France’s Finances Under The Microscope

The OECD has a new country report out on France:

France’s rising government debt threatens the sustainability of public finances in the eurozone’s second biggest economy, the Organisation for Economic Co-operation and Development has warned in its latest country report.

The Paris-based OECD said that a lack of control over public spending could leave France unprepared to deal with the financial consequences of an ageing society.”

I rest my case.
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Falling rate of Intelligence?

Conventional marxist theory used to argue that capitalism was doomed to regular and deepening crisis due to the impact of a phenomen known as ‘the falling rate of profit’. Basically the idea runs as follows: since on the marxist view labour is the only source of genuine wealth creation, and capital accumulation means that the proportion of active labour to ‘dead labour’ (capital investment) tends to decline, then the ‘rate of profit’ will diminish accordingly. Now I certainly have no intention of going into all this rigmorole, but I do remember some wit back in the seventies suggesting that if this was the case, then, for example, we could argue that intelligence must be falling, since the quantity of active human brainpower as a proportion of accumulated knowledge (living to dead ‘mental labour’) was constantly diminishing.

Well, low and behold, a paper out this week at the NBER argues just this case.
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That Dreaded D Word

“Dial D for Deflation” declared the Economist in 2002 in an article which amazingly is still available online. Since Alan Greenspan officially declared the deflation scare over, the word has hardly cropped up in economic debates.

Yet anyone looking at the rapid rise in value of the euro, and the absence of growth in some key economies – Germany, Italy – could have been forgiven for thinking that the ‘all clear’ signal was being given a bit too soon.

Today the latest EU inflation figures are out from Eurostat (PDF file), and Goldman Sachs are warning that: ?without preventive action from the ECB, unit labour costs threaten to pose a future risk of deflation?.
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Changing Perspectives On Immigration.

Views of immigration are changing. Back in the mists of time, when I first came to the conclusion that ongoing demographic changes were going to be important, the voices in favour of a reconsideration of immigration policy were few and far between. Perhaps the first and most notable of these voices was the UN population division. Now things are different, and a series of recent international conferences and reports highlighting the positive advantages of immigration as an economic motor only serve to underline the fact that discussion of this important topic is very much back on the agenda.
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General Counting.

Her Majesties’ subjects have spoken again. It’s just that we don’t know yet what exactly they have said. Well, a majority among them will have probably sighed a little in the booth and then more or less resignedly or enthusiastically ticked off the box next to their local Labour candidate, thus likely ensuring Blairs “historic” second and a half term in office. Earlier, Exit polls predicted a reduced Labour majority of 66 seats.

But because we want to know all this in detail, it is worth mentioning again on top of the page that afoe’s Nick Barlow is blogging the election night over at “What you can get away with” as well as on the 2005 UK General election blog. Here’s why he thinks it’s worth staying up:

“Conservatives take back Putney on a 6.5% swing, Labour hold Newcastle Central but have an 11% swing to the Liberal Democrats. There?s not going to be anything even resembling a uniform national swing tonight, so this could be a long night.”

If that’s still not enough information for the true election junkies among you, then check the list of election bloggers compiled by Chicken Yoghurt. Oh, and before I forget it, the BBC does also offer extensive election coverage including an automatically updating scorecard.

Sometimes it’s who you don’t vote for that counts

As many Fistful readers will be aware, it’s widely expected that there’ll be a General Election in the UK this May. Of course, because of the way our system works, no one can say for definite when it will be until the Prime Minister actually goes to the Queen and requests that she dissolve Parliament but all the signs on the Magic Political 8-Ball point to an election on 05/05/05 (for once, a date we can all agree on regardless of how you order days, months and years).

The UK remains the only country in the EU to use the First Past The Post electoral system which means that, thanks to the vagaries of the system, we can have electoral results that seem somewhat odd to an external observer. Since 1945, no party has won more than 50% of the national vote (the Conservatives came closest in 1955 and 1959) but only one election – in the February election of 1974 – has seen neither of the two main parties (Conservatives and Labour) achieve a majority of the seats in Parliament.
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Outsourcing Debate Hits Germany

Well, well, this was hardly unexpected. In fact the reality may well be that this time there is plenty of smoke but no fire, since Siemens has announced it has no concrete plans to move 10,000 jobs abroad. Indeed much of the noise at present may emanate from a threat to move as a negotiating posture in order to try and force changes. But behind this the underlying reality is that the problem is coming. Not only is Germany having a ‘job-loss’ recovery there is good reason to doubt whether it is having a recovery at all. And of course the main course may well be yet to be served since many of the jobs threatening to relocate seem to be in the industrial sector, whilst just round the corner the high-end services issue is surely coming. Still there is one difference with the US: the headlines are not being made by an opposition candidate talking about Benedict Arnold CEO’s, but by a Chamber of Commerce head who seems to be saying he’s Benedict Arnold and proud of it.
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ECB: German Plea Falls On Deaf Ears

When this is all over, and we come to look back at the when and the where, maybe we will remember today’s decision as just one more of those missed opportunities. Certainly not much notice seems to have been taken of Gerard Schroeders request for a helping hand on the interest rate front. Is there any significance in the fact that on the day the ECB decided to stand firm, German unemployment turned upward again to 10.3%, while it was also revealed that German factory orders fell unexpectedly by 2% in January: just for good measure I suppose.
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Book Review: “European Integration 1950-2003: Superstate or New Market Economy?”

Once upon a time, there was a large, intellectually hegemonic, somewhat totalising ideology rooted in a heterodox school of economics. Its advocates proposed to make massive changes to the structure of society and claimed that only such a revolutionary realignment could alleviate the contradictions and failures of the existing order and save the world from stagnation and misery. They claimed that their programme would produce immediate results, and that the only reason it wasn’t immediately implemented was because entrenched interests were manipulating the public against them.

Ultimately, advocates of these principles did gain power in many places and were able to implement elements of their programme. Some came to power through revolutions of various kinds that granted them the near-dictatorial powers they needed to make the changes they believed necessary. Others were able to convince electorates and even elites that theirs was the way of the future. They turned public dissatisfaction to their advantage, especially during economic downturns when people were willing to turn to new solutions and elites feared that the masses would turn against them.

And, they had some arguable successes, but no unambiguous ones. In some places, particularly those where effectively unlimited power had shifted to them, they often maintained highly inequitable regimes which grew harder and harder to justify, faced ever growing public disaffection, and turned to more oppressive and manipulative means to sustain control. This undermined their movement, but despite the best efforts of their enemies was not quite able to kill it off.

In states where more democratic methods had been used, the need to compromise with established interests and to sustain public consent forced them to accept measures often contrary to their initial programme. Their ideological identity tended to shift over time as winning elections grew more important than ideological purity and as the drawbacks of real power became apparent. Actually being held responsible for results forced many members of this tradition to accept their enemies’ interests as at least partially legitimate, and compelled them to less radical legislative programmes.

In some of those nations, these radical parties became increasingly manipulative and difficult to distinguish from their former enemies. But, in a few places, the necessary dilution of their programme brought about an ideological synthesis that appeared successful, and this success in turn showed that the radical programmes they had once advocated were perhaps unnecessary. In the end, ideology had no real hold on them, and the models and methods that seemed to work became the political and economic programme that they were identified with. Their former allies who operated more dictatorial regimes were easily repudiated.

But others were unable to accept that option. They included dissidents who had been burned by the growing authoritarianism of their own failed revolutions, or who were simply unable to accept that their early ideological purity had become superfluous. They were isolated and powerless, only able to function in the states where their former allies had become moderates, leaving them without meaningful public support. They fumed at the world’s unwillingness to go the way they wanted, and increasingly recast the history of the world in terms of their own ideological predispositions. The past became, in their minds, an unending conflict between an ideologically pure vanguard and scheming established interests, a story of their courageous champions betrayed by back-sliding traitors. Ultimately, the world moved on and these radicals virtually disappeared outside of intellectually protected milieux like privately-funded think tanks and universities.

Of course, by the now the astute reader will have recognised that I am talking about the history of neoliberalism.
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Work Freedom Day

European countries never do very well in the gimmicky league tables or comparative indices of nations that thinktanks love to devise in order to meet the bills. You know the sort of thing ? the World Competitiveness Ratings or the Index of Economic Freedom. I thought it was time to come up with one that plays to Europe’s strengths.

What strengths, you may ask? Well the combination of gloomy back-to-work September, and a recent report from the International Labor Organisation, Key Indicators of the Labour Market, reminded me of something the continent has in its favour ? short working hours and long holidays. And so to boost European?s international self-confidence during these difficult economic times, I would like to propose a new measure of how much time we have to spend at work, Work Freedom Day.
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