Monthly Archives: October 2009

Fall of the European Left, revisited

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Parties of the left are out of power in three of the Big Four now, and everyone expects Labour to lose the next General Election in Britain. Going down the list to the Next-Biggest Four, we have Spain (Zapatero’s center-left government hanging in there), Poland (center-right), Romania (grand coalition of the two largest parties; can’t exactly say left-right, because Romanian politics always don’t map well on that axis) and the Netherlands (bizarre Grand Coalition of Christian Democrats and Labour, with Labour far down in the polls and expected to be kicked out soon). It’s not unreasonable to expect that by next summer, Spain might be the only large country in Europe with a left-of-center government.

There’s a recent post over at Crooked Timber deploring this, and suggesting that it’s because

[We’re seeing] the end of the electoral strategy which began with Bill Clinton and which (arguably) is still being kept alive by Kevin Rudd in Australia. Basically, it’s the view that you can keep a balloon flying by constantly chucking out left-wing ballast. Which worked very well in the 1990s and early 2000s, but it does have a limited lifespan built into it. After a while, you run out of ballast to throw out and you find that the hot-air burners aren’t working any more; the traditional left-wing base of your party has switched off, the unions can’t provide blocks of support and you’re left as a more or less identikit technocrat party, largely indistinguishable from your opponents and trying to compete on the basis of more efficient provision of “public services”.

Well… maybe. I submit that this model works tolerably well for Britain (though I have some reservations); somewhat less well for Germany; and hardly at all for France. (Italian and Spanish politics I leave to those who are better informed.) Continue reading →

Feed the techne

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We had a presentation today from some impressively smart and determined people at Orangebox, a Welsh company that makes office furniture. Their ambition is to do ‘cradle-to-cradle’ (C2C) manufacturing; that is, manufacturing where a lot of the material you use to make your new products comes from your own older products, recycled. What makes this better than recycling, conventionally understood, is that if you know how a product is made, you know how to recycle it effectively. With conventional recycling, either the consumer or an open-to-all recycler has to attempt to separate out the various metals, polypropylenes, nylons, etc. and there’s pretty good evidence that they’re not up to it. For one, even a product as apparently simple as an office chair has upwards of a couple of hundred components. Worse, where dissimilar materials are bonded to each other in the way that they tend to be – if the manufacturer means those materials not to come apart – effective recycling is more or less impossible. The higher grade plastics get irretrievably contaminated through mixing with other plastics; then the only viable destination is the base of a traffic cone, or similar. Can you recycle a traffic cone base? No: the next stop is landfill. From LCD TV casing to landfill via traffic cones might be a ten year process. This is not really recycling.

Getting to be a cradle-to-cradle manufacturer is a challenge. You have to design products that are competitive in terms of manufacturing cost and quality, and which can be separated into their constituent parts when it comes time to recycle them, but which won’t fall apart in the hands of the user. You also need to know what those parts are made of. This is more of a problem than you might think. When you buy the feedstock for plastic components, you get shipped some boxes of granules; these, when heated appropriately, will flow nicely inside your stamping tool and set into the shapes you want. What’s in those granules? The manufacturer isn’t necessarily saying. To help get around this problem, there’s the interestingly named Environmental Protection and Encouragement Agency (EPEA). For a fee, EPEA will contact a materials manufacturer and get them to say, in confidence, what’s in their product. Without giving anything away, EPEA’s chemists will then say if that product is suitable for C2C manufacturing. As a work-around, this does seem to … work.

A while back, Dsquared suggested to me that the concept of embodied energy isn’t a goer. If your aim is to select products in the interest of sustainability, you have to contend with the possibility that you simply won’t know what the true embodied energy value of a product is. C2C manufacturing has a different emphasis. It aims at closed loops; all of the stuff just goes round and round.

Ireland’s slow motion fiscal crisis

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There’s a “normal” path for a fiscal crisis.  Some vulnerabilities build up.  An external shock tips things over the edge.  The country struggles along for a while but eventually refinancing or rollover risk forces the issue: new debt can’t be sold and the Impossible Missions Force is the only available lender.  An ugly but usually effective correction takes place and eventually access to capital markets resumes.  Of course there are exceptions but that’s the broad outline and some 2009 crisis countries may already over the worst.  Then there’s Ireland.

Continue reading →

Obama. Nobel.

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Holy smokes. What will the man do for an encore?

From the BBC:

US President Barack Obama has won the 2009 Nobel Peace Prize.

The Nobel Committee said he was awarded it for “his extraordinary efforts to strengthen international diplomacy and co-operation between peoples”.

Reuters quotes from the citation (The Nobel servers are slammed and super-slow just at the moment):

“Very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future,” the committee said in a citation.

Wow.

Sweden politely lays down the law

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Not since the glory days of Gustav Adolf the Great has Sweden wielded such power in Central Europe.  It’s been a busy day.  First, PM and European Council President Fredrik Reinfeldt held a meeting with under pressure Czech PM Jan Fischer to discuss the status of Czech ratification efforts on the Lisbon Treaty (in an omen, Fischer’s plane was delayed).  The other two European “Presidents” (commission and parliament) were also there.   Reinfeldt’s careful formulation: “it is important that we are flexible and ready to act”, meaning that no more pressure on the Czechs on top of what is already there, but background preparations for treaty implementation will proceed nonetheless.  Meaning specific job descriptions and candidates for the positions of permanent Council president and foreign policy representative.   So formally nothing gets done prior to ratification, but things move at lightning speed once Mr Klaus gets out his quill.   In the meantime, the Swedish minister for EU Affairs, Cecilia Malmström, will go to Prague to gauge the state of affairs on the ground.

But wait, there’s more.  Sweden’s finance minister Anders Borg has put the cat among the pigeons on the fiscal restructuring package for Latvia, which is a complicated mix of support from IMF, EU, and Nordic countries.  Essentially he argued that unless the promised cuts are delivered in the forthcoming budget, the Nordic component won’t be delivered as planned.  And this as the Latvian government works on legislation to convert loans into the non-recourse variety.  While the specifics of these moves may be somewhat surprising, the big picture is that the inevitable dynamics of choosing internal devaluation over external devaluation are playing out as Edward has been warning here for months.

That’s a lot of action over 4 days.  We may not say it often, but keep a close eye on Stockholm for the next while.

UDPATE 8 OCTOBER: PM Reinfeldt had what sounds like a truly bizarre conversation with Czech President Klaus in which Klaus asked for a 2 sentence footnote to the Lisbon treaty.  This looks rather mischievous since the footnote could easily have been agreed at the European Council summit which gave Ireland the treaty clarifications that it wanted.

Socialists win big in Greece

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This seems to have gotten very little attention, but Greece changed governments last week. The ruling center-right New Democracy (ND) party called elections a couple of months ago, and the result was that — predictably — they got stomped hard.

ND had a wafer-thin majority of 152 seats out of 300; they lost 61 (!) seats, and are left with just 91. The rival Socialists jumped from 102 seats to 160, which will allow them to govern alone.

Two of the three minor parties — the Communists and the Radical Left — stayed about the same. The third minor party, the Popular Orthodox Rally, jumped from 10 seats to 15. That’s kind of depressing, because the Popular Orthodox guys are assholes. They’re your classic Balkan Obnoxious Populist-Nationalist Party; insofar as they have a platform, it’s “Hate Albanians and cut taxes”.

One thing I still don’t understand is why ND called this election. Yeah, narrow majority, economic crisis, blah blah. The ND government was only two years old; they could have clung to power another couple of years. They didn’t expect to lose this badly, of course, but the polls made it clear they were going to get kicked out of government. Can anyone shed light on this?

As for the new government: they say they’ll enact an economic stimulus package. Otherwise, from this distance they look pretty similar to the other guys. Again, more detail is welcome.

That said, it’s noteworthy to see a left/center left party win power in Europe these days. (And in a landslide, too.) That hasn’t been happening much lately.

Trivia: outgoing Prime Minister Karamanlis was the nephew of a previous Prime Minister, while incoming Prime Minister Papandreou was the son and grandson of previous Prime Ministers. I would say Greece needs a whosekidareyou site, but on the other hand probably not — it’s not exactly a secret.

Treaty of Lisbon: Endgame

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Today is a key inflection point in determining whether the EU will be looking forwards or backwards over the next few months.  Irish voters will have had their second run at approving the Lisbon Treaty by referendum.  The count begins at 0800 GMT and it’ll be worth checking the Irish Election blog for early word of the “tallies” (informal survey of ballots as they are sorted) as well as general reaction to the result.  There’s some possibility of anti-climactic process if the tallies or a reliable exit poll signal a clear Yes margin early on but there have probably been a few sleepless nights in government circles nonetheless.   Assuming a Yes vote, there will be 3 issues worth watching:

Continue reading →

Spain’s Current Account Deficit Folds In On Itself

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Spain’s current account deficit fell to 2.064 billion euros in July from 7.752 billion euros a year earlier as imports tumbled, according to the latest Bank of Spain data. This is a very sharp and dramatic fall, and my guess is that at this rate the gap will close in six months or so, which will be a very strong correction, and potentially very painful for Spanish living standards.

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The Myrdals and feminist natalism

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Re this Yglesias post about Sweden, and comment thread, female participation in the labor force is influenced by government policies as well as culture, such as subsidized daycare and paid parental leave, with a month reserved for daddies, which makes it easier for both parents to never leave the workforce. (There’s also surely a feedback loop between policies and culture.)

The Swedish approach goes back all the way to the 30’s and the natalist feminist stance Gunnar and esp. Alva Myrdal persuaded the Social Democrat government to adopt. Continental countries, maybe especially CDU-dominated Germany chose a very different approach, which encouraged women to be homemakers, and now perhaps discourages them from becoming mothers.

The Myrdals were motivated by feminism, but also by their worries about declining birth rates in the 30s, and interest in Edward’s favorite subject, the connection between economics and demography. People stopped paying attention to those issues when the baby boom started.

That Sweden’s birth rates haven’t declined to the same extent as Germany’s is then the outcome of conscious policies.

Natalism is generally associated with reactionary politics in many countries, but feminist natalism is the kind that actually works.

Spain’s Manufacturing Contraction Accelerates in September

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Well here’s the first BIG news of the day – Spain’s Manufacturing contraction accelerates in September. Of course, how could it be otherwise. But I do wish all those people who are still in denial on what is now an all too evident reality would finally come out of the woodwork and do something. If Spain really goes down, it will drag the rest of the Eurozone with it, like Moby Dick, taking Ahab Trichet and his crew careering down to the murky bottom with him. Brussels, Frankfurt, you need to react. Zapatero has to go, and he has to go now. Spain needs a set of rational policies to deal with the crisis, before things really get out of hand.

September PMI

Key points:
– The Rate of output contraction accelerated.
– First reduction of new orders in three months.
– Job shedding intensified.

September data pointed to another deterioration of operating conditions in the Spanish manufacturing sector. Both output and employment fell at faster rates, while new business decreased for the first time in three months. The seasonally adjusted Markit Purchasing Managers’ Index® (PMI®) – a composite indicator designed to measure the performance of the manufacturing economy – dropped to 45.8 in September, representing a marked deterioration of business conditions. Moreover, the pace of decline accelerated to the fastest since June. Output contracted solidly in September, and at a sharper rate than in the previous month as demand in the sector decreased. Production has now fallen in nineteen of the past twenty months. Continue reading →