Systemics: Time for major re-thinking (Eurozone. EU, world)

If 300-350 bn Euro of debt cause the Eurozone, EU and world economic systems the problems we have seen, then these systems are really flawed.

In other words, the "Greek crisis" exposes how flawed Euro, EU & world (inclusing the US) systemics (economic-financial, business, political/policy, social, etc) are!

Major re-design needed.

United States of Europe sans UK, France & Germany?

An outside the box syllogism, prompted by current developments in European and EU Affairs:

Maybe Europe is not meant to be fully united (ie political union).
Maybe is meant to consist of 5 separate political entities:
1) UK,
2) France,
3) Germany,
4) Russia

plus

5) a United State of Europe new country, comprising of a political union of most of the rest of Europe's countries (ie 24+ federated member states)

Plutocrats?

I first wrote these thoughts some 7 to 8 years ago, to show the complex and often oxymoronic nature of the "systemics" that exist in the world today. I kept no copy so this is a reproduction from memory. It is more relevant or if you prefer "current" today, in 2011, than it was in 2003/04.

1) A worker is laid off.

2) A TV viewer complains about the quality of content.

They both blame the "system" or various other alleged culprits.

Yet here's the hitch:

1) The worker has been laid off because his/her employer is under pressure by the financial markets - analysts - financial managers to perform better, by cutting costs. The worker has saved or invested X USD or Euros or Pounds etc either directly, via a bank deposit, or a portfolio or money market or other instrument, maybe an IRA (US or similar instrument) or indirectly, via a pension fund, private, semi-private or state operated, in shares or bonds including those of his/her employer. He/she may be aware of that or not.

So in effect, he/she loses his/her job because of the pressure the managers of his money put on his/her employer to perform better and thus give him/her the max ROI possible!

Of course the marginal gain in ROI from the loss of the job is oprobably much smaller than the loss of salary income.

So, in 2011, when we talk of the plutocrats or "the capitalists", do we really know who we are referring to? Do we forget that most investment, money etc managers compete with each other to attract and maintain the "business" of this worker as saver/investor, directly or indirectly? How many investors, be they in the 1% or 99%, investors of 1000 or 1000000 USD or Euros etc choose Socially Responsible Investments or managers who invest their money in such?

2) The viewer happens to be a business owner. His/her company advertises on TV and/or radio and.or new media and/or print. In their effort to attract the widest audience possible and offer his/her company the best return on their ad spend, many/most media put out lower "quality" content than they otherwise would, thus prompting the reaction of the viewer. Little does he/she know that he/she is partly the culprit of the dynamics that lead to the content he/she does not like!

Complicated times. Not suitable for simple models of causality!

So who have the power? The money-crats or the managers of other people's money? Or everyone and no one? Is it a runaway train?

Food for thought.

Private and Public Sector: To each their own

As I have argued before, (see eg August 14, 2011 post: EU & USA: The right policies can come from the center) our times call for a system that provides the basics to each human and leaves them free to pursue or not the rest.

As I wrote in said post "Most political parties and political/policy platforms to the right and left of the center miss the concept that some things are better done by the market, some are better done by the public sector (aka the state). Each has activities where it is stronger than the other. Neither the (financial and other) markets nor the state should be an object of political or philosophical worship!"

Eg social security including healthcare insurance and healthcare itself are better provided by not for profit state owned or run systems (aka the European Social Model).

The current crisis in Europe and the US does not mean that European cannot support its Social Model. It means that not only social security but banking as well (except maybe for investment banking) are better run without a profit making goal by the state. If the state is to guaranteee all or most deposits, which it should, then why not own/run the banks too?

As I proposed:

"The center I am referring to recognises both:
a) the need to secure peoples' basic needs and
b) to give people more freedom in pursuing wants and dreams

in their work/economic or social or other aspects of their lives"

That is the basis for policy making in 2011. For the 99%. The private for profit sector is better at doing many many things. But not those that constitute basic needs such as healthcare and banking/savings keeping.

npthinking Twitter statistics

In the period from September 29 to October 15, according to twocation.com data, the followers map of @npthinking changed as follows.

There was a increase of 4% in the total number of followers, from 1459 to 1521 (+62)

The number of followers living in the Eurozone increased from 636 to 674 (+38) to 44% (stable)
The total number of followers living in the EU increased from 830 to 856 (+26) to 56% of total (stable)
US ones from 436 to 458 (+22)

So USA+EU increased by 48 out of the total +62.

Followers living in native English countries up 887 to 923 (+36) to 60% of total (stable).

These are the % of some country markets on the total (1521 followers) on October 15:
USA 30,10%
Canada 1,70%
Australia 2,80%
UK 11,10%
Belgium 4,70%
Greece 13,10%
Ireland 15,00%
Spain 2,50%
Germany 2,20%
France 2,20%
Portugal 0,60%
Sweden 0,30%
Italy 1,40%
NL 1,10%
Indonesia 0,30%
Ukraine 0,80%
Mexico 0,60%
Cyprus 0,30%
Denmark 0,30%
Estonia 0,30%
Austria 0,30%
Finland 0,60%
Norway 0,30%
Holy See 0,00%
Hungary 0,30%

Largest increases in absolute numbers since September 29:

USA + 32 followers

Belgium +16

France +10

Australia +10

Italy +10

UK +10

NL +5

while largest decreases where:

Portugal -7

Sweden -11

Canada -14

The real issues in EUrope, beyond London vs Brussels, and EPP vs PES: Polynomy is a key one

Polynomy and red tape, be it "made by Brussels" or "made in Britain" or France or Greece or Italy etc is the No 1 problem for SMEs, growth and jobs.

What do I mean by that?

That the real issue is not the transfer of legislative power or policy competences from member states to the EU or Euro institutions, or the re-patriation of them (see Cameron's EU agenda) but uniform yet better and fewer laws and regulations regarding the real economy of workers, free lancers, micro firms and SMEs of EUrope.

In other others, the problem is an interventionist approach that can be found in most legislation in EUrope, be it made by the UK Labour or the Tories, PASOK or New Democracy in Greece, PP or PSOE in Spain, etc, or a conservative (EPP) or PES (Socialist) majority in the European Parliament, the various Councils of the Council of the EU and the European Council and of course the College of Commissioners (most of them have a political/party affiliation, at least before they join it).

Of course that does not imply a libertarian approach to policy making and legislation. But a quite less interventionist one. More of a matter of philosophy than political ideology, actually.

See also my previous posts:

The recipe for growth and jobs

Can a conservative Europe be a united one?

EU & USA: The right policies can come from the center

World (econ/trade) Cup news and dynamics!

""We are in trade war. But today we’re fighting back,” said Democratic Senator Sherrod Brown" after the US Senate passed a "China currency manipulation" bill (See "Senate passes China currency manipulation bill" in The Raw Story, October 11, 2011).

1) "War" is a heavy/loaded word, that I would not use, but Senator Brown is right in that globalisation has turned into a fierce economic/trade World Cup instead of a cooperation "game" of nations. So what was billed as a world championship primarily between multinational corporations (and "local"/national champions (companies)) has gained a second level, the economic competition (World Cup) between countries. With exports (goods and increasingly services), investment, etc as its tools (instead of eg a ball, see football). Countries are ranked by various sources (including the WEF's Global Competitiveness Report, the rating agencies, etc). Based on GNP/GDP, trade or CA balances, etc. The genre of the game is mostly competitive, and mostly fierce, not cooperative.

After the 2008 US subprime driven crisis, some spoke of "over-dependency on exports". Others spoke of "over-dependency on the financial industry" (eg of the UK/London, by a now former German Minister). An equivalent to the US over-dependency on oil that even GW Bush Jr. spoke of?

In more recent months, the US has accused Germany of exporting too much and consuming tooo little! We are also reminded that many economists especially of past times have argued that trade is supposed to be in near balance and that excessive trade surpluses are as damaging to the world economic systemics as trade deficits are.http://www.blogger.com/img/blank.gif

Some have even argued that "good" domestic consumers are a precious asset for a country (eg the US, consumption is 2/3 of the economy). Of course it helps when the market is big enough (eg the US 300 million one) and realy internal and single (unlike the EU not that single after all Single Market and the Eurozone (330 million ie larger than the US in theory, but not as internal as the US in practice). See also my August 29, 2011 post: "Show me your consumers and then I will show you mine!"

2) Back to the bill that just passed in the US Senate, it is not active yet anyway. Merely passed in Senate. Not the GOP majority House of Reps, at least not yet. Normally pro-free trade USA (Bush even tried to create a Free Trade Area for the whole Americas (North, Central and South in Mar del Plata in mid-2000s) but did not inspire most other Americas countries, that are nevertheless into things like Mercosur and the evolving UNASUR, while NAFTA is not too big a success according to all 3 members, and the Democrats in the House and Senate had managed to stall the adoption of bilateral agreements that Bush had concluded) But with 2012 so close, will GOP stand on its pro "free trade" principles or take into account the electoral climate too? By the way, as far as I know, Obama wa never given "fast track" powers like the ones the Democrats led House and Senate had given Bush to negotiate the now shifted towards a "lite" version WTO Doha Round of trade talks.

And while WTO exists with its 150+ members, internationa trade is still not free (only more free than it was 20 or 30 years ago) and according to many studies that there too many "hidden"/covert barriers/protectionist defenses employed by countries (eg many G20 ones) that otherwise partake in the G20 and others' public rhetoric pro-free trade!

4) I have been pondering (and blogging) as per how long before USA and/or EU realise that for them WTO membership has more restrictions than opportunities (& that they can be better served via bilateral agreements between countries, not even free trade areas)?

5) I am not even sure how compatible the US "China currency manipulation" bill is with WTO rules! Could US measures against China activated via this bill lead to China complaint to the WTO that currency manipulation is not covered by WTO rules (and thus not forbidden) and that thus the US measures justify WTO approved counter-measures by China? Not an expert, but wondering.

6) Of course, nowadays, there are only 2 economic super-powers in the world today: China and USA. Russia could be added as a +1 (in a G2+1 instead of G7+1 configuration). The U is not an world economic superpower, unless it unites politically. And the UK, France and Italy have long lost real "G" status (eg G7).

What about Germany, the ex-No1 exporter in the world (now it is China)? Well, Germany is economic/trade champion only in a EU league, not the world league, since most of its exports stay in the EU! Plus Germany (unlike USA, China, and potentially India and Russia) has too small of an internal market to "survive" bumps. That is why it needs EU/Euro.

7) Daring to be different. Not sure how Russia's plans to be a world power via oil and natura gas are working out (calls for a return to the USSR's military superpower status would suggest that the oil and natural gas strategies are not working too well), but Russia is clever in that it puts extra criteria for foreign state (vs private) investments in Russia. And no WTO membership (eve if it is aid to be vetoed by Georgia). Why? Because while USA and Germany had to offer people rebates as a stimulus for their car industries but to be consistent with WTO rules they had to make the rebates available to buyers of made in WTO inports too, Russia, not being a member of WTO merely hiked the tarrifs of car imports!

To be continued in a market near you and around the world!

Towards a new paradigm for the "West"?

1st draft of a brief working paper

1) The West's dominant paradigm has failed to gain global approval - appeal

2) It has even failed to gain approval - appeal in a large part of Europe and the EU

3-4) It is now being challenged in some its core hubs (UK, USA) while in Germany and North - North-West Europe it is trying to gain appeal via populism and xenophobia

5) Is there a solution? a) To incorporate other existing paradigms frm the rest of the world & from rest of Europe b) to go back 2 its roots

6) Option B: Go back to its roots & rebuild from there. But which are its roots? Renaissance, Rome, The Hellenistic Times, Athens?

7) What would the paradigm today be if Alexander the Great had not died but had lived to further develop his own "globalisation"?

8) Alexander's prepared the Hellenistic Times by respecting Egyptian, Persian & other cultures and merging them w/ the Classical Greek one

9) It was left up to his successors & lasted not long enough. Had it lasted longer, would Rome have emerged the way it did?

10) Option A: Can West's Times respect & incorporate other world cultures the way Alexander incorporated others to the Classical Greek one?

See also: My post "Globalisation, today and in 300 BC" (April 20, 2008)

The effect of US and European polynomy on growth and jobs

US & European polynomy (ie too many laws, regulations and red tape) has suffocated the real economy and especially the micros & SMEs.

Unless fixed, don't expect growth & jobs in the US & EU

The "Vikings Invasion" model for SME led exports!

1. Intro:

Who in Europe has really cared to examine "sur-le-terrain" the real problems of SMEs and micro firms in the EU's or Euroland's periphery and find real solutions to them?

Greece's rebound in growth and jobs can come from a mass/pack of new exporting micros & SMEs that will "invade" with their products and in some cases services, the Euroland, the EU Single Market and world markets as the Vikings ships invaded Europe 1000 yrs ago.

Not via large corporations or large private investors.

2. Business as a revolution:

October 9, 2011: 44 years without Che!
Che, an Argentinian of Spanish and Irish descend, had concluded that Latin America's ingrained economic inequalities were an intrinsic result of capitalism, monopolism,neocolonialism & imperialism.

Which of these variables apply in Europe today?

What would a European Che do today? IMO go to Greece or Ireland or Portugal or the Baltics, the EU's periphery, and start an exporting SME. To the Eurozone/Euroland, to the EU Single Market or even to the global one!

Because I ask you, what is more revolutionary and heroic than starting an exporting SME in the Euroland of 2011, especially its periphery?

Plus: Not tolerating monopolies, oligopolies, monopsonies and oligopsonies is not a Leninist monopoly! Real free market fans share this POV!


3. Scope

It is true that most SMEs are occupied with local and national regulatory, redtape and other issues.

That is precisely the main problem of SMEs. Their local "worldview". That is why I call the model I propose "Vikings invasion"!

The EU27 even EZ17 spaces are alas a bureaucratic swamp where mainly large companies and corporations can "work"/operate! The swamp is created mostly by local/national regulations/polynomy and resulting red tape.

Almost 18 years of BS re the EU Single Market is enough!

SMEs need a REAL Single Market now!

The Europlus Six-Pack is no solution to Europe's growth and job creation problems.

The "Vikings Invasion" SME pack-exporting model is!

4. The "Vikings Invasion" model for SME led exports (and growth and jobs creation)

Look into history texts on how (method) the Vikings invaded and dominated Europe for 3 centuries! The key success factor was the independence of each vessel. Yet these vessels formed a "loose" pack that because of its non-coordinated nature it made it difficult for others to defend against! Viking "SME" vessels, due to their size, used Europe's inland waterways to reach all parts of Europe.

This model is what Greek, Irish, Spanish, Portuguese SMEs and their economies need today!

The "Vikings invasion" model for exporting micros & SMEs can be a solution not only for Greece and Ireland & but other EU/Eurozone economies too!

Money and the European paradigm

The EU's so called "paymasters" have to realise that money does not define the European paradigm.

Who was ready for Euro membership after all?

Was anyone but Germany and maybe NL ready for a Eurozone with a fixation on 2% inflation & a Euro >1.3 USD rate?

Not that global, not yet at least!

Whereas it is interesting to read attempts to find a common thread or paradigm to recent social developments around the world (North Africa, Europe, India, USA, etc), I am not yet convinced that such a thread exists at least in the way many suggest. The world is not that "global", at least not yet.

npthinking blog stats, September 2011

Sept 2011
Top 10 % of total pageviews

US 39.7%
Belgium 14.3%
Ireland 5.6%
Germany 2.9%
France 2.8%
Greece 2.5%
UK 2.3%
Canada 1.3%
Russia 1.1%
Israel 0.9%