Euro malaise continues: politician down, businesses worried, and rat race re-assessed

While Horst Köhler’s resignation cannot be directly attributed to the euro crisis, it certainly epitomizes the clash between the post-war political configuration in Europe and the increasingly impatient Germany.

In the past, Germany has always provided the passive sheet-anchor stability that allowed Europe to work. Occasionally a Schmidt or a Kohl would find partners and a surge of European integration would take place. But now Germany has no idea of what to do next. It will not admit that its economic weltanschauung, based on relentless exports and damped-down internal demand, is now part of the European and world crisis of capitalism.

The new Germany would like to behave as a normal nation and certainly has national security on its mind.  Both domestic and European-wide politics have yet to catch up with it, even when the question of military interest is framed within the scope of expanding and protecting its economic interest.

Köhler made the point that German military capability was relevant to German interests, including German economic interests. As the world’s second biggest exporter after China, Germany has a self-evident interest in keeping the world as open as possible for the free flow of trade and commerce, and to help defeat the growing scourge of piracy. This is so worrying Nato policymakers that an entire session at the Nato parliamentary assembly’s spring session this weekend in Riga was devoted to the question of how to ensure peace and free traffic on the high seas.

Some political and business leaders are quietly applauding the continual slide of the euro as one of the tools to stimulate exports in the region, others argue that a weak euro do more harm than good in eroding business confidence in the region, which may prove to be the worst legacy resulting from this ongoing fiasco.

The biggest worry for European business, however, is not so much the decline of the euro itself but rather what it says about the European economy. European governments will have to reduce public spending dramatically to allay the market’s fears. Spain has already announced that it is cutting public-sector wages by 7% and Greece by 16%. This will inevitably remove spending power from the European economy and so dent its short-term prospects.

… The introduction of the single market and the single currency were supposed to spark a glorious period of innovation and productivity growth. This has not happened. The European economy remains dependent on long-established corporate champions such as Daimler and on public-sector jobs. The old continent has dismally failed to create local equivalents of America’s Microsoft and Google.

The FT has an interesting piece that questions the impact of fiscal austerity on a continent that, for the past few decades, consistently prioritized lifestyle and the ubiquitous work-life balance ahead of economic growth.

Tuesday morning links: Digital virgins, lost generation, brains on endorsements

BUSINESS
European Commission targets ‘digital virgins’
blogs.wsj.com– Europe’s broadband penetration rate is still only 25%, 30% of Europeans have never used the Web, and only 1% of Europeans have ever used a fiberoptic connection.
Why we shouldn’t subsidize construction
Reuters– The main way that Spaniards have become rich in recent years is by sitting back and watching the value of their real estate grow exponentially.
Gary Vanyerchuk’s wine and social-media empire
newyorker.com– A relationship with Gary V means an ironclad guarantee that he’ll reply to your e-mail within four months, with at least a “thnx” or a “mwaa!”
Luxury shopping is making a comeback
slate.com– Just in time for the premiere of Sex and the City 2, there are signs that the orgy of luxury shopping that made the latter years of the credit bubble so much fun are back.

FINANCE & ECONOMICS
The electoral consequences of large fiscal adjustments
Voxeu– It is possible for fiscally responsible governments to engage in large fiscal adjustments and survive politically.
Two million idle Italian youngsters run risk of becoming ‘lost generation’
The Guardian– On the day Rome launched a desperate package of cuts to trim its debt and avoid the meltdown suffered by neighbour Greece, figures showed that two million young Italians are now drifting, neither studying nor working.
Spain is trapped in a ‘perverse spiral’ as wage cuts deepen the crisis
telegraph.co.uk– Spain’s unemployment was already 20.5pc even before this latest dose of shock therapy. There are 4.6m people without work. Dole payments alone account for half the budget deficit.

MATTER OF SCIENCE
Scientist infects himself with computer virus
news.cnet.com– A senior research fellow in the U.K. says he has become the first person in the world to be infected by a computer virus.
People with Asperger’s less likely to see purpose behind the events in their lives
scientificamerican.com– Why do we often attribute events in our lives to a higher power or supernatural force? Some psychologists believe this kind of thinking, called teleological thinking, is a byproduct of social cognition.
Who needs time zones?
tnr.com– One economic study on television schedules suggests that our sleeping patterns are affected far more by our need to synch up with other time zones than by when the sun rises and sets.
Celebrity product endorsements on the brain
miller-mccune.com– Brain-scan research suggests celebrity faces evoke specific happy memories, and those positive feelings rub off on the products they endorse.

THE REST
Why England will win big before reverting to type and losing on penalties
football.fanhouse.co.uk– England will probably score first: in big games in World Cups they get almost all their goals in the first half, after which they typically recreate the retreat from Dunkirk.
Zoopolitics
foreignpolicy.com– How caged animals became a tool of statecraft.
Worker suicides have electronics maker uneasy in China
spiegel.de– Whether the sheer magnitude of the factory overwhelms the workers’ psyches is not a question Foxconn managers are prepared to answer. Size, after all, guarantees low overhead and high profits.

Morning links: Matters of the brain

BRAIN MATTERS
The web shatters focus, rewires brains
Wired– Brain activity of the experienced surfers was far more extensive than that of the newbies, particularly in areas of the prefrontal cortex associated with problem-solving and decisionmaking.
Alzheimer’s prevention strategies remain an elusive challenge
scientificamerican.com– Research advances in Alzheimer’s has arrived not in the form of new drugs but in technologies that track the underlying biology of the disease before the first symptoms appear.
Scientists prove even the thought of money spoils enjoyment
physorg.com– Subjects who were wealthier had a self-assessed lower level of savoring ability, and this undermined the positive effects of money on their happiness, although they were overall slightly happier than the less well-off subjects.

BUSINESS
Venture capitalists do it. Why shouldn’t philanthropists do it, too?
O’Reilly Radar– Entrepreneurs are most likely to help a field move forward if they build on the knowledge and the mistakes of the past rather than tripping down the well-trodden road.
Googling the book settlement
american.com– Clashes between competing visions of the good are more compelling than humdrum stories of good versus evil. This is no different.
The new investigators
cjr.org– Many of the new nonprofit centers are housed at universities, so the reporting could resonate and influence those most directly affected by the issue.
Music’s new entrepreneurs
forbes.com– From videogames to cookbooks, rockers are experimenting with ways to connect with their fans’ hearts and wallets.

FINANCE & ECONOMICS
Emigration up, birth rate down: Graying Germany contemplates demographic time bomb
spiegel.de– Unfavourable demographic shift is no news to Germans, although the net emigration trend cannot be too encouraging.
We’re all Swedes now
foreignpolicy.com– The Swedes themselves no longer believe in a Swedish model, or, when they do, it’s very different from the heavily regulated “people’s home” of myth.
Banks covertly financing Italy’s deficit
business.financialpost.com– Covert financing of the government’s deficit by Italian banks reinforces the solvency fears currently surrounding Italy, according to a new report from Lombard Street Research.
The economics of immigration are not what you think
ndn.org– Studies show that immigration has increased the average wage of Americans modestly in the short-run, and by more over the long-term as capital investment rises to take account of the larger number of workers.

THE REST
“Nul points” from Germany for Greece in Eurovision song contest?
blogs.ft.com– Two predictions can safely be made about Saturday’s Eurovision Contest: 1) most of the music will be painfully sub-standard; 2) millions of Europeans will nonetheless pick up their mobile phones to vote for their favourite songs.
Wiki-Constitutionalism
tnr.com– In Latin America, constitutions are changed with great frequency and unusual ease, as if they were Wikipedia pages.
Women and body image: a man’s perspective
telegraph.co.uk– There’s a solid pulse running through everything our culture aims at women – be beautiful, be beautiful, be beautiful.But being beautiful, it turns out, is a near-impossible task. It keeps getting harder and harder.

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Idealizing a world departed

The rest of the world is slowly catching up to the long eroded ideals of Sweden, now making its reality through the world via its booming crime-writing industry.

Vast and irreversible social changes have eroded confidence in the government:

[W]hat has changed since the genre was invented in the 1960s by the husband and wife team of Maj Sjöwall and Per Wahlöö is the overwhelming loss of confidence in the future, and in the state. This does reflect reality.

And while the rest of the world looked to Sweden for its utopian narrative and reputation, Sweden has become more like the rest of the world.  Namely, the very anti-thesis of Swedish-ness, America.

The story of Sweden over the last 50 years has been one of a steady loss of exceptionalism. In some ways the outside world has grown more “Swedish” — we all wear seatbelts, drink less, and believe in gender equality. At the same time, Sweden has grown much more worldly — it drinks more, works and earns less, and struggles with the assimilation of immigrants. The Swedes themselves no longer believe in a Swedish model, or, when they do, it’s very different from the heavily regulated “people’s home” of myth.

A startling statistic:

There were 230 homicides in Sweden in 2009, compared with 143 in Washington, D.C., which has a population a bit more than half Sweden’s size. But compare these figures to what they were in the years when Sweden looked like a utopia. In 1990, there were 120 homicides in Sweden, and 472 in Washington. There is a convergence here that doesn’t flatter Sweden.

More readings while we are on the subject:
· New York Time’s feature on Stieg Larsson and his messy legacy, http://nyti.ms/cuN1H4
· The man who blew up the welfare state, by n+1 on the politics behind Larsson’s writings, http://bit.ly/a05JrO
· The Prospects looks at the complicated values and histories that define modern-day Sweden, http://bit.ly/2ZZWeN
· Christopher Caldwell probes deep into Islam on the outskirts of the Swedish welfare state, http://nyti.ms/aaRiVY

More light-hearted readings here:
· By Slate, on Sweden’s bizarre Christmas Eve tradition, http://bit.ly/6RuJBN
· What an all-Ikea meal looks like, the Atlantic, http://bit.ly/
· Neighourly rows over the laundry room, CSM, http://bit.ly/bCDSx4Reblog this post [with Zemanta]

Morning links

Courtesy of Viewsflow’s Daily Briefing.  You can also follow it here, get it in your inbox by signing up here.

TECH & MEDIA
Why I Switched from iPhone to Android
pcworld.com -“I used to feel that, to get the best smartphone software and hardware experience, I had to live in Apple’s walled garden. Now, the walls are getting higher, and life outside the garden looks better and better.”
Why you shouldn’t believe ‘Facebook backlash’ numbers
news.cnet.com – The lack of alternatives to Facebook means that many dissatisfied members probably will not delete. their accounts altogether. It’s more likely that they may be clamping down on privacy controls.
M.I.A.’s agitprop pop
NY Times – What Maya wants is nearly impossible to achieve: she wants to balance outrageous political statements with a luxe lifestyle; to be supersuccessful yet remain controversial; for style to merge with substance.
What’s the matter with Sweden?
pitchfork.com – Think the cool Swedish indie band you’ve just heard of on the radio made it out of the Nordic wild all by themselves? Think again. Across the western world, different states have long played, and some still are, a vital role in the promotion of music.

BUSINESS
How China is trying to go green
Newsweek – As China gets richer, it will slowly but surely create its own equivalent of a Whole Foods buying, eco-tourism-enjoying middle class. That’s the very group that will be most likely to question the cost of unbridled development.
Positive sign: Worker mobility
The Big Picture – The natural wanderlust of a segment of employees was suppressed, and is now busting out again.
Where the smart people live
blog.robpitingolo.org – Looking at educational attainment density measured as college degree holders per square mile, here are the cities and counties that made it to the top.
Are there too many psychopaths in Corporate America?
bakadesuyo.com – The prevalence of psychopathic traits in corporate professionals is higher than that found in community samples.

FINANCE & ECONOMICS

Does Obama recognize the great global shift?
foreignpolicy.com – What are we to make of the fact that countries the United States wishes would play a larger role in the world are now doing so, but in a way that frustrates American goals?
How Angela Merkel’s selfishness is killing Europe
foreignpolicy.com – While Germans may feel liberated in the short term by thumbing their noses at their allies, Merkel’s isolationism will eventually mean a less comfortable neighborhood and a weaker Germany.
An update on the concentration of income in Canada
worthwhile.typepad.com – In Canada, the uber-rich are still getting richer, while the wealth of the kind-of-rich are staying put.
Weak euro could whack summer boxoffice
hollywoodreporter.com – If European currencies remain at present levels for the balance of the summer, studios would take an 11% hit in seasonal grosses.

Social welfare spending on both sides of the Atlantic

An interesting analysis via Freakonomics, comparing social welfare payments in the US to those in Nordic countries.

The Nordic countries collect income taxes on the cash payments made to social welfare recipients at rates that are four to five times the rates paid by American recipients.  Then when the Nordic recipients go out to make purchases, they pay consumption tax rates on their purchases that are 4 to 5 times the rate paid by the poor in America.  Furthermore, the U.S. government offers a series of tax breaks to promote social welfare that are not found in the Nordic countries.

The difference between the U.S. and the Nordic countries is closed further when expenditures per total population are considered. … If the adjustments for purchasing power are correct, net public social expenditures by government in America in 2003 ranked roughly in the middle of the Nordic countries.  Per capita net public social welfare spending in 2003 (in 1990 dollars) in the U.S. was $5,400, while Sweden’s was $6,300, Norway’s $5,900, Denmark’s $5,472, and Finland’s $4,200.

Americans have more opportunity to reach higher incomes because Americans in the upper half of the distribution have much higher incomes than Nordic people in the upper half of their income distributions.  On the other hand, households below the 10th percentile in America fare much worse on average than the lowest group in the Nordic countries.  Despite a large array of poverty programs, people in the U.S. are falling through holes in the safety net.

Nevertheless, it is undeniable that there is more income inequality in the US.  But the study seems to suggest that a high Gini coefficient in the US might have just as much to do with the prevalence of high income earners, as it does with the occurrence of low income earners.

What would be more interesting to see, is whether the differences in redistribution model have an effect on lifetime mobility.  I would imagine that a high marginal tax rate over still relatively low incomes – which is the norm in Nordic countries, will dissuade people from leaving all the welfare benefits behind and enter, or re-enter the labour force.

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A continent apart? On English individualism and why it smugly and smartly stayed away from the euro

From the Economist, on three factors that sets the British apart from its continental cousins.

One, a history of trading (as opposed to French farming, for example), common law system, and early industrialization.

Historians describe the English (more than the British) as unusually individualist and market-minded since medieval times, working for wages and trading property. England has had a central system of common law for centuries. It industrialised early. It has not been occupied in a long while. All this matters.

Two, the fact that the British has other options – part geography, part history.

These are all reasons why the British are different. Why, though, is Britain unique? The Nordics are free-traders who joined late and believe their national standards to be higher than Europe’s. Lots of east Europeans look to America for their security. Germany and Austria have their own Brussels-bashing tabloids. Sweden and Denmark both declined to join the euro.

The difference is that, although many of the others dislike aspects of the EU, they feel they have no real alternative. On many fronts, the British think they do. If a common EU foreign policy fails, Britain is still on the UN Security Council. If the euro collapses, Britain has the pound. Should EU regulation get too burdensome, there is always the chance of opt-outs.

Three, Britain does not share in the collective defeatist sentiment from WWII (except for the imperial decline part) as those on the continent.

To de Gaulle’s generation, the EU was a solution to the “German problem”, above all. Yet the post-war cry of “never again” resounds less in Britain. But it matters greatly that, almost uniquely in Europe, the second world war is a positive memory in Britain—and that Britain has not been invaded for centuries.

But smugness and schadenfreude aside, few in even the most reactionary corner of the British press could deny that, like it or not, UK and the EU are stuck with each other for the foreseeable future.

Europe will survive only if it acts more like a maritime power, its eyes fixed on growth and the far horizon. And Britain is needed to defend the free movement of people, goods, services and capital in the internal market. Walking away from the EU would not make either the club or its rules go away. In short, Britain and Europe are stuck with each other.

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Labour participation in a post-modern, work-life balanced world?

The best part of blogging is when the world echoes back, and someone challenges me on my ideas.  The latest question came from a dear reader, Amit, on the post I did a while ago on women’s labour participation in the OECD, particularly that of Japan and the Netherlands.

I’ve edited our email exchange slightly for easier web consumption.

Amit says:

1) The use of “abysmal” suggests that there is a pre-posited ideal state. Why so? It remains unclear as to whether the US and Scandinavian experiences with bringing vast numbers of women into the workforce fulltime are “correct” in an absolute sense.

Elizabeth Warren points out in her analysis of the US middle class, that women in the US workforce are there not just because they “want” to be, but often because they “need” to be, to afford housing and consumption at levels conditioned by media/pop-culture. She shows how the debt burden has risen per family, consistently, to the point where a prole+/bourgeoisie family has no alternative but to post 2 incomes to afford its suburban house (to which schooling is tied).

The US does not frown upon “assisted childcare” to allow women to work fulltime, but it also does not provide such care (though Scandinavian states do). For a mom to work fulltime in the US, the family takes on an additional expense burden (that eats away further into that debt servicing cash flow) of nannies and playschools, and the angst of knowing that this type of care is unregulated, and is held to a standard only on a caveat emptor basis.

Why is the US model good? Most American women (of a bourgeoisie status anxious grad schooled variety) I know, feel severe pressure to work and retain the “victories” of feminism, despite the strain it brings to their nesting and breeding instincts.

2) The Atlantic this week features the “millennial response” to the hook up culture, see it if you have time, and juxtapose with the Japanese sub-20 aspiration

3) I find your highlighting of the demand supply gap for the Y6MM+ man fascinating. If the US economy does not recover (through some fascinating and unforeseen next-big thing that generates jobs, perhaps it is Facebook?!), the same anxiety will grip American women of bourgeois extraction (and expectations).

There recently was an Atlantic review of the institution of Marriage itself, which shows that it will likely remain prevalent for bourgeois + (with richer women marrying younger and less educated and employed men, destined to be stay-at-home dads with part time work) and deteriorate entirely for bourgeois – (where marriage is largely abandoned already, 50% of kids are born out of wedlock, and 50% of those end up with an additional out of wedlock sibling via a different father within 5 years).

I’d call that sociological phenomenon of working women and stay-at-home-dads “inversion”.

I replied with the following, with mostly my observations and thoughts on why higher labour force participation for women is a net positive for society, and should be encouraged.

You say integration, I say delegation

The question on everyone’s mind right now is the issue of how the EU can better monitor and regulate the fiscal health of its member states, given the historical and cultural back droppings of this diverse continent.  Most of the ideas point in the path of more fiscal and political integration.  Some are nothing but populist and reactionary rants. But fantasy or not, the intent is there.

So given such an astounding lack of creativity, it’s interesting to see ideas that suggest smarter, and not more integration.  It might require a large degree of tinkering to make it work, but this makes more sense to me than most rhetoric I come across.

In referring to proposals that have member states monitoring each other’s budgetary decisions:

It would clearly be anathema to the German government to have its spending and tax policies approved by France, let alone by Greece and Portugal. The problem for the EMU leadership is therefore to find a way to prevent excessive deficits while leaving member states free to shape their own spending and tax policies.

Instead of imposing such intrusive measures, a united continent of Europe can conceivably impose stricter constitutional measures within its member states – certainly ones that are part of the currency zone, that place limits on state deficits. The United States is held up as such am example.

Although the 50 states share a currency and each sets its own spending and tax policies, state deficits remain very low. Even California has a deficit of only about 1 percent of the state’s GDP and total general obligation debt of less than 4 percent of state GDP. The basic reason for these small deficits is that each state’s constitution prohibits borrowing for operating purposes. States can issue debt to finance infrastructure but not salaries, services, transfer payments or other operating expenses.

With a similar set up in principal, European states can possibly retain independence over its budgetary and tax decisions, while having a deficit ceiling that it cannot break regardless of which way the political wind blows.  But the issue with Europe right now is to overcome the (rightly so) fears of sovereign power erosion. Several national elections are taking place across the continent over the summer, and ceding more power to Brussels will win nobody votes this time around.

Smart negotiations over state sovereignty for more economic stability, or handing over more power to Brussels in matters that they have little business in that will end up where we are any way.  One of the many questions for EU leaders to ponder.

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The harder question behind Eurozone fail

So far, most of the discussion over the Eurozone crisis has centered on the lack of economic feasibility of such currency union in a a non-optimal currency zone.  But the more interesting question we could’ve been asking all along is: whether the union in its current incarnation – having been achieved with much hand-wringing and backdoor dealings, in fact signals a progress of democratic ideals, or a regression of such.  That’s to say, were the ideals of a singular economic and political union a misguided exercise to start off with, and has the pursuit of such impossibility led everyone involved in precisely the opposite direction?

Ambrose Evan-Pritchard seems to think the EU has gone too far, if not from inception, but certainly the hard line behaviour it has engaged in the past few years.

In my view, the EU elites overstepped the line by ignoring the rejection of the European Constitution by French and Dutch voters, then pushing it through under the guise of the Lisbon Treaty without a popular vote, except in Ireland, and when Ireland voted ‘No’, to ignore that too. The enterprise has become illegitimate – it is starting to exhibit the reflexes of tyranny.

Slipping into tyranny and illegitimacy aside, the EU leadership also seems to have learned little from their predecessors the last century. The singled-mindedness in deficit reduction may very well push the entire zone into deflation.  And while Germany still harbours a collective paranoia of its hyperinflationary days, few seem to recollect that reinforced deflation was the root of the problem.

This is the Gold Bloc fallacy of Continental Europe from 1931 to 1936, the policy that led to Bruning’s destruction of Weimar, Laval’s near destruction of the Third Republic in France with his deflation decrees. It was a precursor to Laval’s fateful role as the Nazi enforcer of Vichy. He was later executed by firing squad, vomitting from a botched suicide with cynanide.

End of the day, standing on the other side of the Channel, this is a sober question to chew on.

Fonctionnaires and EU finance ministers will pass judgement on the British (or Dutch, or Danish, or French) budgets before the elected bodies of these ancient and sovereign nations have seen the proposals. Did we not we not fight the English Civil War and kill a king over such a prerogative?

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On European identity: Ultranationalism and supranationalism, two sides of the same coin?

As the Eurozone crisis rages on, the depth of analysis that goes behind the very construction of the union gets deeper.  This is my favourite today, a discussion on European national identities, and a lack of continental common identity.

For the past two centuries, the European obsession has been the nation. First, the Europeans tried to separate their own nations from the transnational dynastic empires that had treated European nations as mere possessions of the Hapsburg, Bourbon or Romanov families. The history of Europe since the French Revolution was the emergence and resistance of the nation-state. Both Nazi Germany and the Soviet Union attempted to create multinational states dominated by a single state. Both failed, and both were hated for the attempt.

There is a paradox in the European mindset. On the one hand, the recollection of the two world wars imbued Europeans with a deep mistrust of the national impulse. On the other hand, one of the reasons nationalism was distrusted was because of its tendency to make war on other nation-states and try to submerge their identities. Europe feared nationalism out of a very nationalist impulse.

Thus, the foregone conclusion on the other side of the Atlantic is that the Eurozone project has failed, as the very essence of the integration project worked against the cultural and historical backdrop on the continent.

The European Union is an association — at most an alliance — and not a transnational state. There was an idea of making it such a state, but that idea failed a while ago. As an alliance, it is a system of relationships among sovereign states. They participate in it to the extent that it suits their self-interest — or fail to participate when they please.

Lastly, check out the Viewsflow Daily Briefing, which has focused heavily on the Eurozone crisis for the past week.  Some samples here, here, here, and here. Check them out, sign up here, or follow it on Facebook here.

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Europe still the economically illiterate continent your opa left

Europe’s lingering hostility towards the market economy which sways from suspicion to outright resentment is rearing its head again, and has Tony Barber fuming.

One reason why the eurozone is sliding into ever deeper trouble is because its political and bureaucratic elites do not like, do not understand and have no wish to understand financial markets.

In the last few weeks, European leadership has alternately attacked everything from hedge funds, sovereign wealth funds, to now rating agencies.  On the surface, it might resemble same kind of populist outbursts American politicians served up on a plate when confronted with public outrage during the bail-out and ensuring bonus debate.  But in a European context, the public rage has been largely directed towards rising unemployment and prospects of potential cutbacks.  The leadership on the other hand, have been largely playing victims to the boogeyman that is financial market participants.

In the meantime, British and American analysts are racing to decipher the long-term implications of what took place over the last few weeks.

First stab: Germany is clearly emerging from its WWII guilt-ridden, Euro-centric, and multi-lateral stance, to a national psyche that is more focused on self-preservation.  It will have its fiscal sustainability, within or without the Eurozone.

Characteristically, one of the key terms of fiscal conservatism in Germany is borrowed from environmental politics: Nachhaltigkeit or sustainability. Unsustainable debts are associated rhetorically with a diffuse and contradictory bundle of future-angst – worries ranging from climate change to Germany’s declining population. Quirky it may be, but it would be wrong to deny that this eco-enhanced fiscal conservatism does have some grip on reality.

Secondly, part of the fiscal imbalance within the Eurozone itself, in which northern and southern Europe more or less mirror the financial co-dependence between China and the US, needs to be addressed.  Opinions differ as to just exactly what Germany’s options are, aside from its long-term pursuit of and export-led model, given its demographics and fiscal conservatism.

A low-inflation, export-driven model of growth was an appropriate policy in the face of Germany’s national disaster in 1945. It was contained within the Bretton Woods system thanks to America’s accommodating current account balance. In 2010, such a policy is fundamentally at odds with Germany’s role as the anchor of the eurozone. The challenge for the German political class is to complete the modernisation that it has achieved in so many other areas of policy. It must overcome the last legacy of the Adenauer era in its knee-jerk commitment to fiscal conservatism.

Post WWII, Europe’s political power projection on the world stage has been weak relative to its economic contribution.  Should it fall from economic grace too, then what is left?  American is undergoing a painful economic adjustments with political consequences, and its status as the lone hegemonic power is both unsustainable, and undesirable to most.

Links of the day, European edition

1. On the difference between empiricists and philosophers, and the size of blunders they commit.

Most of the world seems to think that the Americans are the ones who do the crazy things, but it is really the Europeans who commit the colossal blunders. Americans are empiricists – they will try anything, but if it doesn’t work they stop doing it. Europeans are thinkers, philosophers. They theorize and analyze brilliantly creating castles in their minds, turning them over and over to perfect them. The tradition starts with Plato, then Machiavelli, and goes through Karl Marx, Nietzsche, and Pareto, to the creators of the euro. Every philosophy can be discredited. It is only when a concept works in the real world over time and is adjusted to fit changing circumstances – like Communism in China – that one can be sure of success. All empiricists know that the euro can not work as constructed, but the Euroleaders will destroy their economies, harming the Swiss as well, until they are forced from power.

2. On the problematic side of free education, of which the lack of standards naturally emerge as a side effect, as manifested in the Swedish educational experiment.

Yet the Swedish authorities’ own research has concluded that over the last fifteen years since the free schools were introduced, the number of low performing pupils has increased in Sweden, while the high performing pupils have neither increased in numbers nor have they become more successful.

The free school system, implemented without imposing clear standards, has seen schools opening with sub-standard facilities, often without libraries, and with a far greater number of unqualified teachers.

What’s more, the introduction of free schools has led to increased segregation where pupils from the same social background increasingly concentrate in certain attractive free schools.

This matters because segregation and poorer facilities serve no-one but the Conservatives seem to specifically think that these “freedoms” are positive aspects of the policy. This is a serious mistake.

3. Should Europe work harder? While Americans kick itself in the butt continually in the race to keep up with emerging workaholics the likes of Japanese and Koreans around the world, Europe says, meh.  Productivity can help you catch up to, say, the US, when the rest of the emerging countries are mired in political instability.  But nowadays, when there are competitors out there willing to put in the hours and invest in productivity, you think Europe in the next 50 years will look anything like what it does today, when measured up against the rest of the world?

4. What an ex-Cold War spy thinks of the current European Union. Ouch.

“The European Union is like some tasteless Dutch vegetable, irredeemably detumescent,” he pronounces. “I mean, just look at that extraordinary woman they have made foreign minister, Lady Ashton — she looks like ET as dressed by Oxfam. The best thing the EU could do would be to draft in another country, somewhere like Angola, which would torpedo the whole wretched union thing and put it out of its misery.”

Outrage over Arizona is just a way of life in Europe

I can’t say it better than what’s already been said below.  Outrage over Arizona’s new law that mandates citizens to carry IDs at all time has been the way of life in Europe for years.

In America (and really in the Anglo-Saxon world in general) there is a very different attitude toward national identification than in Europe. There is no national ID card in the US. In fact, many have argued that to require people to get such an ID would be unconstitutional. Several states are even challenging a 2005 federal initiative that would just harmonise the way state driving licenses are designed. Because there is no national ID most Americans use their driving license as identification.

This is pretty true.  In Canada, you can pretty much get away with a driver’s license plus your social insurance number card for the majority of your bureaucratic dealings with the government.

Contrast that with the Netherlands.  As a side note, although I give the country a hard time, I hardly think that goes on in this country is any more paternalistic and Big Brother-like than any of its continental neighbours.

Exhibit one: I had to register with the local government as soon as I enter the country to notify them of my presence.  And should I move, they must be notified at all times.  For us, address changes are made out of a sense economic necessity and convenience (you want to get your tax returns, insurance papers, bills and home-order catalogues), not government dictation.

Exhibit two: In order to verify my partnership status with my boyfriend to renew my residence permit, I had to provide a not-married certificate from Canada.  It was simply inconceivable to the Dutch government that we had no such document in Canada, since marriage is a provincial matter and not legislated federally.  With much resignation, I handed over 30 euros to the Canadian embassy for a piece of paper with zero significance, which they handed over with a wink.  This piece of paper was then taken to a Dutch bureaucratic counter for a 10 euro stamp to validate its meaningless authenticity.

Exhibit three: Two uniformed policemen knocked on my door one day to check if a long-departed person previously registered under my current address is still in the country.  The fact that the police manually track down people to ensure they have left the country is crazy.  The comforting part of the story is that they were about two years too late.

Exhibit four: People love to whine here as they do anywhere.  But in my years here so far, I have yet to hear anyone complain about the mandatory ID-carrying rule in place, nor any grumbling over the new biometric passport system in place for its citizens.

The best starting point in getting acquainted with the Shanghai World Expo

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Image via Wikipedia

I’m cross-posting a pretty link-rich post from our corporate blog, in case you are interested in the Shanghai World Expo and want more info.

Short background: it’s a 6-month long extravaganza kicking off May 1st in Shanghai.  It’s  such a big deal inside the country that citizens of Shanghai are getting a few days off work as a way of clearing people off the street and channeling all resources into maintaining order and ensuring smooth running of the event.

All week here on Viewsflow, we are following the 2010 World Expo in China.

  • Flickr photostreams of various Pavilions are here, and the official Expo site introduces five themes of the exhibition.
  • Pavilion overview from ChinaSmack: Computer generated graphics of what various pavilions look like.  Walk through one, and walk through two.
  • Pictures of when trial runs turn away crowds courtesy of LostLaowai.

And don’t forget to follow our Twitter account as we update you with real time links all week on the Expo, and follow our Twitter Expo list too!

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