Dutch elections: preliminary round-up/impressions

The 2006 parliamentary elections in The Netherlands have produced some interesting results. Another centre-right coalition of CDA, VVD and D66 (before the latter blew up that very same coalition, see comments) seems to be off the table and the formation of a new coalition will prove to be very difficult what with the votes spread out more evenly over the main parties. There are now four major contenders instead of three. Prime Minister Jan-Peter Balkenende, who will probably continue to be Prime Minister, will now have to consider forming either a left-leaning coalition or risk an unworkable monster coalition. From The Guardian:

The Netherlands is facing political deadlock after the governing Christian Democrats scraped an unconvincing win in yesterday’s election and parties on the hard left and right performed well enough to impede their ability to form a government. As political leaders braced themselves for weeks of horse-trading to form a coalition, the outgoing finance minister delivered a blunt assessment of the result.

“It’s chaos,” Gerrit Zalm, a member of the Liberal (VVD) party was quoted by Reuters as saying. “The real winner is the only party that actually did not participate, which is the party of the anarchists.”

A summary round-up of the results can be found below the fold.
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Illiterate voters

I should know better than to visit Arts & Letters Daily when I am up to my ears in work. The wealth of reading material found there provides the ideal excuse for procrastination. “Hey, I am doing something intellectual here”. Nevertheless, after having resisted the temptation to go there for a while, I finally succumbed and discovered an interesting blog and an essay on the illiteracy of voters when it comes to basic economic principles. The blog is Cato Unbound and the essay, written by economics professor Bryan Caplan, is called Straight Talk about Economic Illiteracy (pdf, via Mercatus Center). My high school major in economics notwithstanding, please do not laugh, I consider myself to be an economic illiterate and therefore had to read the essay. It was a good call. One quote to wet your appetites as well:

Admittedly, economic illiteracy does not automatically translate into foolish policies. We could imagine that the errors of half the electorate balance out the errors of the other half. In the real world though, we shall see that such coincidences are rare. The public tends to cluster around the same errors – like blaming foreigners for all their woes. Another conceivable way to contain the damage of economic illiteracy would be for citizens to swallow their pride, ignore their own policy views, defer to specialists, and vote based on concrete results. Once again, though, this is rare in the real world. Politicians plainly spend a lot of energy trying to find out what policies voters want, and comparatively little investigating whether voters’ expectations are in error. Indeed, even when politicians brag about their “results”, they usually mean that their proposals became policies, and sidestep the difficult issue of whether those policies worked as advertised.

I do have to add one caveat concerning Bryan Caplan, at least for economic illiterates like myself. Caplan, according to wikipedia, “has been heavily influenced by Ayn Rand, Thomas Szasz, and Thomas Reid”. This influence is notable in the essay, just look for his take on the word “greed”. There may be an ‘agenda’ here. I especially like the before-I-saw-the-light style he adopts. In any case, I am mainly interested in his ideas about voter illiteracy and how he defines that illiteracy in terms of his own economic belief system. Is Caplan right, in general, in saying that voters are economically illiterate? Or is he simply using that angle as a trick to ‘convince’ true illiterates to see his light as well? This is an important, albeit naive, question, since illiterates like me are dependent on information from ‘specialists’, and Caplan ‘is’ an economics professor… To be filed under “forest and trees” and “caveat emptor”?

UK and German Retirement Policies Compared

As we all know raising the participation rates of older workers is both essential and a core component of the Lisbon Agenda, so here’s a timely report from the Anglo-German Foundation for the Study of Industrial Society comparing policies directed towards older workers in the UK and Germany. More salacious material to stimulate all you policy wonkers out there. (Hat Tip to David from North Sea Diaries). Looking at the table on page 3 the UK seems to have been a good deal more successful in acieving these objectives over the last decade. In both coutries male participation rates in the 55-64 age group has actually gone down since 1990, with the increase for the group as a whole being a matter of increasing female participation. On the other hand the UK has managed to reverse the 1990 – 2000 downward male trend and between 2000 and 2004 55-64 male participation went up, something which it noticably didn’t do in Germany.

The report concludes that the primary deficit concerning active labour market policies for older unemployed in Germany is the lack of specific targeting of this group both in active job placement and training. In the UK, the scope of active measures is rather limited both with regard to the kind of measures � New Deal 50 plus/New Deal 25 plus � and the level and duration of funding………In the UK � despite a more socially inclusive stance recently � funding of job creation and a broad application of training measures has not taken place so far, given the low intervention character of labour market policies. In Germany, in the wake of recent labour market reforms, a shift in paradigm towards a more activating approach to job placement has been implemented.

Older and Older

I think this is no longer news, but the OECD held a press conference yesterday to inform us that we are all living longer, but we still aren’t working longer, and that somehow these two facts don’t fit with our existing pension arrangements. Well perhaps it isn’t exactly news, but it still needs to sink-in somewhere. So I guess this is why yesterday the OECD were drawing everyone’s attention to a new report they have prepared on the basis of 21 separate country reports compiled as part of a thematic review of policies to improve labour market prospects for older workers initiated in 2001. The whole thing will get icing and a cherry at what is being called a High-Level Policy Forum to be held next Tuesday (18 October) at Palais d’Egmont. More details on the reports and the accompanying older workers forum can be found here).

At present, many public policies and workplace practices discourage older people from carrying on working. On average in OECD countries, fewer than 60% of people aged between 50 and 64 have a job, compared with 75% of people in the 25-49 age group (see Chart 1).

Such policies and practices are relics of a bygone age and unsustainable at a time when population ageing is straining public finances and holding back higher living standards. If there is no change in work patterns, the ratio of older inactive persons per worker will almost double in the OECD area over the next decades, from around 38% in 2000 to just over 70% in 2050.

This, in turn, would lead to higher taxes and/or lower benefits, coupled with slower economic growth. On the basis of unchanged patterns, OECD analysis shows, GDP growth per capita in the OECD area could shrink to around 1.7 % per year over the next three decades, about 30% below the average annual rates witnessed between 1970 and 2000.

Incidentally, I think this figure for sustained *per capita* growth of 1.7% across the OECD over the next decades is extraordinarily optimistic. If you strip out some of the large economies where the ageing problems are considerably more moderate – US, UK, France – I juts can’t see how the rest are going to sustain any per capita increase at all. What they will be into is damage containment. Unfortunately, as we can see, they seem to be in no special hurry to get on with even this.

Something Worries Me About Peter Bofinger

Really I realise I have been remiss in another important sense. I have long assumed that in fact the decision to reduce deficits was taken due to the coming fiscal pressure from ageing. This certainly was the background to the discussion. However now I look at the details of the SPG this area is not mentioned (as far as I can see) and the other – the free rider and associated – is the principal consideration.

So those who criticize the bureaucratic and infexible nature of the ECB are in the right to this extent. Of course the underlying demographics *should* be part of the pact, but that is another story.

I find myself in a tricky situation, since I am deeply sceptical that the euro can work, and now after the French vote even more so, but since it has been set in motion, the best thing is obviously to try and make it work (even while doubting). So I am thinking about all this. Obviously I should try and write a longer post making this clearer.

The SGP was adopted at the Amsterdam Council 1997. A history of the implementation of the pact, and a summary of the debate over the new pact can be found here. The Stability and Growth Pact was designed as a framework to prevent inflationary processes at the national level. For this purpose it obliges national governments to follow the simple rule of a balanced budget or a slight surplus.

Now if we go back to the origins of the pact, to the communication of the European Commission on 3 September 2004, you will find the following:

“As regards the debt criterion, the revised Stability and Growth Pact could clarify the basis for assessing the “satisfactory pace” of debt reduction provided for in Article 104(2)(b) of the Treaty. In defining this “satisfactory pace”, account should be taken of the need to bring debt levels back down to prudent levels before demographic ageing has an impact on economic and social developments in Member States. Member States’ initial debt levels and their potential growth levels should also be considered. Annual assessments could be made relative to this reference pace of reduction, taking into account country-specific growth conditions.”

Now curiously I have found nothing in Bofingers argument which seems even to vaguely recognise this background.

A good starting point for this topic would be the conference “Economic and Budgetary Implications of Global Ageing held by the Commission in March 2003.

The European Council in Stockholm of March 2001
agreed that ?the Council should regularly review the
long-term sustainability of public finances, including the
expected strains caused by the demographic changes
ahead. This should be done both under the guidelines
(BEPGs) and in the context of the stability and
convergence programmes.?

This document on the history of EU thinking on ageing and sustainability is incredible.
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Turkey recommended for EU accession talks

The European Commission has recommended that accession talks for Turkey should begin, but hasn’t laid out any dates for the process:

Commission officials are reporting on the progress Turkey has already made, along with Bulgaria and Romania.

The final decision on Turkey rests with the leaders of all 25 EU member states in December – with accession years off.

The Commission’s recommendation is a milestone in an increasingly impassioned debate.

The decision was reached by a “large consensus” among commissioners, one EU official said, but no vote was taken.

There was also no recommended date to start negotiations with Turkey.

More from The Scotsman/PA, EU Business, Reuters and EU Observer.

Update: The full text of Romano Prodi’s speech can be found here and I’ve copied it below, so you can click on the ‘continue reading’ link to see it as the English HTML link on the site doesn’t seem to be working (pdf and doc links are).
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Daniel Pipes on Tariq Ramadan: Why French literacy still matters

Readers of my previous comment on Tariq Ramadan will no doubt have come away with the impression that I don’t much like Daniel Pipes. This is not an entirely accurate assessment of my opinon of him. I think Pipes is an unreconstructed bigot and xenophobic fanatic whose academic work fails to meet even the lowest standards of scholarship, whose career has been built on politically driven attacks, and who has set up with his “Campus Watch” as a terrorist front designed to intimidate academics and ensure that there is as little debate, discussion or rational thought on Israel, US foreign policy or Islam as possible. His reseach and scholarship are not intended to better inform action but to support specific agendas, usually revolving around hating some foreign force or people. Instead of fostering debate, his work is intended to intimidate. Pipes advocates religiously targetted surveillance, he supports making federal university funding conditional on ideology, and he has helped to terrorise professors who are named on his website. In short, I think Pipes is swine.

He is a second generation right-wing tool, the son of one of the men most responsible for America’s “Team B”, which grossly overblew the Soviet menace in the 70s and 80s – causing massive US defense spending and resulting deficits – and complained that anyone with a better sense of reality was soft on communism. Normally, Pipes’ parentage would constitute poor grounds for condeming him as having a pathological relationship to facts. But keep this in mind, since it constitutes one of his arguments against Ramadan.

All you need is Google to find out why I think these things about Daniel Pipes. It’s not a lot of work. His own website provides ample examples.

But, today, I will be targeting something a little more specific. Pipes has put up on his website his comment on Tariq Ramadan’s visa denial, originally published in the New York Post on Friday. In it, he makes specific points against Tariq Ramadan, linking, in some cases, to articles on the web in support. These articles are primarily in French. As a service to our non-francophone readers, we will be translating the relevant sections, since they lead one to the conclusion that Pipes assumes his readers will just take his word on their contents.

We report, you decide.
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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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