For global and EU systemics to work they need more than trade flows. Or less

Here are some systemics and dynamics thoughts (written and tweeted Nov 24, 2012):

What libertarians seem to forget imo is that any group of more than 1 person constitutes a "society" or polis etc. Laws are part of explicit and informal "social contract" between members of a society/group/polis (politics comes from polis). The economy is also a dimension of a social contract when families stopped self producing everything and started trading w/ each other. Intra-polis trade between families created need for prices (even in barter trade) and thus money. But in basic intra-polis/village trade no one was really left "jobless", was mostly specialization benefits.

I am sure economic theories/models (be they of 5000 BCE or 2012 CE) worked much better in 5000 BCE! In a way, extra-polis trade (see eg explorers to "new worlds") disrupted the social/econ contracts/balances of de facto closed societies. Not to mention that lack of competition rules probably had created warlords and other oligarchs inside closed systems/cities/villages.

Why do I say probably? Cos I was not there to see for myself, at 5000 or something BCE. Were you?

Opening up and allowing trade between families in a polis came as part of social and legal contracts/laws/balance. But but inter-polis (ie inter-national) trade/exchanges were not coupled by common laws and a social/econ contract! Were they? No WTO etc.

That is still in 2012 the underpinning element of trade and other inter-state exchanges of all kinds: They fall outside national scopes. Of course so many are in favor of free trade without unification, it sort of allows them to have the cake and eat it too!! Think about it!

Trade between entities not bound together the way a country is bound together is sort of having a cake and eating it too! Sort of "dumping".

That is also part why most economic models/theories have failed. They deal in principle and de facto with closed systems. Look at GATT and the WTO: It regulates basically trade but fails to deal with many other dimensions thus systemically unbalanced. What I am saying is that trade, investment, migration and other flows need to happen within a "system". Is such system compatible with any sub-global/earth sovereignties? In other words is even trade compatible with national sovereignty since separate social contracts?

Can comparative advantage really exist in a league (competition) between 200+ national economies where there is no actual "league"? Does this mean that the world needs to become a federal political entity for "fair" trade to exist? Is it otherwise an "animal farm"? Can national social contracts exist at the same time as free trade exists? Much like libertarians who want to exploit imo the benefits of a society (econ is a social activity) w/o the "costs" of a society ... Or look at how some in the UK want to free-ride Europe and the world w/o any associated social contracts or rules! Pick and choose only!

Thus no wonder that many of the arguments used against the EU are actually prompting localism/separatism in many EU member states!To use absiloute logic, either sovereign states need to become like eg Cuba or North Korea or join together in a federal entity!!

But in any case, imo trade was, back when it started in human history, the first opener for more open systems. But that was thousands of years ago. Not in 2012! The systemics to work need more than trade flows. Or less.

The idea that one can be a sovereign state (city, national, etc) and still engage even in trade with others is imo challenged in this era!  It worked in 1200 BCE or 1400 CE or even 1949 (GATT era) etc but not in the systemics and dynamics of 2000s!

Thus it should come as no real surprise that European and US and world systemics and dynamics are out of control in the 2000s and 2012 and that globalization, regionalization (EU, UNASUR, ASEAN), nationalization (UK), localisation/separatist dynamics do co-exist in 2012!  Because systemically speaking the system is out of whack! Freedom of trade and investment cannot work systemically for long w/o full system integration.


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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.

Economic immigration in the era of WTO free trade

Economic immigration should be at least as free as WTO trade (among WTO members).


Another option is for economic immigration terms to be included in bilateral trade/economic agreements

Good houskeeping, the European social democratic way

Good "housekeeping" in the EU member states is always a must but Sarkozy, the current Dutch government, Merkel and others must be sacked for obsessing about it!

For setting targets that are too unrealistic, in terms of the actual numbers as well as the whole philosophy of setting strict targets and obsessing about reaching them. That is also a problem with inflation (the 2% "magic" target), even the targets of the Europe 2020 "growth Strategy". Economics, including fiscal and budgetary ones, are not like Physics or Chemistry, they are part of social sciences and as such they must be treated with a grain of salt. People are not robots, neither are their economic, social, political and policy  actions.

Some politicians are willing to bend to the demands of financial markets.

Since many years ago I have written about the demands placed on listed companies by the financial market. The pressure to meet specific targets on a quarterly basis. And the negative impact that this has on the medium term performance of the corporation.

In recent years, the same pressure is being put on countries, their economies.

Time for that to stop! That should be one of the philosophies of the social democrats in the EU27.

Of course states, as companies do, need to improve their accounting procedures, know what they are spending and why (the why part is management accounting as opposed to financial accounting). To keep their finances solid but without "human sacrifices" of the obsession austerity kind. The preservation of the European Social Model and the need for the recognition of the positive role economic immigrants can play in the funding of the social model of an ageing EU27 (instead of scapegoating them).

To make a humanist EU the beacon for others in the world, since the American beacon has been dying out in recent decades (see also the resistance to not only HillaryCare of the Bill Clinton 1st term but also of Obamacare, especially the public option).

In a secular Europe, economic religions such as growth via austerity, classic, neo ir ordo liberalism and of course neo-Marxism have no place! Policy must provide solutions for real problems of real people.

On enterprise and legal certainty in the 2012 world

"Argentina's "unilateral and arbitrary" decision amounts to an attack on the exercise of the free enterprise and the principle of legal certainty" says a resolution adopted by The European Parliament on Friday.

The EP also says that the European Commission should use all appropriate dispute settlement tools available at the WTO and G20 to respond to Argentina's "unilateral and arbitrary" decision to expropriate the YPF energy company.

Whereas I am not taking sides because I am not aware of the full details of the specific issue that involve a private company (and a formerly private one), here are my POLICY related comments.

1) Does Cristina Elisabet Fernández de Kirchner's (Argentina's President) concept of national sovereignty vs David Cameron's one. Compare and contrast.

2) Not sure WTO rules cover such issues (as well as many other global economic ones). Is the EU asking the WTO to become an agency of global economic "governance" (compare and contrast issue with the issue of "economic governance in the Eurozone). What can G20 do or can do withiu its present and appropriate role? This case is maybe one more reason in favour  what I have been arguing re EU and US exit from the WTO and reliance on bilateral full topic agreements (covering trade, investment, economics, immigration, etc) between eg the EU and Argentina or EU and Mercosur or UNASUR.

3) Re the EP's claim that "Argentina's "unilateral and arbitrary" decision amounts to an attack on the exercise of the free enterprise and the principle of legal certainty. Are there not many many other factor that "attack" free enterprise and especially legal certainty inside the EU and the Eurozone? Such are polynomia (over-legislation) and red tape? Eg the absence of EU direct tax competency and laws?

4) I have commented before that the G20 membership is high on anti-protectionist rhetoric and low on reality,  with many and significant hidden protectionist practices and barriers to trade.

Thus, no matter who is "right" in this case, this case serves as yet another food for thought stimulus for the policy issues I raised above.

PS. I have argued that given the global dynamics it is maybe time for the EU to raise its walls (economic fortress), rely on bilateral agreements, not WTO (see China effect) and develop a common and humanist immigration policy for economic immigrants (after all, the EU27 population is ageing and needs external population boost, for reason including the viability of its Social Model). Bilateral economic agreements are a good place to include bilateral economic immigration agreements.

Wave goodbye to the Western Way of Life? But which Western way of Life?

The initial impetus for this analysis was today's (Friday) release of the US Department of Labor's data for March re employment (see a press report by BBC News) as well as a phrase from a statement by the US Secretary of Labor Hilda L. Solis on March employment numbers: " we need to invest in community colleges and job training programs that prepare our workers for 21st century jobs".

21st century jobs? Studies have showed that the biggest bulk of jobs creation in the US has been in low-skill - low pay jobs such as carer and related.

Plus the US medical sector (mostly private as opposed eg to Europe) has been a job creator even in the midst of the US economic crisis. Please note the continuing resistance by lobbies and others to Obamacare, even without the original public option.

Please also note my view that the No 1 target of the so called "Euro crisis" is not the Euro but the so called European Social Model which is inter alia based on public health insurance and healthcare services.

Take also 8 minutes to listen to my theory on the fundamental causes of the US subprime crisis.

You may also want to read my February 3 post "If GDP per capita in USA, EU, China, India was to converge then ..."

Ms Solis argued inter alia: "We've added nearly half a million manufacturing jobs since February 2010. This week, major U.S. carmakers announced that their U.S. sales rose last month to the highest level in at least four years.... the industry has seen a complete turnaround, adding more than 230,000 jobs since the summer of 2009".

Yet for decades now, manufacturing jobs have been moving East. before China entered the WTO on December 2001, Japan was the main target of complaints by US lawmakers. Since China, a 1.3 billion entity still in communist political mode but with a capitalist model of economy in operation in recent years, has entered the "WTO trade game", the impact on the US and the EU (especially the Eurozone with its inflation phobia that has led inevitably to a hard Euro in most of the 10 years since the intro of the Euro notes and coins on January 1, 2002) is even more remarkable!

Are environmental policies and tools, prompted by global warming, the "wooden walls" (see Ancient Greek history) that will save Western world manufacturing and related jobs?

How about the so called "Western Way of Life"? First of all, what is it? Is it the European Social Model (watch it being destroyed in Greece and other PIIGS as well as in the UK) or the US "success or bust" model (aka venturing without a safety net)?

So what if US unemployment remains above 8% (with more low skill - low pay jobs) and EU unemployment is soaring? As long as the financial - health insurance - healthcare sector is doing well in profits and in jobs ......

Note also the recent initiative of the 5 BRICS countries/economies to stand up to the current "world order". as well as India's refusal to allow its airlines to fall under the EU's  transport CO2 emissions trading scheme.

Plus, as long as listed companies are reaching financial results expected by analysts ..... Times are too financial and too jobless. Or is it because US and EU GDP per capita is starting to converge with China's via "free trade" etc? Growth without jobs (or with low pay jobs)? It's called productivity by some,isn't it? Look at what's happening with Greece's internal devaluation experiment!

And look at how the prices of things are rising in EU member Bulgaria as well as non-EU Albania (prices of food in Tirana are reported to be as high a in pre-crisis Athens) in spite of the fact that salaries in Bulgaria and in Albania have risen only a small fraction compared to the rise in the cost of living! Within the EU, people from the new member states have/are trying to partake in the western way of Life by moving. Romania's 2011 census reported a 12% drop in population compared to the previous one, leaving the country with just over 19 million inhabitants compared to 22 million only a few years ago. Trade or migration?

At the global scene, people are trying to partake in the Wsstern Way of Life either via economic migration (in spite of it being discouraged or outlawed by most destination countries) or via trade.

So as billions of people, in China, in India in other BRICS and other countries around the world (and in "New Europe") are making a rightful claim to the Western way of life, that way of life disappears. Means it was not viable to begin with, ie it was only meant to work for a % of the world, an elite?

In the "old days", eg in Ancient Sparta, the Spartans exploited an 8-fold population of the neighbouring Messinians as helots (slaves). To protect against their uprising, they (the Spartans) became soldiers for life and their state a military one. Compare that to the Athenians. But the Athenians' wall, built by Themistocles, the same Athenian who masterminded the win in the battle of Salamis, turned against them during the siege by the Spartans during the Peloponnesian War when an outbreak of the plague (be it Typhoid Fever or other, see About.com) killed 33% of the population, including Pericles.

The world as we know it via History, be it Rome, Middle ages Europe, etc, Charles Dickens' England, etc was mostly a world were elites enjoyed things the masses could not (that 99%).

It can be argue that the industrial revolution and the ensuing mass production techniques provided for a certain way of life for a much wider % than just the elites. To get a rough idea: One can calculate the 99% based on the whole world for this period, ie the Western world as the area of the planet where the elites lived (the 1%, 1% of 7 billion is 70 million, the combined population of the US, Canada and the EU is around 800 million, thus the world's 1% elite is 9% of USA+Canada+EU! Rough calculations, but indicative of the West - rest of the world divide.

In any case. it was in the early 1990s in Brussels that one day my secretary noted that she was seeing beggars in the streets and that was a new thing, in her eyes. I replied that people in need were always present, but in distant parts of the world. Now the "segregation" was diminishing. It seems to me, 20 years later, that I was right. More and more rich people are not in the "West" and more and more poor people are in the "West" compared to the industrial age. A new phase has been on, for some time now.

But does one more poor person in the West make for one less poor person in eg Asia, via trade? Not necessarily, because that value foregone by an average Belgian may not be pricked up by an average Chinaman but by a Western company producing in China (some 50% of China's exports are still not made by Chinese firms in China but by "Western" companies).

Yet, instead of the West's states and welfare systems helping Americans and Europeans adjust to the earthshaking relocation of value (not people) from the West to other parts of the planet, a Euro crisis is used as an excuse for cutting down that European Social Model and passing many fillet parts of it to the private sector. Instead of America getting a public option, Europe is losing its own "public option". That was the main game changer of the last 2-3 years.

No wonder many Europeans, especially, and for now, South European ones, are experiencing a sense of vertigo. The economic poles are shifting. It is 2012.

Food for thought:

a) Can capitalism work to make everyone better off (ie with a minimum number of "losers")?
b) Is modern finance as we are experiencing it in recent years a core element of capitalism?
c) Is China capitalist, communist or both?
d) Is the real "problem" economic immigration or trade?
e) Can "Devaluation" take place successfully in the West to allow for the growth of the rest of the world? By "devaluation" I mean a wider equivalent of the "Greek experiment", ie a reduction in wages that is met by a reduction in the cost of living as well. In Greece. it does not seem to be working. Wages are falling but the prices of most goods and services is not.  Take another example. London real estate prices. Can the London economy sustain them? What will happen after mid-August?

In recent years I have talked to many persons who experienced the Soviet Union and the Iron Curtain first hand not only as children but as adults as well (eg until the age of 25 or 30+). Almost all miss the certainty that existed regarding the basics: a job, basic food on the table, a roof over their heads, access to free healthcare.

I will wrap up this post with a piece from Gary Hart's speech at the MIT auditorium in 1984 (I was there): The enemy in South America is not communism, it's poverty.

Draw your 2012 analogies!

Which does more damage to the EU economy and jobs? a) immigration or b) imports?

Here are some thought on recent events:

1) The EU can open up export markets using its 500 million market as leverage via bilateral deals not WTO. WTO is fail (see eg Doha Round).

2) David Ricardo's theories don't apply 200 yrs later. Trade has to be balanced, reciprocated in a way. Not the case eg with Germany that wants the cake and eat it too (see its views on Barroso proposals on reciprocity in world trade).
After China joined WTO, US and EU kissed manufacturing goodbye. Plus there is only a limited world market for German quality products, not much room for more players or capacity.

3) So, which does more damage to the EU economy and jobs? a) immigration or b) imports? IMO, (b)

4) Wage cost is antique economics (IMF, etc). Modern biz competes on quality and/or branding not price. Which Eurozone, EU or third country's wages do Greek or Spanish wages have to match for eg Greece and Spain to achieve competitiveness in IMF/Troika's logic?

5) Germany, USA and China have been partying in the EU market while many of the EU members are "starving". Time to raise trade walls and lower immigration walls.

2.5% intra-EU migration, only 4% non-EU immigrants in the EU!

According to the Eurostat, "Foreign citizens made up 6.5% of the EU27
population in 2010 Foreign-born people accounted for 9.4% of the EU27 population"

But I do no see why the Eurostat's press release headline merged the number of intra-EU and non-EU "immigrants.

Out of the total 6,5% of the 500 million EU27 population, the 6.5% includes two parts:

a) 2.5% of inta-EU27 "immigrants"

b) 4.0% immigrants from the rest of the world (ie non-EU)

The 4% figure is lower than some would imagine and puts a dent in the complaints re "foreigners" in the EU!

It would be interesting to know how the 2.5% internal migration of the EU27 population (citizens) in 2010 compare with the intra-USA one!

From "buy local" to "hire natives" to "invest at home (not abroad)"

Many of EU & world problems stem from systemic imbalances due to uneven freedoms for capital vs services, people/labour even goods.

It seems some policy makers et al in some EU members think that the Chinese market is more attractive than EU Single Market. A grave strategic mistake!

The China imports slowdown is bad news for those EUropeans who think exports to China can replace Eurozone & rest of EU Single Market ones.

Note that German's exports have rebounded in June after a bad month in April and a record month in March (should one try to correlate them with the exchange rate of the Euro?).

The inflation curbing policy (or obsession) of the ECB that has led to an expensive Euro for much of the 11.5 years since the introduction of the coins and notes, makes exporting to Eurozone easy. Exporting from Eurozone is the Herculian task!

In other words, the Euro exchange rate has been eroding most if not all Eurozone economies for most of the Euro years. Even Germany's. In a way, the bailouts of the GIPs are the price the Eurozone/EU is paying for the ECB/Bundesbank perennial obsession against inflation that hurts Eurozone biz, exports and tourism (especially Portugal, Spain, Italy, Greece).

Are there socio--economic & poitical forces in Germany that have had enough of the uber hard DM/Euro obsession of Bundesbank/ECB? One would hope so, beceause then there is hope for a less destructive Euro exchange rate policy (that could also require a change in the mandate or powers of the ECB (almost typed: Bundesbank).

Otherwise, a key strategic option is the activation of an "Economic Fortress EU" that ought to include:

a) Exit from the WTO and reliance of specific case-by-case agreements of the EU with other countries (eg USA, Canada, India, China, etc) or groupings thereof (eg ASEAN, Mercosur or UNASUR, ACP, etc). Those could include agreement not only on trade of goods, but also services, intellectual products (and protection of intellectual property (see ACTA and the Singapore WTO agenda), economic migration, and of course capita movement/relocation).

b) Upgrading of the 4 freedoms inside in EU Single Market.

Will come back on both (a) and (b) in future posts.

My point is: capital, goods. services, labour & people should enjoy same level of freedoms at global or regional scope. The latter is more feasible

Another point is that the EU Single Market has to offer members benefits non-EU countries/economies should not have, ie more value.

Humanity has moved from city states to nation-state and now moving to region/continental-states. Like empires, globalisation is too unstable. Regionalisation will inter alia be good for the environment

Direct globalisation has failed. There's no global free movement of services & labor even goods. Why not build walls 4 capital then? Only route is via phase of regionalisation (NAFTA, EU, UNASUR, ASEAN, etc) with some links (capital, trade, services, labour/people) between regions

From "buy local" to "prefer to hire natives" only short step to "invest at home (not abroad)". That is not the solution. The solutions are at regional/continent level. And maybe someday, the global one.

Global and EU systemics: Major systemic imbalances in urgent need of fixing!

I am not sure how the following model fits with traditional economic models (note: I am an MBA, decision scientist and a policy analyst, not an economist or financial analyst anyway) such as the capital - labour - land or the capital - labour - knowhow ones:

In "my" model, there are 4 factors: capital, goods, services and work. And IMO for a system, be it the EU or the USA or the world (globalisation) to work, these 4 factors must have more or less the same level of freedoms ("4 freedoms").

Also IMO, the current instabilities in the global and EU systemics are due to uneven levels of fredom between these 4 factors.

Capital has a very high level of freedom to move and relocate around the world. Capital movements have, realitively speaking, few restrictions, within the world and within the EU.

Goods have seen their freedom grow exponentially since GATT was founnded after WWII leading to the creation of the WTO in 1994. But still, the level of freedom of goods is nowwhere near "free trade". Many tariffs and quotas, especially the former exist even between the WTO membems (and within WTO rules). Even in the EU Single Market for goods, many problems still exist, especially for small firms.

Services at least the most tradeable ones, have been making progress but their freedom is nowhere similar to that of capital and goods. At WTO and at EU level. Eg in the EU many are in fear of the travelling plumber!

When it comes to work or the freedom of labour, then things are quite sad, especially at WTO/global level and even at the EU level many problems exist. Too many.

My thesis is that unless the level of freedom of all these 4 factors converges upwards, it will soon start to converge downwards (that applies to the global and to the EU "systems"). In goods, the by now admitted failure of the WTO to reach agreement in the Doha agenda, opting for an effort to conclude a lite or extra lite one instead, the backwards pressures can be seen. With a zero or low level of public debt being reconised as a key factor in sovereignty (due to the Euro crisis etc), the concept can easily be expanded to the trade balance and the CA balance. Already certain countries have been accused (by the US) of "exporting too much" (eg Germany and China). Movement of workers, free lancers and people is "near apartheid" level globally and be in for political asylum or so called economic immigration reasons, it is alas getting worse pretty much all over the world.

What is more, the economic globalisation, in the form of the freedoms of capital and trade, needs to be balanced, structurally by a global political and a global social pillar!

Else, it is structuraly unsound.

If there is no global polity (a world parliament and possibly government (eg for the WTO 153)), or at least continental-level polity, I would not exclude de-globalisation and either regionalisation or nationalisation/localisation of capital and goods freedoms (see eg "buy local" initiatives).

Or a system of 4-7 major global players (federal EU, USA, China, India plus Russia, Japan, Brazil (or UNASUR), see my recent relevant post).

It is in the good interest of capital and the finance world to encourage or at least not block the globalisation of the other factors and the creation of global political and social pillars.

That is maybe why, in a way, the financial markets seem to be pushing the EU or at least the Eurozone towards political union!!! Because a single currency and a single market need a single polity as foundation and the financial system may not be always responding to crises in rational ways, but its vision is as good as anyone's. And the prudent financiers IMO know that either the other factors gain more freedom or capital loses much of its own.

Plus, the business world, those who produce and deal in goods and services, have clear vision too. And to the extent that the finance world does not manage to be part of the solution to the imbalances, they will ally with the politicians and societies against them.

Not for the battle for midde earth though! Enough metaphorical headlines or slogans (overdone by media etc in recent months). What is going on is the world today is the ultimate real show, much more interesting and cruel than any fairy tale or show.

The humans will prevail, eventually, they always do. Ask the monarchs, the Romans, the Soviets, etc. The financial system is next, it seems, if, as a system, it does not read the signs of the times and listen to the prudent voices inside it.

Walls (bis)

Those of us (especially in Europe and the US) who were protesting apartheid in the mid 1980s and celebrated the fall of the Berlin Wall in the late 80s, how do we feel about the attitude towards immigrants, by many politicians and a vocal part of the public opinion, in the world today?

It does seem that the humanist gains of the 80s are being stepped on nowadays.

Sad, sad times for humanity.

Capital vs Humans, the EPP, PES, ELDR way?

According to the Guardian today, "EU executive considers reimposing border controls" (please read the article then my comments).

Is it a coincidence that all 3 key players in this, ie Sarkozy, Berlusconi & Barroso are all from the EPP European political party? The party that takes public pride in having 15 or 16 of the 27 heads of state/government as its members?

That via its majority in the European Council and the European Parliament has EPP members in all 3 top EU positions, at present, ie:

1) Presidency of the European Commission (where a majority of the Commissioners were proposed by EPP member parties/leaders in government)?

2) Presidency of the European Council (where again it has a majority, ie among the heads of state/government of the 27)

3) Presidency of the European Parliament (where its national members hold a total of 265 seats out of 736, the biggest and thus most influential group in the EP, eg as a result the EP's current President is from the EPP ).

I) Is the change considered by the Commission's President to Schengen in line with "EPP values"? In line with European values?

II) What is the real value or use of the European political parties and political groups thereof in the EU policy making? In European integration?

IMO, the EPP has to prove its EU "values" in the Schengen issue since the parties involved, ie Sarkozy, Berlusconi and Barroso are EPP.

But that "burden" is not only for the EPP.

IMO, the EPP, the ELDR and the PES have to adopt clear positions on issues such as Schengen, Immigration, etc, that both reflect & bind all their member national parties and leaders. Otherwise, what is their real use when compared eg with more generic (and less binding) international groupings such as the Socialist International etc?

In other words, when the going gets tough, the tough get going, thus the EPP and other key EUropean political parties have to show their mettle in these hard and crucial times.

Capital vs Humans, the EU way?

According to the Guardian today, "EU executive considers reimposing border controls" (please read the article then my comments).

This prompts me to think:

Capital vs Humans (1): Why does EU have a common trade policy (ie for foreign capital, goods, services etc) but not common #immigration policy (ie for labour and humans in general)?

Does the EU (and its 27 members, more importantly) put capital & goods above labour/humans?

Capital vs Humans (2): If members can temporarily suspend Schengen, then why not also temporarily suspend the EU Single Market for goods, especially when they are foreign made?

Sad days for "EUropean values", IMO.

There are also important consequences for the EU's political parties (eg EPP, PES, ELDR) but I address those in a separate post.

From "America, America" to "Europa, Europa"?

As I have often stated, it is my opinion that every human has a "human birthright" to live and work legally any place on this planet he/she chooses to. Absence of this right constitutes IMO a form of global apartheid that future historians and generations will look down upon.

IMO the willingness of the US to receive almost anyone who made to Ellis Island (an immigration policy that has been become very restricted in recent decades, to a detriment to the US (IMO again)), made it a beacon to the world population and to the world. In more ways than one.

It is now time for the EU (or the Europlus) to decide whether we have the vision, the humanism as well as the pragmatism (see ageing population) and the guts (to counter populism) to become the "America, America" of the 21st century (for asylum seekers and economic immmigrants). Given recent events, we appear not to. But those attributes (vision, humanism, pragmatism and guts) exist in EUrope. They only need to be activated.

Europe has a long and at times very troubling history. Initially it was mostly Europeans those who cried out "America, America" when fleeing to the US and seeing the coast of the US. The world systemics and dynamics are such that the world needs a new place to assume this role. Can EUrope do it?

It can, it must and it should. It is part of its becoming a beacon to the world and one of the cornerstone of its "values".

So, "Europa, Europa"?

Nationalism vs Cosmopolitanism or Earth Sovereignty

"May you live in interesting times" was actually an Ancient Chinese curse! These days, since Friday, we are all Japanese (to paraphrase JFK's "Ich bin ein Berliner"). Shocking events since Friday, the earthquakes, the tsunamis and last but not least, radiation! News these days are more dramatic than most scary film scenarios.

Among many other things, they have prompted protests re the use of nuclear energy in France, stress tests of the plans in Germany demanded by Angela Merkel and an EU stress test of nuclear plants initiative.

Can the EU work as "one" on this? Or is it losing whatever community spirit it had in previous decades due to the emergence of nationalism in recent years?

National vs Natural:

"Splitting up? The re-nationalization of Europe" is the topic of a most interesting article in Eurozine based on a discussion between Andriy Shevchenko and David Van Reybrouck. A must read, IMO!

1-2 points from the article (which I fully recommend as food for thought):

1) On the 23 languages in the EU: "And it means that there is no common forum. There is no European public space"

2) Also read how France managed to create French identity in less than 64 yrs!

Via the imposition of French as the single/only language in France, in the 1850s!

IMO, Cosmopolitanism will be "enforced" in EUrope and the rest of the world by Earth's Nature & its "events", ie Nature will defeat nationalism. Because earthquakes (like the ones the Japan) and the resulting tsunamis, volcanos (eg as the one in Iceland and its recent effect on most of Europ), birds (that the flu they may carry), CO2 and radiation pollution etc do not require passports or visas, they have no "respect" for national borders, sovereignty or identities. They remind us that we all 6.9 billion live on the same vessel. These realisations will defeat nationalism and re-activate universalism or cosmopolitanism (citizenship of the world).

Plus what good is one country's no nukes policy if a few miles across the water or land, its neighbour has located one of its own nuclear energy plants?

Plus IMO the issue of use of nuclear energy in the EU could be the topic of the first ever EU citizens initiative. The kind of topic that will unite the EUropean public opinion or Society. Energy: The answer is in the wind and under the sun!

Real catastrophes:

On Monday, FN President Marine Le Pen toured a centter for illegal migrants on Italy's Lampedusa island. "I have come to express my real concern on the ground. The European Union does not have any solution. We are going to see a real catastrophe and the EU is impotent" she said, inter alia (Yahoo! xtra news, AAP).

My comment re "real catastrophe": The ageing EU has capacity & wealth enough for citizens & immigrants. Real catastrophes are earthquakes, volcanos, nuclear pollution etc!

Real internationalists:

"Euroscepticism: liberal, modern, internationalist, moderate and cross-party" is the title of Daniel Hannan's opinion piece in the Telegraph on March 15! For sure!!!!

According to tweet today by the EU Commissioner Mrs Viviane Reding, there are about 16 million international couples (13% out of 122 million couples) in the EU. Maybe they and their children are the main drivers of EUropean identity.

In the meantime, "World braces for Japan economic hit" is the title of an insightful article by Ben White in Politico (politico.com) today. Inter alia, he points out that in January Japan held nearly $886 billion in Treasury securities while China $1.2 trillion US (some 4 times the ones held by UK investors). But IMO this is no time for Economics. As humans, we must focus on Japan and the Japanese people and all others in Japan, the heroes working inside the tainted plants, and maybe also think how some technology is good for humankind whereas other is not. And how for an economy to exist, humans are needed. IMO our era is too financial. Is it also too technological?

Only one economics piece: According to RTE Business today, "The European Commission has proposed a common system of working out the tax base of businesses operating in the EU".
Plus also today, the ratings agency Noddy's downgraded Portugal's sovereign debt rating from A1 to A3.

Not very human-centered times!

Approx. 205 million of the world's population were out of work in 2010, according to recent figures from the United Nations. This means that the EU has 11% of the world's unemployed while it has 7% of the world population (0.5 vs 6.9 bn)

Recent Eurostat stats:

Eurostat 1st estimate: Q4 of 2010 Eurozone and EU employment up by 0.1% vs Q3 2010. +0.3% in both vs Q4 of 2009.

Eurostat: January 2011 compared with December 2010 Industrial production up by 0.3% in Eurozone. Up by 0.6% in EU

Industrial Relations, what Industrial Relations?

The Industrial Relations in Europe Conference. The conference, 17-18 March in Brussels, aims to present and discuss the issues raised in the 2010 Industrial Relations in Europe report with an audience of social partners, academics and representatives of the Member States.

Every two years the European Commission produces an Industrial Relations in Europe report, which provides an overview of industrial relations developments in Europe for the previous two-year period. The 2010 edition is the sixth report in the series.

Around 150 participants will be invited to the event, which will consist of four panel sessions each devoted to one aspect of the report:

Session I - Industrial Relations in Europe in the 21st century's first decade
Session II – Negotiating the crisis: the actors of social dialogue
Session III – Industrial relations outcomes: overcoming the crisis
Session IV – The possible contribution of social partners to the Europe 2020 strategy

The conference, as the report itself, will focus on a review of industrial relations in times of economic crisis and on the role of social dialogue in achieving the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth.

IMO, with a conservative majority in the European Parliament (EPP plus the ECR (Tories etc)) & the EU Commissioners' College and the various deficit and inflation hawks around Europe (not least in Germany), industrial relations are bound to be suffering in the EU and many national levels these days. See also the Eurozone "competitiveness pact".

Single what? For whom?

1) Speaking today is Paris, the French EU Commissioner who is in charge of 2 key portfolios, Internal Market and Financial Services, M. Michel Barnier said inter alia that he does not want protectionism but economic realism.

EU economic realism should IMO mean a request and achievement of reciprocity in 4 freedoms by others in the world arena, from USA and China, to India, Russia and anyone who wants to have relations with the EU, economic or other.

Should the EU threaten to leave the WTO & rely on bilateral reciprocity? IMO, that is not an out of question scenario/option, in these zany times. systemics and dynamics.

Let me add that M. Barnier also said that the Americans are always surprised that the EU does not demand commercial reciprocity.

On the other hand , on the always hot issue of migrants and human rights, it is my opinion that migration should be free among WTO members! Future historians will refer to our era as "New Middle Ages", because most of the sum of policies in EU, US and world re asylum seekers & economic migrants constitute "apartheid"!

As per financial regulation and reform in the EU, M. Barnier said in his same speech that it is on a good path (une bonne voie)? I am curious whether the Commissioner has watched the "Inside Job" Oscar winner documentary of Fin/Wall St!

The size of the EU's population (500,000,000) and single market should indeed be exploited IMO:

a) For the EU to implement not simply reform but an overhaul based on a total rethink of the financial industry.

b) Promote free migration (in all directions) within the WTO membership.

(an interesting point made by M. Barnier: Monnet et Schuman ont eu une idée incroyable: cimenter l'envie d'être ensemble par l'intérêt d'être ensemble)

2) The EU 27 (& its single market) have 21+ languages. What is max no of languages a person can speak? What % access these can offer him/her to the "EU single market"?

How many English speaking jobs are available in EU minus UK & IRL?

How many French speak one outside FR, Wal, Lux? German?

Maybe being a EUropean is impossible after all, b/c no human can speak 21+ languages! Knowledge of other European languages (and which & how many) is the wider strategic EU question!

Examples:

Does speaking EN, FR & GER but not the national languages get an EUropean a job in 20.5 of the 27 EU member states?

Does speaking EN, FR, GER, SP & IT (5!) but not the national language(s) get an EUropean a job in 18.5 of the 27 EU member states?

Thus can the EU ever achieve a Single Market as far as jobs are concerned? Due to many reasons, with 21+ languages being No1, by far!

3) IMO the problems in IRL & GRE are partly evidence of the failure of an alleged #EU single market, for many reasons & factors


4) By awarding an Oscar to the documentary Inside Job re Wall St. the members of the Academy IMO made a clear statement!

Outsource This: Thoughts on current dynamics (EU, UK, USA, World)

A solid decision must take into account local, national, regional (eg EU) and global regulatory & legislative constraints. Not an easy time for decision makers then!

Eg business in 2011 will have little in common with business in 2008. In that the conditions & working assumptions of 2008 that affect business have changed radically, it's a totally new "ballgame".

Eg (policy) to address the demands of the times governments need to completely overhaul the philosophy & the existing body of legislation & regulations.


Management: From out-sourcing to in-sourcing?

The competitiveness of economies (for business location purposes) is IMO a matter for the Strategy - Corporate Planning Dept of a corporation to determine, on a case basis. Yet most corporations do not have such depts since many decades ago. Maybe that's the "problem"!

In a few years, some corporations will be outsourcing the top management function of the corp. as well!
Is it time for corporation to start "in-sourcing" their advertising, strategy, IT, HR, functions/depts? #management (back to basics).
The decline of the Roman Empire started when they started outsourcing to the Goths, the Vandals, etc.
The decline of Sparta started when they started outsourcing their left flank to "allies".
And the decline of capitalism started when corporations started "outsourcing" their capital needs to the "markets" & banks rather than their shareholders.

By outsourcing important functions, corporations looked lean & mean in the eyes of the "markets" & analysts but in fact became "anorexic".

Plus, many analysts & commentators act as if they are judges in talent shows, "judging" corporations & countriies as if they are hopeful singers, puting even more pressure on publicly quoted corporations to max performance short term.


Exporters = modern heroes?

Are there mindset factors at play in the loss of exports competitiveness of the US and the UK in recent decades?


Information (and analysis) is Power

The US and the UK are used to analysing the world (think tanks, media, etc).
In recent times, the "world" is also analysing the US & the UK!


Are mentalities and attitudes in the UK but also Germany & France the key barrier to a deeper EU?
a) They dub foreign lang TV shows & films about 3 hours ago via web
b) They are pro EU as long as the EU is molded in their national model
c) France after all almost rejected Maastricht and rejected the pre-Lisbon Constitutional Treaty (in May '05).
d) Gernany's participation in a deeper EU seems tied by the decision of its Const Court.

The EU isn't in crisis this year. It has always been in crisis, because the EU & EEC/ECs were/are built via weird design & flawed project management!


Can a leader lead EUrope and his/her country at the same time?
The obvious answer would be: Yes.
Case study to the contrary: A few months ago Nicolas Sarkozy seemed to be the kind of visionary leader that could steer EUrope forward, through the debt crisis etc. A few monhs later, his proposals and actions in the field of immigration (recall of citizenship, Roma etc) in an effort to please a certain section of the French electorate have tainted his and his country's leadership role in EUrope!


The EU and the UK in a prisoner's dilemma!

The issue of a UK referendum on EU membership is kept alive in the UK. Polls indicate a strong lead againt EU memership (ie exit of the UK from the EU).

A few introductory notes:

* It's the Lisbon Treaty Euroskeptics fought against that actually provides a process for the #UK to leave the EU, should it so decide!!!

* The sovereignty card being played by English and other British Euroskeptics and anti-EUers could IMO actually backfire on England!

* I still think the UK could actually lead the EU into a deeper union! But it would require a major change in mentality (via better info). Read what I mean, below!

* Would the UK have a a) better or b) worse balance of payments if it was outside the EU and its Single Market?

* Would the potential for a deeper - fuller European Union increase without the UK (europhobia) & Germany (constitutional constraints etc)?

* Is a) the #UK b) Germany c) both d) other e) no MS holding back a "deeper" #EU (army, taxation, econ gov, etc)?

Here's my take:

Legal systems in Europe tend to have very different philosophies, eg British vs French vs German vs Italian. Yet another Babel!

Actually IMO better law-making could lead to a very large reduction in the number & volume of laws & better "protection" of people.

Those who fear that the EU leads to laws being decided by the EU institutions rather than national ones are right! A single market needs "single" (or common) laws in most areas in order for the market to be single (or common).

The UK's Euroskepticism is in my opinion justified only in that Euro continental policy & law making is more interventionist (see "dirigisme") compared to the British. The solution to that is a pro-EU UK that leads the thinking towards a deeper union that has better but less legislation (federal & national). A deeper yet less interventionist European Union with single yet fewer and "better" law and "statist" intervention! That is the best solution in the "prisoners dilemma" of the EU and the UK.

If UK and EU continue in their current paths, a lose-lose "divorce" seems inevitable down the line. The UK tradition for less interventionist policy & law making has many allies in all other member states but someone needs to lead the way With or without the UK, a dirigist EU will continue to lag behind the US plus lose ground to the BRICs, suffocating entrepreneurship & citizens.

One has to consider how the union system of the EU suffocates not only companies & growth but citizens as well. Let's take a look at the demographics of the "mighty" (in terms of GDP) Eurozone! A single state Europe is the only viable strategy! Plus: Can one argue that the Germanic states were better off before they were united into Germany in the 1870s?

Can a weirdly designed union of 27+ countries of 500 million compete with a solid 300 million US of A, the 1100 million of India and the 1300 million of China (for GDP/growth, jobs, etc)?

There are hundreds of languages spoken in the homes in the USA! But a single one is used in the workplaces and marketplaces. That means that national diversity can exist, even flourish, under uniform parameters, thus a single state Europe need not supress national "IDs". A single state EUrope is indeed a leap compared to the current situation & the socio-political trends in MS. But without vision Europe is bound for bust.

Otherwise, we might as well move back to a city-states system! Like eg pre-1870s Germany! Or Ancient Greece! With Germany, France and the UK vying for the dominant role, like Athens, Sparta and Macedonia or Thebes (Spain?)!
Ancient Greece has similarities to modern Europe. Greece did not become a single state until 1831 and after Roman and other occupations. When will Europe then become a single state? In 3010 or 4010 AD?

Without English as its lingua franca (in the workplaces & markets) the EU will remain a quaint linguistic Babel for American & other tourists! A real single EU market needs banks with connecting branches all over the EU, the ability to be serviced by a single mobile provider no matter where in the EU one lives, an EU-wide "NHS", an EU income tax system that encourages mobility, etc etc!

Anyway, in 50 yrs, Europe will probably either be
a) a single country OR
b) a huge museum for American, Japanese, Chinese, Indian etc tourists.

Probably the latter!

A continued Euro-chaos as now? That option actually leads Europe to the museum I mentioned.

I propose you also read my post: Britain and the heart of Europe, in 2005 (and today)


The pseudo-immigration problem in EUrope:

... of non-EU and intra-EU "immigrants" is IMO one of the reasons the EU will remain un-competitive in the world while the BRICs & US will do much better!

Intra-EU "migration" isn't supposed to be "migration", just like intra-EU sales are not considered exports/imports. Yet it is not treated that way. Maybe that's the problem with the EU. Most things are not clear cut, they are half-way, thus confusing the average person & firm. Everything EU is vague (flou). US-style inter-state relocation doesn't require a single EU state though. And sovereignty is another "flou" subject, globally! Ie what constitutes "sovereingty" in 2010 is quite different than in 1910, 1810, 810!

The population of a new member state should be given the same transition period constraints re relocation to one of the "old members". Not the current pick your choice between 0, 2, 5 and 7 (I think) years. In 2004, the UK chose a 0 years transition period for population of the "A8" new member, while many member states chose 2 years and 7 years (!!) was
chosen (I think) by France & Germany! Quite uneven! 2 years for all by all should be the policy, IMO.

But at present, EU citizens' freedom of intra-EU, inter-state relocation is not as free as intra-US, inter-state freedom. Alas EU laws don't give EU citizens per se freedom to relocate, only give it to those who find job, start biz or have means not to become burden on the state. But does not apply to intra-US "migration", eg when a Californian moves to New York or vice versa.


Certainties about Uncertainty & Economics vs Physics

There is an ongoing debate re the certainties of Economics and its similarities and difference with sciences such as Plysics.

This is my take:

Between certainty and "que sera, sera", there is a lot of room in between! A lot!

Having studied Prob/Stats, OR (Operations Research) - Decision Sciences while at MIT & NU & Finance at INSEAD I wouldn't over-estimate their ability to predict.

How many are aware of the maximum efficiency frontier on a E(return) vs E(risk) table, anyway?

The trade-off between expected return and expected risk (curve) remains one of the most not understood Financial (and decision sciences) concepts.

The use of either perfect markets or perfect information hypothesis in most Economic theories & analyses waters down the realism of the results.

In spite of the use of fancy math formalas in recent decades Economics (including) is still a Social Science. Physics is a Natural Science.

I used math/OR to try to better assign aircraft to flights in my MS thesis (1987) but didn't claim I was actually optimising, ie finding an exact or perfect solution!

A lot of Economic & Financial stuff these days seems more like product of a "religion" (see dogma/dogmae) rather than a science!

Economics, including macroeconomics, is a useful tool, but still not Physics" or able to predict/assess with the certainty we read quoted in or by well known media etc!

In other words, I agree with the conclusion in Legrain's Aftershock book but of course Macroeconomics is not Physics. Riccardo was not Newton!


Spare thoughts:

WTO -Doha: Have the US Congress & Senate given Obama the "fast track" powers GW Bush had?

UK exports in Services: £3.8 billion surplus on trade in services in July, surplus of £3.6 billion in June. Not too bad, eh?

Civil Society will make or break the European Integration

Banking and Finance are not the core of modern economies

SMEs must take a more proactive approach to European Integration

Hungary says will meet euro criteria by 2014-15

capital, goods, humans and systemic imbalances in globalisation and the EU

Offering capital and goods more freedom than humans produces systemic imbalances (in addition to being rather anti-humanistic).
IMO there should be free immigration among at least the WTO member countries/economies.

PS: The very low intra-EU migration eg creates systemic imbalance inside the EU and its single market.

Some thoughts on world dynamics

Some thoughts on world dynamics

Too many CEOs in 2010 still have the mindset of military leaders, in that they are preoccupied with beating the competition instead of focusing on client needs, wants and satisfaction. Too many analysts as well.

On the other hand, world dynamics in recent years have turned countries into players in a global economic game where the goals are scored via exports and trade surpluses!
Hence corporations are failing in satisfying clients, shareholders and ... analysts, countries are failing to satisfy their populations and have allowed populists to create scapegoats out of political and economic immigrants (see recent proposals re immigrants and "new" citizens in USA, France and Belgium).

In short, the world (Earth) is anything but uniting, in spite of the positive effect of the Internet and social media!

18 thoughts (and 562 words) re EUrope's interest

The events in Europe, the US and the world prompted these thoughts of mine this (Monday) morning.

I was reading an interesting WSJ article this morning. The article and the data quoted in it show IMO how Asian (& US) manufacturing and other exporters were piggybacking on the "hard" Euro. Also begging IMO the question: Who was the so called engine of growth: a) Asian manufacturing (as claimed) or the EU consumers and/or the uber-hard Euro?

Which led me to the following sequence of thoughts:

1) If China's yuan-USD rate policy had an "X" impact on US imports, what can then be said of impact on Eurozone imports due to the ECB's hard Euro policy? X times 3, 5, 10, more?

2) Are the EU citizens' interests being served by EU's WTO membership especially but bot exclusively since China entry and strategy?

3) The ultimate way for the Euro to be promoted and for EUropeans to unite may be for the EU to leave the waning WTO system!
(Food for thought: Should the UK leave the EU or should the EU leave the WTO? lol)

4) Food fir thought: Should the EU consider leaving (even temporarily) the WTO in order to protect its interests (eg the Euro, its budgets, the Single Market, etc)?

5) How are the EU's micros, SMEs and "average" workers (and the European Social Model) being served by the EU's WTO membership?

6) Should the EU pull the plug of the current (and faulty) version of globalisation? And negotiate a new one with US, BRICs, ASEAN, etc?

7) Are these key strategic questions that the current "crisis" is diverting the EU and its members from considering? For whose benefit?

8) Which interests are promoting & capitalising on xenophobia in order to divide the EUropeans as well as alienate them from their fellow 6 billion humans?

9) What interests are promoting a) intra-national and b) inter-member-states squabbles in the EU in order to divert attention away from the EU's interests?

10) Who is afraid of the EU's Social Model, its 0,5 bn population, its socio-political values and their potential impact on the rest of the world?

Think those issues through! Do not get caught up in the plot as set out by certain interests!

11) Which interests are promoting narrow (tunnel vision) views on such issues as sovereignty, taxpayers interests, immigration & identity, etc?

12) Which interests are capitalising on national and other stereotypes to keep EUrope from union and to promote xenophobia?

13) Which interests are working hard to make EUrope again a place where progressive minds flee from rather than the whole world is drawn to?

14) Which interests are working hard to turn the European Dream of the last 50 yrs into a nightmare for EUropeans and other humans?

15) It is high time for a global campaign against a) rising xenophobia, b) anti-humanism & c) a "global apartheid" in the US, the EU, the world.

16) The sum of most national immigration policies in force around the world these days constitute in effect a "global apartheid".

17) Are we going to let fellow humans become the scapegoats for the problems we are facing in this era?

18) Elementary my dear Watson: Economic immigration should in principle be FREE at least between the countries that participate in the world trade WTO system

Thanks for reading (and thinking)!