7 points in defense of Greece

1) Greece does not use nuclear for energy thus does not risk the safety of others, as many other EU/Eurozone states (and others) do.

2) Greece does not use ultra low corporate taxation, thus does not take taxable income away from other EU/Eurozone and other countries/states.

3) Due to geo position (and lack of a US of E), Greece has to spend for defense per capita more than anyone in the EU. EU/Eurozone "paymasters" Germany, France, NL are among the main sellers of arms.

4) Greece has been too loyal a believer in the EU Single Market concept (but alas only on the imports side)

5) Greece joined the EEC and then the EMU/Euro primarily not for economic but other (especially security) reasons (many others did too).

6) Greece's geo location (no land borders with the rest of the EU until 2007 and none with the rest of the Eurozone even today) affects the competitiveness of its exports (existing and potential).  

7) Greece's geo morphology (islands etc) breaks its internal market into many local ones thus hindering economies of scale and competition.

The Euro was supposed to ...

The Euro was supposed to help intra-EU trade (EU Single Mkt).

Instead, it became a toy for CBs, MInFins (bonds etc) & fin speculators

EU Regional policy effectiveness considerations

The EU Structural Funds were supposed to help eligible regions of the EU better prepare for the EU Single Market.

Have they?

The Cohesion Fund for the EMU/Euro.

Has it?

Have these funds acted as an excuse or rather a diversion from incorporating regional policy in all other  EU policies?

US states: Winner-takes-all

Did you know that it's up to each US state to decide what allocation system for its electoral votes to use?

Most choose winner-takes-all.

That system heavily distorts the US popular vote in the results.

If freedom is indeed another word for Nothing Else to Lose ..

If freedom is indeed another word for Nothing Else to Lose, then the Greeks are approaching Freedom.

Faulty premises leading to faulty analysis and policy

As issues such as the Euro crisis have shown, many analysts & commentators treat economies or societies or states as a human person.

I propose that this type of analogical analysis is flawed and thus leads to faulty policy conclusions.

Countries, economies, societies, states etc are not persons. they are systems and the suitable analysis is systems analysis. That's my view.

Austerity, marathons and high jumping

German and other commentators are now arguing that Greece has not shown enough progress.

On the other hand, stats from Jan-July 2012 have shown that the Greek budget has performed better than targets/expectations.

So is the claim of the commentators valid for the pre-2012 period?

Well, my view is the following:

Austerity is like (I usually don't like to treat for analysis purposes states or economies etc as persons but making an exception only for the purpose of demonstration of a point via an eloquent metaphor) starving someone, then making him/her run a marathon and accuse him/her when he/she faints at the 5th km from starvation and fatigue!

In my opinion, the goals set by the two Greek MoUs (MoU = Memorandum of Understanding) were too high/unrealistic/punitive. When this happens then even the achievement of lesser goals is hampered. To use another metaphor, from track and field. when the bar is set too high, this causes counter-productive "stress" to the athlete, thus can lead to very poor results! More realistic bailout terms/goals would have caused less "stress" thus could be reached if not at 100% at least near that.

If a member of the Euro trades mostly outside the Eurozone ...

1) If a member of the Euro (whichever these members are) trades mostly outside the Eurozone, does it make sense for it to be in it?

2) If a member of the EU and its single market (whichever these are) trades nostly outside the EU, does it make sense for it to be in the EU?

3) Membership of the EU single (or even common EEC) market "means" a state has focus inside the EU mkt (short though of a Fortress EU mentality)

4) The rationale of the single/internet EU market of 500,000,000 is for it to be (oh well) internal/single. And for members to trade mostly inside.

5) Global mega exporter Germany sells 40% in the Eurozone and 60% inside the Single EU Market. Makes sense!

6) If most EU members trade(d) mostly outside the EU, then what's the point a) of the EU Single Market? b) of the EU?

7) But then again quite a few of the 27 joined the EU/EEC primarily for security rather than economic reasons.

Euro irrational

What defies logic (and other things) is that even those who know that Austerity is not the solution insist  that Austerity commitments are honoured as is, not even adaptable.

Real policies for the real economy

Real policies for the real economy

And real regulations for the financial economy/matrix.

They are both urgent needs.

The key to a well working capitalism

The key to a well working capitalism lies in the balanced mobility of financial vs human capital.

Since in the last few decades at world (GATT then TO) and regional (EEC/EU, Mercosur/UNASUR,  NAFTA, etc) freedom/mobility of not only capital but goods as well has increased strongly, while legal ("economic") migration has actually decreased, no wonder for Capitalism's imbalance and thus crisis.

EU Single Market and the EU's SMEs

The EU Single Market was supposed to lead to EU-wide market segments and niches thus

a) helping niche micro/SMEs

b) consumer niche tastes!

Did that happen?

Personal liberty is a noble goal but ...

A comment on the occasion of Ryan's entry in the race (and his budgets):

Personal liberty is a noble goal but cannot act as an excuse for social non-empathy and lack of human solidarity.

Paymasters, in the EU and the US

Why is no one talking of "paymaster" states among the 50 US states?

Because the US has a real union, unlike the EU/EZ!

What some people don't seem to get re the hard Euro

In the years of the hard Euro, ie when the Euro was (until relatively recently) quite high compared to the USD, the Yuan and other currencies of major trade partners (and tourist origins eg USA),  that  suffocated much of EZ business because it not only had a hard time exporting to non-Euro markets but also faced (when eg Euro was 1.4 or 1.5 USD) more fierce competition inside the Eurozone and even their own "national" markets.

So while interest rates for Eurozome member states were lower than past thus allowing them to borrow more (via sovereign bonds) than the pre-Euro years, they were still high enough (in order to stick to the 2% inflation target of the then ECB directorate) compared to US, UK and other central bank interest rates, for the Euro to be expensive Euro vis-a-vis USA, China, etc.

So while the budgets of Euro member states benefited from cheaper money, and maybe companies too, the price competitiveness of many Eurozone businesses (including tourist ones) took a severe, IMO, beating.

Guess whom (which country) I have in mind today?

The Eurozone's hard Euro policy (explicit or implicit, as a result of inflation "phobia"  thus interest rates higher than UK and US that pushed the Euro up) benefited a lot of non-EZ and lots of non-EU countries' exports! Even "spoiled" some of these countries' exporters and leaders.

Germany and Robert Redford in the Candidate!

Germany in the last few years reminds me of Robert Redford in The Candidate. It became the undisputed EU's leader but then asked, "And now what?"

The truth, alas, about the EU is ..

The truth, alas, about the EU is that none of Germany, France and the UK know how to lead and the others do not know how to work as a Team!

All in (centrist) moderation?

Some say that the political center has no ideology. Well, for one, "all in moderation" is a key centrist philosophy, made in Ancient Greece.

Moderation, or if you prefer, a balance, between individualism (as opposed to the libertarians) and collectivism (as opposed to socialists and of course, communism).

Moderation between austerity and Keynesianism.

Moderation - balance in regulation and legislation. No zero state (libertarians) but not over-legislation, over-regulation and red-tape labyrinth (statists).

No worship or dogmatic attachment to either a) the public or b) the private sector. To each their own, depending on the structure of the industry/sector/economic activity.

Understanding that neither the markets nor the state are "wise".

How many political parties in Europe would be define as centrist based on the above? Which?

Games, in sports and in business

Seems that some have it all wrong. You actually compete in business but you participate in sports.

Is Germany a bull in the Eurozone's China Store?

Some thoughts of mine on PressEurop's very interesting report: Berlin still selling too much (14/8/2012)

1) The FAZ comments IMO, at best, show (let's call it) "non-systemic thinking".

2) Is Germany exporting too much or importing and in general consuming too little? Too little from the Eurozone?

3) In terms of trade surplus, Germany is a bull in a China Store. Funny thing is, Germany's inflation phobia makes China another bull in the Eurozone and EU's "stores"/mkts for goods.

4) Germany saves "a lot" which means it has to find outlets for its investments. No wonder Germany had invested "a lot" in the PIIGS (while selling "a lot" to them too). The rest is not "rocket science"!

5) But the strategic/systemic question is: Is Germany too big to be part of the EU/EZ but too small to be a power on its own? And if Germany is too small to be a world power on its own, what do that say for eg UK's ambitions? France, sometimes arrogant, nevertheless knows it needs "Europe". UK and Germany (and others) act as if they do not.

6) Marketing: What exactly is Germany exporting that the Eurozone (40%), EU (60%), the world, a) cannot substitute or b) always need/want?

7) So with Germany having cornered the high quality market, China the low price one & US the new tech one, what's left for (most of) the rest?

8) Problem not only that Berlin still selling too much but its policy/philosophy not selling (in many parts of Europe/EU/Eurozone)

Where are the philosophers when we need them?

Where are the philosophers and other thinkers to speak in public (USA + Europe) about the values of Humanism and Enlightenment in these new Middle Ages?

These new Middle Ages when solidarity is branded entitlements, when the taxpayer interest is the political premise rather than citizen's?

The new Middle Ages when a mother of 5 is told she should have borne fewer children (instead of government/societal bonus, especially in seriously ageing countries like most of Europe)?

The new Middle Ages when "foreigners", especially economic immigrants, are the scapegoats for the problems in so many countries?

Where are they? In the media? In the social media, eg Twitter? Where are they?

The number one impairment towards competitiveness for Spain, Portugal, Italy and Greece is

Neither Austerity not Keynes is what South Europe needs the most, It's radical curbing of "polynomia" (over-legislation).


To put it differently, the number one impairment towards competitiveness for Spain, Portugal, Italy and Greece (and others) is a culture of over-legislation that suffocates people and small and medium size business.

Living in most societies today is like living in a condo with 100000 pages worth of rules or using a TV with a 100000 pages manual.



I am not sure whether it's bureaucracy that creates over-legislation or vice-versa, but the solution starts with curbing the latter first.

Products are tested for side-effects etc before they are released. But legislation is not.

Of course over-legislation is a global problem (even in the UK) but it suffocates Spain, Portugal, Italy and Greece the most.

The raison d'etre of politics is to produce public policy, not public relations. Political parties need to become policy making "factories"


But it should be noted that a fewer and better laws philosophy does not mean no laws, ie it's not a libertarian's wet dream.

The UK should leave the WTO instead of the EU!

The UK's June trade balance (goods and services) from £ billion -2.9 in 2011 to -4.3 in 2012! Without services, it would be worse!

The deficit in goods trade of the UK is greater with the rest of the world than with the EU (June 2012): -5.2 vs -4.9 (£ billion, source: ONS).

Also: June UK exports to EU fell 7.2%, but to rest of the world they fell 9.6%, thus debunking the myth that the UK is better off outside the EU and focusing on trade with the non-EU rest of the world!

So maybe the UK should leave the WTO instead of the EU!

Actually, since the UK is a member of the WTO directly and via the EU's membership, the UK should stay in the EU and convince it to leave the WTO (and replace it with existing and new bilateral agreements).

Their way or the highway?

Countries with large trade surplus take pride in their capabilities.

They sound like entrepreneurs who think they succeeded on their own.

They also sound like the scorpion in the Scorpion and the Frog.

Some @npthinking follower stats

2256 followers. 143 in Brussels (Belgium 160), 120 in London (UK 307), 33 in Paris (84 in France)

The following stats are based on tweepsmap.com raw data per country (Aug 6, 2012):

Based on 2256 followers:

1) The Eurozone followers are (only %s 0.05% (corresponds to 1.128 follower) and above listed)

13 of 17 Euro countries yield 0.05% or higher. Slovakia, Slovenia, Malta and Estonia yield less than that.

Greece 10.67%

Belgium 7.11% = 160 

Ireland 4.81%

France 3.72%

Germany 3.12%

España 2.74%

Netherlands 1.64%

Italy          1.15%

Portugal 0.77%

Finland 0.33%

Cyprus 0.22%

Austria  0.11%

Lux          0.05%

Total EZ:   36.44% = 822

2) Rest of the EU (EU minus Eurozone):

7 of the 10 clock 0.05% or more:

UK        13.62% = 307

Other non-EU 1.64% = 37

Analysis:

Sweden 0.71% = 16

Denmark 0.33% = 7 (7.4)

Hungary 0.22%

Latvia 0.16%

Bulgaria 0.11%

Czech Republic 0.11%

Total non EZ EU: 15.26%, 344 tweeps

1+2 (total EU27): 51.70%, 1166 tweeps

3) USA 22.05%, 497 tweeps

4) Rest of the world (world minus EU minus USA): 25.8%, 582

Cities:

Athens, Attikí, Greece 6.73%
Brussels, Brüssel, Belgium 6.35% = 143
London, England, UK 5.31% = 120
Somewhere, UK 2.74%
Somewhere, Greece 2.46%
Somewhere, USA 2.3%
NYC, New York, USA 2.3%
Dublin, Dublin, Ireland 2.08%
Los Angeles, California, USA 1.59%
Paris, Île-de-France, France  1.48%
Somewhere, Ireland 1.48%
Somewhere, England, UK 1.2%
Berlin, Berlin, Germany 0.98% = 22
Somewhere, California, USA 0.98%
Thessaloníki, Voria Ellada, Greece 0.82%
Madrid, Madrid, España 0.82%
Chicago, Illinois, USA 0.71%
Toronto, Ontario, Canada 0.66%
Washington, District of Columbia, USA 0.66%
Barcelona, Catalonia, España 0.6%

Some things are not the Greeks' fault!

The Greeks/Greece have in the last 2.5 years been blamed by many analysts, commentators, media etc for the Eurocrisis. The main premise for the blame is their perennial government deficits and resulting national debt. One can debate that, but that's not the point of this post.

The point is:

So many allegedly "successful" country (national) economic models are actually based on gimmicks, "piggybacking" on other countries, myths/stereotypes, etc!

For example:

Some countries over-rely on exports (trade surplus). While some exporting is of course a very good thing, there are limits. A country cannot and should not rely too much on the consumers of other countries (that a perennial trade surplus indicates). All in moderation.

Some countries rely on tax competition (too low tax rates, off-shore tax heavens, etc). Nothing to be proud of. On the contrary.

'Some countries' economic model takes advantage of nuclear energy, putting into risk their neighbours and the whole planet!

The same, but to a different extent and nature, applies to CO2 emitting industry. Past and present mega polluters (see global warming).

Crucial events/factors in EU/EZ systemics and dynamics

Crucial events/factors in EU/EZ systemics and dynamics have been:
1) The enlargements. They did make deepening harder after all (UK got its way but got bit some way)
2) BuBa's inflation phobia
3) China's Dec 2001 WTO entry

(3) is the one that disrupted EU/EZ systemics and dynamics the most, esp PIIGS' (and others).

In a "more closed" EU Single Market (or in a WTO withoit China), PIIGS' wages would have to compete with eg Slovak and Bulgarian ones. But now they have to compete with Asian (mostly Chinese) ones.

Capitalism is getting old. New product needed.

Is socio-economic "Calvinism" and the related "pure" version of capitalism (see Max Weber) marketable/exportable to a) South Europe and the b) rest of the world outside Europe?

Is it dominant in the US anymore?

It seems not, based on results.

New "product" needed.

If the world wants to maintain freedoms in trade and capital

Systemically speaking, if the world wants to maintain freedoms in the trade of goods  and the movement of capital, it must liberate movement of labour & services too.

Otherwise, look at the global, EU, EZ other systemic crises driven by uneven freedoms and the systemic instability they cause. 

Eg see what Achilles Heel for the EU Single Market and Single Currency low intra-EU labour mobility is.

Towards more national and local or continental and global?

The argumentation that subsidiarity drives focus at national or local level is faulty!

On the contrary, the most appropriate level of decision making is becoming more continental and more global (Earth-al).

The opposite is a fallacy.

Global warming is but one of the issues that require global scope and drive this dynamic towards continental and global level "subsidiarity".  Financial regulation is another.

As per things such as the EU, Mercosur or UNASUR, ASEAN and other dynamics towards continental scope in statehood, they are more useful now than ever before. In spite of the populism/narratives re national and local dynamics. They are part of the problems humankind faces, not the solutions. From city states to national states to continental and hopefully an Earth-state.

In indeed the appeal of local and national is emotional, but reality paints a different picture. Time for gutsy political and philosophical leadership to pave the way.

Who are the real free-riders?

One could argue that countries that rely on nuclear (and to a lesser extent CO2 emissions) are worse offenders of EU/global community interests and "free-riders" than debtor countries.

They expose neighbours and the rest of the planet to risks for the own benefit.

In search of (some) consistency

There is a case to be made for:

a) free trade
b) managed trade
c) fortresses

But each model has to be consistent not "have a cake & eat it too" stances by some countries that think that they can adapt the rules of the game as (they think) it fits them.