud. The Greeks want out, even though they cannot say it out loud. And they all want the Grexit for their own reasons, little of which have anything to do with the good of Europe of the Euro per se.

So Wow, OXI (No) won, and by a landslide. Surprised? Then again, anyone listening to anything coming out of Greece should have expected it. With the deal off the table, a Yes vote would have been the equivalent of signing up for German Language lessons. A Yes vote was simple capitulation to Berlin and Brussels, even if dressed up as a vote for stability. OXI was an affirmation of the independence of Greece and the Greek people.

I wrote on April 15th, 2015 that the Grexit was inevitable, and it still is. Sure, there is another conference, and there will be another after that. Nothing will be achieved in these conferences; if the Greek government does not agree to capitulate to serial defaulter Berlin and Brussels, aka The European Branch of Goldman.

And nothing will be agreed because it is already accepted that the loans cannot be repaid, that the debt is unsustainable. Therefore, asking Greece to demonstrate how they can pay back loans that they cannot repay is asking them to lie, again. If the Troika, Germany and the rest of Europe are willing to pretend, then maybe. But nobody is pretending any longer.

And while Prime Minister Tsipras insists that he does not want to leave the Euro, those statements are for the "centre-left" of his party and the wider population, as they face insult after insult from their European brothers. In reality, Tsipras has no intention of staying in the Euro, and is actively creating the situation that enables an exit that can be "blamed" on the Troika, Germany and France.

Greece’s prospects of staying in the eurozone have dwindled further after the Prime Minister Alexis Tsipras arrived at an emergency summit of his fellow eurozone leaders in Brussels without a concrete plan to resolve his country’s debt crisis.

Eurozone leaders and ministers struggled to contain their incredulity as Mr Tsipras and his new Finance Minister, Euclid Tsakalotos, could only offer oral outlines of their request for another bailout, despite the EU’s demand for fresh proposals after last Sunday’s referendum rejected the previous bailout terms. The Independent

All Tsipras need to do now is wait for the news to gets out that Europe will demand that all Greek bank accounts be raided in a "Depositor Bail-in" - the numbers vary from as little as 30% of all account values greater than €8,000 up to "What have you got, hand it over". This would see what little is left in any Greek bank account confiscated. Think Cyprus without any mercy.

Once that is presented as part of the in-or-out proposal from the Troika, Tsipras, with no money left in the banks, will have the support he needs to introduce a New Drachma.

Two Options, One outcome

Because we need to be clear, there are, from the Loan Sharks perspective, only two options. I'm sure they've gamed this out already, but I see only one longer-term outcome.

  1. Write a deal that will save Greece, and watch the other countries demand the same.
  2. Punish Greece, leading to the introduction of IOUs (also known as New Drachmas) and force Greece out of the Euro.

Both of these lead to the same longer-term outcome: death of the Euro, but option 2 pushes it out to someone else's watch. With option 1, the demanded bailouts and write-off of the other countries will bankrupt Europe. With option 2, Greece does an "Iceland" and after more pain, begins recovering, though from a lower base, resulting in evidence that there is successful and meaningful life after the Euro.

There is no 3rd option, the "do nothing" option, because "do nothing" resulting in the actualisation of option 2.

It is important to remember that the decisions that are being made by all sides are NOT about saving Greece or the Euro, or France, Spain, or any of the rest. It is all very personal. It is about saving the stashes of dosh that these people have made, saving their status, and saving their jobs. And this goes for everyone involved in this.

Greek Political Unity

Tsipras is doing what he's doing because this is the only way that he saves Syriza from political oblivion. The other Greek parties are supporting him because (unsubstantiated, but my own guess) they know that if they do not, there are "perp walks" in their futures. If there wasn't the implied threat from the Greek Parliamentary Committee on the debt, then they would each be doing everything they can to undermine Tsipras and Syriza.

Beyond the threat of the Parliamentary Committee findings, there is the "Lost List" (the ""Legarde List") of individuals with significant bank account at the Geneva branch of HSBC in Switzerland, a list of 1991 names that then Finance Minister Giorgos Papaconstantinou, um, lost. There is a much longer list of 80,000 names that Syriza is looking at. There will be plenty of politicians and various ministry officials on that list.

So the deal is pretty simple, support Syriza in getting Greece out of the Euro and implementing a recovery programme, or go to jail. I think we have the basis for a Greek Government of National Unity, headed by Syriza and Mr Tsipras. We might even see the return of "V for Varoufakis".

The Loan Sharks

The Loan Shark enforcers are in a difficult position and must decide which will be worse, general rebellion across the Zone from a "saved" Greece option, or a punished Greece facing more pain as a warning to France, Spain and the rest. It must be difficult to know that whichever choice you make, in order to save your own stash of dosh gained through screwing Greece in the first place (the lenders AND the Greeks who did the deals), more suicides, closed businesses, lost futures, are on your head. But hey, you were (and are) just "doing God's work".

So there is no way out for any of them. Save Greece, lose the Eurozone. Kill Greece, save your stash and kick the dead-Eurozone can into the next guy's term in office. Then, like the Dark Lord Cheney, you can blame your unmitigated disaster on the next poor schmuck.

20 June 2015

Greek Bankers and former MPs are going to jail

This might just be Syriza's "way out" of the Grexit, and the way they can stay in the Euro, while destroying PASOK and Nea Democratea's (ND) ability to regain power. Earlier this week, on 17th of June 2015, a special committee of the Greek Parliament released their report, and in so doing, have put Greek bank executives, Finance Ministry heads and MPs from the former ruling parties on notice: you have iron bars in your future.

Rewind to earlier this year, when Syriza established a Parliamentary Committee, the “Debt Truth Committee” to determine how much of the 320 billion debt is legal, and recommend how much of that debt to unilaterally cancel as illegal. On the 17th the committee reported their findings. In perhaps the biggest non-surprise of the saga, the committee has reported that the "Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious."

This provides the Greek Parliament with a legal opinion to allow them to abrogate the loans. Wipe the slate clean. Clear the ledger. Stop the payments. Thank you, it's been fun.

This also gives the Greece government the authority to arrest Greece Finance Ministry officials and politicians. And under EU law, the Greek government could issue an arrest warrant for IMF and ECB officials. Would an EU arrest warrant for IMF chief Christine Lagarde be honored next time she gets off an airplane in Europe?

The Troika's objective

As I posted a couple of days ago, the "end of history" crowd needs the elected government of Greece to fall, to ensure the myth of the eternal victory of liberal western capitalist democracy as the sole survivor of Cold War One (CW1).

"If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it. In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers." (from Ambrose Evans-Pritchard at the Telegraph of 19 June 2015) 

It is easy to listen to the Troika's rhetoric of Greece the Failed State and to assume that more and deeper cuts and systemic changes are required. It is also easy to assume that Greece has not changed, and is the laggard in Europe. Yet looking at the numbers and we see a country that has implemented systemic changes that would destroy any ruling party in any Western country, from France or the UK, to the United States.

Could France, Germany, the UK or the USA cut its government payroll by 28%? Could any of them cut their average pension by 61%?

As Evans-Prichard goes on to say "We all know the argument. The EU is worried about political “moral hazard”, about what Podemos might achieve in Spain, or the eurosceptics in Italy, or the Front National in France, if Syriza is seen to buck the system and get away with it." All the while forgiving and forgetting the Moral Hazard that is incumbent in the IMF, ECB enforcement of the original loans and lending (investing) in Greece.

The price

With the loans being declared illegal, Syriza now goes into negotiations early next week looking to see what the Troika is willing to bring to the table. If the only things on offer are more years of hardship and continuing a program that "directly affected living conditions of the people and violated human rights, which Greece and its partners are obliged to respect, protect and promote under domestic, regional and international law" (Exec summary, Chapter 6) , then Syriza walks away, declares the loans void, and says "see you in court".

Greece would not even need to leave the Euro, as it will still be the legal currency of the country. There will be no need for a New Drachma with an instant 50% devaluation. Euros would continue to flow through the economy, and Greece's primary budget surplus would make it, theoretically, one of the better performing governments in the Eurozone, if not the world.

Suddenly, while Greece will be locked out of international capital markets, the immediate need to access those markets to service the debt will disappear. Not that simple of course, but a much stronger negotiating position.

Syriza's "get out of jail" card

For Syriza to stay in power, they will need an "out" to demonstrate to two constituencies that they represent the break from the past.  

They also need to deepen their roots throughout the Greek bureaucracy. After all, after 40 years of sharing power between PASOK and ND, all ministries, especially Finance, are stocked with bureaucrats who know how to please moderate socialists and moderate conservatives, but most of all know how to outlast whatever political party is in power. Just like almost every Western capital city.

Syriza needs to clear out the functionaires more closely aligned with the two (formerly) major political parties, and replace them with economists and functionaires aligned with a leftist socialist economic agenda. 

Syriza's "go directly to jail" card

What better way, then to frog-march to jail the ministry functionaires who wrote the papers that supported the politicians who negotiated the deals that the functionaires in Athens and Brussels (and Washington) then agreed. As long as those functionaires remain in place, more papers will be written demonstrating why the previous papers represented the only way forward. For syriza to make any progress, they must ensure those papers are never written. How better than to fire the functionaires (on the grounds of course, of #1 the functionaires committed illegal acts and #2 Greece still needs to streamline the bureaucracy and therefore must cut heads).

Of course, this is not exactly in the individual best interests of the functionaires - thus the importance of the “Debt Truth Committee”.

If the Committee states that the loans were illegal, as they have, then Syriza has all it needs to remove the functionaires pending trial. And to arrest and smear any sitting MP from PASOK or ND who was in any way involved in negotiating, speaking in favour of, or voting for the bailouts. 

So Syriza, the legitimately elected representatives of the Greece people, will negotiate for reductions in the debt burden, while at the same time shoring up their longer term position in Greece itself by surgically removing the functionaires who work to undermine them from within the ministries. They will try the politicians and former MPs who voted for the bailouts. As with Iceland, we will see what democracy really means, the democratically expressed will of a people translated into real pain for those who screwed the people.

18 June 2015

Wolf! Wolf! Wolf, and Moral Hazard

Having been wrong about the Grexit date of 9th May 2015, and having written again about why it is actually in the best interests of Greece based on other countries' experiences, it is time to call "Wolf!" again. Boring, I know, but "Wolf! Wolf! Wolf!".

Or, "Grexit! Grexit! Grexit, and Moral Hazard!"

There, I've said it. Now why do I keep saying it?

Syriza was elected, and they are a political party, and they will implement to the extent that they can, their agenda. From the Syrisa perspective, the ongoing Greece-Troika-EU dance that has become oh so tedious has two purposed; ensure that the Germans will reject or refuse to put any viable plan on the table, and ensure that EU's  (and Toika's) willingness to inflict massive and almost perpetual pain on the Greek people finally reduces the percentage of Greeks who say they want to stay in the Euro.

From the Troika perspective, it is clear that, like good loan-shark enforcers, the Troika will be happy to see every last penny extracted, every last asset liquidated, before in the end suggesting that there is one way-out left; suicide. According to the New York Times reported on 25 May 2015, "As for the hospitals, even though they are taking in twice as many patients now, their budgets have been cut to the bone. In the first four months of this year, health officials say that the 140 or so public hospitals in Greece received just €43 million from the state — down from €650 million during the same period last year."

The suicide that the Troika would like to see is the suicide of Syriza, those nasty, far-left socialist / communists who also happen to be Greek nationalists. So we are now in a battle of wills between the "End of History" with it's ultimate victory of liberal capitalist democracy and a miserable rearguard of that failed socialist philosophy that has no future.

The problem with this narrative, like all simplistic narratives, is that the situation is of course far more complex, and is one that strikes at the heart of the presumptive winner in the game of history. Capitalism is failing. Liberal democracy is failing. Sure, it remains the now-dominant political-economic narrative, and will remain so probably though the coming crisis (no, not the Greek one, the real one).

Moral Hazard

Greece is a reflection of the Moral Hazard that has engulfed the capitalist system, with Too Big To Fail (TBTF) banks, but Not Big Enough To Save countries. When the final choice must be make, the Troika and virtually all Central Banks will  impoverish and force a country to fail, rather than allow the poor lending decisions of the banks and IMF to reap the reward of poor investing decisions.

Moral Hazard is the concept that if an entity (or an individual for that matter) knows that they will be able to "get away with it", be it murder, theft, or simply poor lending and investment decisions, then there are not impediments to that unacceptable behaviour. In central banking and regulatory context it means the importance of demonstrating that no business is TBTF, because to admit that the business will not be allowed to fail will simply encourage "Moral Hazard" or behaviours that are ultimately counterproductive to the business (or the counter-party) to the point of damaging the business.

In the case of Greece, one side of the Moral Hazard has been the implicit expectation that no matter what happens, the money "loaned" to Greece will be repaid. The other side of Moral Hazard is that Greece sought and took loans when it knew that it was taking out loans that were well beyond the ability of the Greek economy to repay.

Until the IMF, ECB, national Central Banks and national governments print money, buy bonds, and run their countries at significant budget deficits, there will be Moral Hazard. With Greece, all can see the future, they just aren't willing to look.

10 May 2015

This One Chart Proves the Grexit is desirable, and inevitable

Saturday 9th May, or as I've been calling it, G-Day (Grexit Day) has come and gone, without Churchill's desired invasion of Greece, with the idea of flanking Germany while also limiting the spread of Soviet control across eastern Europe.

No. Wait. I'm getting things mixed up here. Let me start over...

Now, I wouldn't want you to think that I'm actually comparing the Eurozone to the German occupation of Europe during the Second World War. There is no comparison. One brought pain and suffering across a continent, destroyed peoples, economies, culture, cities, indeed entire countries. And no, don't wait for the punch line - and then there was WWII. The fact is that the European Union with open borders and flow of people and capital has helped to lift millions out of poverty while also ensuring peace across (most of) the continent for over 50 years.

It is just a little humorous however to notice that the pre-D-Day map of Occupied Europe does bear a striking resemblance to a present day map of Euro Europe.

One of these is the EuroZone, the other is Axis occupied Europe in 1943 - Which is which?

So, starting over...

Saturday 9th May, or as I've been calling it, G-Day, has come and gone without the invasion of Europe by the New Drachma. Having predicted May 9 as the day, I now say "I was wrong ... about the date." Yet the conditions for a Greek Exit from the Euro are as strong today as they ever were, and getting stronger by the day. In my previous post predicting May 9 as G-Day, I listed six reasons why Grexit is inevitable. The passing of the 9th without a Grexit does not in any way invalidate any of those reasons.

Now I'll add another reason; it is the only way that Greece will rebuild the Greek economy and get the country back to work. And until the country gets back to work, there will be no future for Greece.

This chart, from the National Party (the ruling party) of New Zealand shows why Greece must leave the Euro, and why it will be a good thing. Look closely at this chart:

Now what does this tell us? Here are some quick observations:

  1. New Zealand almost when broke in 1984, and in the space of 3 - 4 years, after restructuring its economy, went from being the 24th least open economy in the OECD to being the 1st, most open economy. And the economy grew nicely, after weathering the terrible pain of the restructuring.
  2. Ireland has stuck with the Troika's demands and programme, and remains in trouble.
  3. Iceland, after defaulting and being locked out of the international capital markets and the initial pain, has now enjoyed multiple years of solid economic growth, and is now #1 on this chart of levels of employment.
  4. Meanwhile Greece is right there at the bottom. It knows that it can follow Ireland and spend another decade handing over assets to the loan sharks, sorry, the Troika and the loan sharks they represent, or it can take the Iceland approach and see renewed economic growth, quickly.
The road to growth is through a managed bankruptcy and fresh start. People can do this, and so can companies. As for lending to people, in the United Kingdom the FCA (Financial Conduct Authority) requires lenders to ensure that their clients are actually able to repay, and to ensure that the loan will not result in undue hardship. So why didn't those lending to Greece, or to be more accurate, buying Greek bonds and therefore making an affirmative investment, confirm that their investment would be able to be repaid without undue hardship.

A quick reminder of my original 6 reasons:

  1. This is what the Greek people voted for.
  2. The Greek people know that Europe is not going to bail them out, again (and again).
  3. Greece (and the Troika) know the debt will never be repaid.
  4. Syriza had six months or face political oblivion next election.
  5. The Greeks needed to show "good faith" and negotiate, and they've done that.
  6. The demand for reparations from Germany is designed to ensure negotiations fail.
Number 6 is almost the "General Belgrano" option. If it looks like negotiations will actually happen, thereby stranding your fleet in the middle of a South Atlantic winter, then do something to ensure the other side will not negotiate.

New prediction:

So, having missed the date, instead of fixing another date, I will only predict the following for anyone visiting Greece this summer:

  • Buy your Euros before you leave, because if the Grexit happens while you are there, you'll not be using any ATMs, they'll be shut.
  • You might even get the chance to buy your New Drachmas before you leave.
  • The weather will be sunny.
  • The Retsina will be tasty (and will go perfectly with the sunshine, olives and salads).
  • The Greek people will be as wonderful and hospitable as ever.

Because let's be real about this, in or out of the Euro, Greece is a fantastic place, and the tourists will flow in, and the wine and olives and other produce will flow out. And with any luck, and Grexit will also begin the process of (re-)creating a vibrant economy that brings the Greek diaspora home.

Oh, and for a final treat - the official Talking P.I.G.S. music video!

 Talking P.I.G.S. official music video

29 April 2015

Rethinking Dealing with Illegal Migrations across the Mediterranean

After paying the money and getting in the boat, a "lucky" Eritrean Illegal Migrant crashed up on the shores of Rhodes in Greece. She is now free to travel to Athens, and after that Sweden. Earlier in the week, up to 900 illegal immigrants drowned when their boat sank off Italy, bound from Libya. Both are tragedies, but thankfully only one of them includes mass death. Most of the people of the boat from Turkey made it to shore, with three deaths when the boat ran aground and broke up. Most of the people on the boat from Libya drowned, with some, including the captain being rescued.

The next tragedy was an opinion piece in the Huffington post by John Wight. John's opinion piece made me mad. Really mad. And insulted. Does John take us all for simpletons, or is he so blinded by hate of governments that have to make difficult choices?

His piece certainly is emotive, and lays the blame for the 900 deaths at our feet, as Europeans and our Western governments. Does insulting his readership help to advance to reduce the carnage on the Mediterranean? Does his article include any recommendations on how to improve the situation? I'm afraid not, and it is pity, because the answers, in my opinion, do not include opening the doors to anyone who will pay a people smuggler to help them commit a crime, thus making both the smuggler and the economic illegal migrant criminals.

Note the use of words here; Illegal Migrant vs Refugee. Words are so important. If these people are refugees, then we feel guilty that somehow our stable societies are somehow responsible for people, and therefore we must make amends. Call them Illegal migrants and we are facing a wave of people who are making a calculated though risky investment in a better future for themselves and their families. Good for them.

"Her family paid more than 10,000 dollars to give her the chance of starting a new life in Europe hoping that she would eventually reach Sweden." (Lucky Eritrean)

That does not sound like a refugee from a war-torn country ripped apart by Western intervention. We can go into the detail - yes Eritrean has been a war-torn country, much of that caused by their own war with their neighbour and former master Ethiopia. But $10,000 is a huge amount of money in Eritrea, where the per-capita GDP is $1200. That money could have been applied to help her family build a better future in Eritrea.

John Wight's first paragraph reads: "The drowning of 800 people in the Mediterranean is a crime against humanity, the ultimate responsibility for which lies not with the people traffickers operating the boats involved, as some assert, but Western governments that have destabilised the nations from which those refugees are so desperate to escape they are willing to risk their lives in the process." (Blood on our hands)

John, I'm afraid that you and I will disagree, but in a nuanced way.

There are three groups to blame here, not just Western governments. And where our governments are to blame, it is not for the reasons you bleat on about. Those to blame are:

  1. The Illegal Migrants who hope to buy their way into Europe. The Illegal Migrants, having broken the law to get "here", have invalidated any moral right they may otherwise have to be "here".
  2. The traffickers who take their money and put them into unsafe boats filled vastly over their capacity.
  3. European governments that do not return those people to their last ports of call on their journey to Europe.

I will expand on each of these.

  1. The Illegal Migrants are buying their way across the sea. They are not fleeing with what they can put into a hand-cart or on the top of a car. Getting across North Africa to Turkey is not cheap, especially if you start in Eritrea, or Somalia, or Iraq, or Guinea-Bissau, or any of a host of other countries. These people are not rich by European standards; they are poor, very poor. But for countries with an annual GDP equivalent of between $600 (Somalia) and $1200 (Eritrea) per person equivalent. These people are well-off by their local standards. And they have not paid for this trip on their credit card or some other promise of future payment. The traffickers do not take credit, they take cash. 
  2. The traffickers are cashing in on a combination of political instability and a market. Get into Europe for a price. These traffickers are advertising on Facebook, and have little difficulty gaining clients. There are advantages to being a people-smuggler. Compared with drug smuggling, the rewards are comparable, the penalties less, and the market booming.
  3. European governments treat Illegal Migrants arriving in boats dramatically differently from Illegal Migrants arriving by aeroplane. Should you attempt to enter Europe illegally by an airline, the airline carries the cost or flying you back to the airport at which you embarked. This stops people who can afford $10,000 from simply flying to Sweden - they will be put on a plane back to where they came from. So why is it acceptable to arrive by boat and stay, but not to arrive by aeroplane and stay? Instead, they will commit a number of crimes, with the hope that if caught, they will fall on our mercy they will be allowed in.

So let's be realistic about a few things.

First, Illegal Migrants are not the people that we want to bring into Europe. Why? For the simple reason that their illegal actions have marked them out as individuals who will break the law to get what they want. These are not "innocents" cast out onto a dangerous sea. Most countries require background checks to confirm that migrants do not have criminal records, and in most cases will not grant admission to criminals. This is not unusual or in any way in violation of anyone's human rights. Image owning a shop, and in walks someone that you have on CCTV stealing from you yesterday. That person then asks you for a job working in your store. Are you going to hire this person? Do you have a moral obligation to help them? Countries are the same, and have the right and obligation first to their own citizens, and then to the rest of the world.

Second, allowing the Illegal (Economic) Migrants to stay sends a powerful message to the home country that Europe is open, and all they need to do is sell-up, and buy their way north.

Third and completely missing from the discussion; allowing the conditions for mass Illegal migration undermines and weakens the countries from which the migrants originate. Where an Illegal Migrant can raise, individually or through family, the $10,000 required for the migration, that is $10,000 that will never be invested in the home country. It is also $10,000 invested in undermining the confidence in their future, for those remaining in the home country.

So how do we stop the Illegal Migrations? Instead of just blaming, I'm going to give some concrete suggestions.

  1. Care for the Illegal Migrants, house them in camps and determine which are legitimate asylum seekers. Feed them, educate them while they are in the camps, treat their illnesses. Show compassion. Show respect.
  2. Perform true and detailed screening to identify the legitimate refugees in danger if returned to their home countries. This is compassionate, legal, and moral.
  3. Then automatically return all Illegal Migrants to the country from which they departed to arrive in Europe. I am not suggesting sending them back to a place where they are being (if they were being) put at danger (and if that were the case, then they would have a legitimate claim to refugee status). But if they climbed on a boat in Libya or Turkey, then just as is they climbed onto an aeroplane, they are the responsibility of that country.
  4. Publicize in home country journals the return of the Illegal Migrants to the country from which they departed (not their home country). Make it clear that Europe will accept legitimate asylum seekers, and will return those that are not.
  5. Invest in development programmes in the home countries, where such development is possible. After all, Somalia is a source of Illegal Migrants, a home to radical Islamic fanatics who would love to butcher non-believers anywhere (sleeper cells anyone), and a country in which effective development aid is almost impossible.

None of this is cheap, but it is much cheaper than dealing with the waves of Illegal Migrants yet to come, and far more humane then suggesting through our actions that their best option is to cast themselves into the sea. Europe has a right to accept the immigrants that European countries select, not any criminal that manages to make it to shore.

(Disclaimer: I am a serial economic migrant, who has done so legally every time I have moved between countries.)