Thank God for government by our betters

Via Crooked Timber and Mark Kleinman, I’ve just read this utterly stupid column from Forbes:

Europe’s Utopian Hangover

The EU is built on a fantasy–that men and women can do less and less work, have longer and longer holidays and retire at an earlier age, while having their income, in real terms, and their standard of living increase. And this miracle is to be brought about by the enlightened bureaucratic regulation of every aspect of life.

The EU is a French concept and is still largely run according to French ideas. And France is the archetypal EU country. If you have a regular job in France, your life is, in theory, lyrical. You work 35 hours a week. You generally get four weeks of holiday in August, plus a further three weeks throughout the year, in addition to 11 state holidays. Full medical care is provided, even in retirement. Retirement age varies, but it is now typically 55. Pensions may be two-thirds to three-quarters of a person’s salary at the time of retirement. […]

Americans should count their blessings, above all the supreme blessing of having an economy that is run by businessmen not bureaucrats, or that–under wise governance–runs itself.


Ah yes, thank God we’re ruled by businessmen, those godsends of compassion and competence that brought us economic success stories like Enron and Worldcom and leaders like George W. Bush – an MBA from Yale – who would never mismanage a nation’s finances.

Johnson is obviously right. I notice how standards of living have fallen sharply since the mid-19th century, when a 60 hour work week was the norm and elderly was practically a synonym for indigent. We work so much less now, and we’re so clearly poorer by comparison to our Victorian forebears. And the rule of the business class is clearly just and equitable. Look at how businessmen stood against fascism in the 1930’s and 40’s, never ever collaborating with dictators, and their strong stand against dictators in Latin America and the apartheid regime in South Africa in more recent years. Why even today, we see businessmen refusing to invest in China, Myanmar and Saudi Arabia in protest of the human right situation in those countries.

And the EU is so clearly a French institution. The stability pact that accompanied the Euro plainly serves French interests, since France is so readily able to meet its requirements while imposing such a heavy burden on other European states. France always gets what it wants from its European neighbours. Why, France gets a rebate on its contributions to the EU budget… er, no that’s the UK. France has managed to get all of Europe to sign onto a single military alliance, except for Finland, Sweden, Denmark, the UK, Ireland, the Netherlands, Spain, Portugal, Italy, Austria, Greece and all the new Eastern European members. But, French is of course the de facto language of the European bureaucracy, isn’t it? You hardly ever hear English in European institutions, do you?

Okay, I’m done being sarcastic. I don’t have a high regard for Forbes magazine, but this sort of dreck should never have gotten past the editor’s desk.

41 thoughts on “Thank God for government by our betters

  1. Scott Martens: Businessmen certainly brought us more wealth than government bureaucrats. Or haven’t you noticed that the Soviets simply didn’t make it? Also, in America, badly managed companies like Enron and Worldcom are allowed to die – only in France and Germany are they kept alive through subsidies, to continue their bad management policies.

    And Bush has yet to mismanage the nation’s finances. In fact, he’s gotten Europe to finance most of the deficit that covers the war.

    Living standards have improved not only since the mid-19th century, but also since a decade ago. Try to keep a little perspective. And your ostracizing of businessmen for collaboration with dictatorships is laughable: state bureaucrats continue to do the same thing, while western tourists pour even more money to third world dictatorships.

    France continues to be the one of the biggest beneficiaries of EU largesse, so there goes that argument. And the fact that France hasn’t managed to get all of Europe signed onto a single military alliance says something about the essential folly of that French idea. And while were nitpicking, why does France continue to insist that the European Parliament has to stay in Strassbourg, forcing the EU to spend more than EUR 100 million a year for travel expenses between Brussels and Strassbourg? French egocentrism continues to be a plague upon Europe, and keeps Europe weak and divided at a time when all of Europe seems to aspire to more relevancy in the world.

    And Forbes continues to be a voice of businessmen. It’s a useful voice to be heard, though Europeans like you might prefer some voices to be silenced.

  2. Markku, just this one thing: France has managed to put Strasbourg in the Treaties and it’s there to stay, although I’d say most of the people involved hate the whole thing. And while we are on this ever so slightly off-topical subject, have a look at this press cutting:

    “It was Labour foreign secretary Ernest Bevin who suggested in 1949 that Strasbourg should become a powerful symbol of a new Europe in which peace had been restored.

    He urged that “this great city, which has borne witness to the stupidity of the human race… should become a symbol of the unity of Europe an ideal place in which to pursue this great project in an atmosphere of good faith, rather than domination.”

    This is where I found it: http://icwales.icnetwork.co.uk/0100news/0200wales/content_objectid=13341697_method=full_siteid=50082_headline=-Euro-ruling-hits-Strasbourg-merry-go-round-name_page.html

  3. Ania: And what European city has not borne witness to the stupidity of the human race?

    As to the Treaties, there is no reason Strassbourg has to be there to stay. Just change the Treaty, and save the EU taxpayer 100 million a year. Oh, right, the French would object… they stand to benefit from those transport costs, etc., after all…. In the end, it is like an EU subsidy for the city of Strassbourg. Beats having to have the French government take economic responsibility for the city.

  4. France gains from the EU, but then again so presumably does every member country. That is why they wish to remain members, and majorities of their electorates wish to remain members.

    If you meant purely on a financial basis, yes France is a large recipient of EU funds, but what matters is its net contribution, and France is a net contributor to the EU.

    On a more general level, Scott is right. You can work fewer hours, for fewer years, and yet see your income rise. It’s called productivity growth, and the EU’s record over the last 10, 20, 30 years stands in good comparison with that business paradise, the US.

  5. “Just change the Treaty” – now, I wonder why nobody at the EU Convention even tried mentioning Strasbourg. That probably means they knew they did not stand a chance… Here’s another press cutting for you:

    “Complaints are furiously denounced by French MEPs, who are backed by the Germans and the Italians and by lobbyists, who love the captive audience. Paris is quick to stamp on any suggestion that the number of sessions be reduced. Unfortunately, the French are within their rights as the siting of EU institutions is decided by unanimity and John Major struck a very bad deal with Fran?ois Mitterrand in 1992. No one even bothered to raise the issue in Val?ry Giscard d’Estaing’s constitutional convention.”

    http://politics.guardian.co.uk/eu/comment/0,9236,992882,00.html

  6. It would be illuminating IMO to carry on this debate with reference to Mary O’Mahony and Willem de Boer on: Britain’s Relative Productivity Performance (2002), at: http://www.niesr.ac.uk/research/BRPP02.pdf

    Tables 1 and 2 there show France to have impresssive productivity per HOUR worked, even compared with America, and also impressive growth of productivity per hour for much of the period since 1979.

    It happens the French prefer to take the benefits of their high productivity through longer holidays, shorter working weeks, earlier retirement and lower employment rates compared with both America and Britain.

    In case anyone asks, Ms O’Mahony has impeccable credentials and is rated as one of Britain’s foremost experts in productivity comparisons.

  7. Bob: now there you go and ruin a perfectly good ideological argument with mere *facts*. Because if Mr. Johnson was worried by mere facts how could he possibly wonder:
    …”that men and women can do less and less work, have longer and longer holidays and retire at an earlier age, while having their income, in real terms, and their standard of living increase.”

    Thus displaying a glowing indifference to evidence from much of the last two centuries.
    Or that one would actually claim that France is a *net beneficiary* of EU funds – while it is a net conributor as Matthew pointed out – and is trivial to discover via, even a quick, google search (i.e. here:

    http://www.france.diplomatie.fr/actu/bulletin.gb.asp?liste=20021024.gb.html)

    So again: please don’t cloud issues with facts Bob. They’re not appreciated by *proper* minded people.

  8. “men and women can do less and less work, have longer and longer holidays and retire at an earlier age, while having their income, in real terms, and their standard of living increase”

    Wasn’t that what technology was supposed to do for us. Is someone really against this.

    Of course there’s a point about policy mix. But there are businessmen in France, although there are no Google’s Yahoo’s etc. – but then there aren’t too many in the US these days.

    And don’t the US have their share of vested interests and bureaucrats. Try looking here if you want to know what they are trying right now to do to competition and world trade vis a vis China:

    http://www.cecc.gov/

    All of this is very silly

  9. Scott,

    Bush went to Yale as undergraduate and did an Harvard MBA. But the point is certainly valid. I still don’t understand how Harvard Business School has apparently never been asked about his admission ;).

    As for Johnson’s rant – wasn’t it Michael Moore who pointed out in “Downsize This!” a few years ago that Steve (flat tax) Forbes is probably an alien for he did not blink once during an interview that lasted several minutes…

    I think ignoring stuff like this is the healthiest way to deal with it. I am, however, a tad bit worried about the wider implications of such a rant getting past the editorial desk – the overall quality of the American public discourse.

    There are so many brilliant brains in America, on all sides of all political dimensions, yet American public discourse more often than not tends to resemble to war rather than to a discussion.

    I wonder if that is the natural outcome of power struggles in a more heterogeneou is society (and thus where Europe is headed) or if this is primarly a consequence of lack of a free market induced “race to the bottom” of media quality?

  10. Talos,

    Facts are very inconvenient. European ideological clevages I know about but it really is much harder work trying to get at the facts about the differences between EU economies. The more I’ve probed, the bigger the differences seem – which is one reason I believe the Euro was unwisely pushed through prematurely for political reasons. Be that as it may, European social security, healthcare systems and tax structures and burdens, as well as capital markets, differ widely so valid generalisations are difficult.

    We can agree that America stands out starkly as having a significantly lower tax burden and that France has a tradition of statism or dirigisme going back, literally, centuries and which has more a nationalist than an ideological tinge. Successive French governments, both leftist and rightist, continued to apply a national industrial strategy, including picking national champions, long after such notions were (mostly?) abandoned in other parts of the EU if they were ever applied with the same dedication. But the overall picture is very blurred. After WW2, W Germany left the massive problem of housing reconstruction very largely to the private sector while in Britain both leftist and rightist governments subsidised rented housing provision by local authorities.

    There is a broad distinction in that the northern countries in the EU tend to be free-traders while the southern countries tend to be trade protectionist. We can see that internally in the EU in different national stances to unwinding the EU’s Common Agricultural Policy and in readiness to levy anti-dump duties to keep out imports of low-cost manufactures. But then what was the Bush hike in tariffs on US steel imports about?

    Followers of the European scene may often encounter a simplistic argument that (West) Germany and France have higher productivity per hour worked than Britain so Britain should rush to adopt the Euro and discard any inhibitions about closer European integration. Were things as simple as that. In fact, Britain’s GDP per head was overtaken by W Germany’s in the late 1950s and by France’s in the late 1960s so it seems likely other causal factors besides differences in intra-European trade barriers were at work.

    One that seems significant to me is Britain’s inferior systems of industrial and vocational training coupled with a persisting high drop-out rate from full-time education after the minimum school leaving age is reached – a problem still with us: “It must be one of the most stunning statistics that we are 20th out of 24 OECD countries for staying-on rates at 17” – David Miliband, minister for school standards at: http://news.bbc.co.uk/1/hi/education/2238424.stm

    Ramping up national economic performance may have far more to do with necessary, though varied, internal structural reforms than with further reductions in intra-EU trade barriers and European political integration – especially since trade barriers on manufactures are now quite low thanks to successive international trade rounds through to the Uruguay Round in the early 1990s. It certainly seems to be the view of the European Central Bank that the persistently high unemployment rates of France, Germany and Italy are largely due to structural factors in their internal markets and not demand deficiency. The stella performance of Ireland’s economy is a strong hint that low taxes and laissez-faire product markets are conducive to economic success. However, Ireland also has a rather centralised system of wage-bargaining, as does the Netherlands, so it’s not laissez-faire all the way.

    Btw any with great stamina may be interested in this recent heavyweight study: The Sources of Economic Growth in OECD Countries (2003) at: http://www1.oecd.org/publications/e-book/1103011E.PDF

  11. IIRC Japan has the most industrial robots per worker, second was France (there robots pay SS).
    Ireland is a small country, and was quite poor not so long ago, since it is rather near to the UK ans English is as known there as in Britain, the place was an convenient site to build multinational (mostly US I believe) corporations’ factories at a low cost.

    DSW

  12. Tobias: Europeans should worry less about a “race to the bottom” in media quality, and more about the starch ossification of state-supported academia and media which mistakes national chauvinism with quality.

  13. Matthew and Talos: Oh, geez! It figures that a bunch of Euros, weaned as they are by the welfare nanny-state, would think that a net contribution justifies the receipt of the subsidy, when the point is that there shouldn’t be subsidies in the first place….

  14. Markku,

    Please point me towards the economy with no government subsidies so I can see how it works in relation to the US, German, Japanese, Uk, French and Italian economies, which last time I looked were in the top ten most successful in the world.

    Understandably you may point out that their success is historical, and based upon subsidised industries such as cars and steel, whereas the future (and indeed the only reason we can have this discussion) belongs to industries untained by government intervention, such as the internet (or Arpanet as I believe it was once called for some strange reason…)

  15. “It happens the French prefer to take the benefits of their high productivity through longer holidays, shorter working weeks, earlier retirement and lower employment rates compared with both America and Britain.” – Bob

    And the ones who would like to work longer and earn more money? Where *is* Guillaume Gates? Paul All?ne? Michel Delle? Laurent Ellison?

    *looks under carpet*

    *looks in both Toulouse and Lyon*

    *shrugs*

  16. Doug, you are an incompetent. France by itself is not a big enough market for that. Neither are Spain, nor Italy, not even Germany is big enough. Is the free-marketting UK better? I doubt it. I am not aware of a Sir Gates, Sir Allen, Sir Dell nor Sir Ellison.

    If you want to work more, you can simply go to the USA. I do not know exactly what have happened to him, but Philippe Kahn was quite a figure some years ago.

    And these guys you list are the same they have been for some 20 years. In fact there were more in the past, Mitch Kapor anyone?

    DSW

  17. Markku,

    I don’t quite get what the national chauvinism argument is in relation to publicly supported media? Ever watched Fox News? Anyway, there’s no free lunch – in an industry that is mostly selling eyeballs to advertisers publicly imposed standards can keep the “race to the bottom” above the quality market equilibrium. That said, I am the first to admit that some European media (that is tv and sometimes radio) markets are still somewhat skewed towards the public incumbents. But that’s a only a matter of degree, imho.

  18. As the man wrote [1925]: “The broad mass of a nation . . will more easily fall victim to a big lie than a small one.” [Oxford Dictionary of Political Quotations]

    Repeat after me all together now: America is a free-market economy.

    “Please point me towards the economy with no government subsidies so I can see how it works”

    Quite so. The challenging discussion is about why, how and when it makes good sense for governments to subsidise a business or an industry and when subsidies – or hiking trade barriers – amount to no more than paying off some rent-seeking special interest group with political clout, as with the Bush hike in tariffs on US steel imports which is now reckoned to have cost more jobs in steel using industries than are being safeguarded in the steel making industry. They know not what they do.

    To digress a little, with few outstanding exceptions practitioners of the dismal science have seldom made good humourists and satirists. Stephen Leacock (1869-1944), a Canadian, was one: http://www.nlc-bnc.ca/literature/5/index-e.html

    Another was a Frenchman: Fr?d?ric Bastiat (1801-50). Savour this delicious petition to the National Assembly seeking protection for candlemakers against unfair competition from sunlight: http://bastiat.org/en/petition.html

    Plus ?a change, plus ?a m?me chose.

  19. Bob,

    >Repeat after me all together now:
    >America is a free-market economy.

    well, as all states are becoming more and more regulatory, all this is a matter of degree. America is certainly a “freeer” (does that comparative exist in English?) market than are others. There are evidently varieties in Capitalism and there is no clear cut way to predict their potential to enhance welfare. But I digress. You’re right: It’s well worth pointing out the myths so many people more often than not take for facts.

  20. To be fair to the fellow from Forbes, there are some depressing facts cited in the body of the article that warrant the conclusion that all is not running like clockwork in Eurodisney’s “It’s a Small World” attraction. Yet it is hard to see how they justify the usual cant of the laissez-faire running dogs. France and Britain are facing a pension crisis, an anxiety we’re not unfamiliar with in Bush’s America, where elderly really is synonymous with indigent in far too many cases, especially when it comes to paying for prescription medications from an industry with obscene profit margins and no signs of a sense of sense of social responsibility so far. Unemployment and poverty? Steadily on the rise. “Living beyond its means?” Thrill to the rollercoaster ride from a balanced budget to a deficit in the trillions. As to the wisdom of the private sector, let’s talk about the chairmanship of the NYSE and the fruits of Elliot “Ness” Spitzer’s crusade against shady dealings on Wall Street. If Europe “has little ability to determine events because its armed forces are small, underfunded, obsolete and ill-trained,” one is entitled to ask how a military-industrial complex engaged in social engineering in the Middle East (with private contractors linked to the administration making out like bandits to build prison camps and maintain bases) counts as the wisdom of fiercely independent businesspersons. I’m sure that the Danes, for one, have good reason to be skeptical of the EU technocracy, but it doesn’t follow as night from day that they’re clamoring for our American brand of voodoo economics founded on an Orwellian state of permanent war, either.

  21. Matthew, Tobias, Bob: “It’s well worth pointing out the myths so many people more often than not take for facts”

    Actually, the myth that persists is that state subsidies benefit all of society equally; rather, they wind up making everyone equally poorer. But no one notices in a welfare state (unless they travel to America and see greater wealth, prompting envy and scorn… – doubtlessly, another factor in European anti-Americanism….)

    Indeed, subsidies exist in all developed countries in the world, including America. Yet that does not justify their existence. Subsidies distort the free-market; consumers get less choices, and pockets of poverty are created within and outside of the state.

    And, admittedly, the steel tariffs were a political blunder. Even Republicans have been left scratching their heads, wondering what that was all about. My guess is that there is another kind of thinking at play: a warning shot that the nation with the most accessible markets in the world – and which most every developed part of the world is dependent on for their well-being – could at any time start practising the same kind of protectionism Americans routinely face.

    Now, there are also some subsidies that are worthwhile, but it always becomes a dangerous game to decide which deserves to continue and which does not. The key is to keep the free-market model as the model to aspire to. Too often in Europe the sight of that model is lost, yet it is that model – the American model – which pulls the European model along, through America’s incredible appetite for European consumer goods. The model doesn’t pull in reverse, because there isn’t a strong enough of a consumer market in Europe, due to Europe’s high taxation levels which leave less cash in the pockets of consumers.

    Europeans routinely assume that their state subsidies and welfare benefits guarantee a preferred way of life. But the fact is that European quality of life would be even better, should state subsidies be minimized and the welfare state dismantled.

    And there is the strange side effect Europeans would attain – but which they try to get now through ranting and raving (though they call it multilateral dialogue): America would be forced to listen to Europe, as European consumers become important to American economic well-being.

    Life might even become more interesting, and challenging, when nanny isn’t there anymore to take care of you. A recent study of Belgians indicated that 1 out of 5 Belgians has considered suicide, while 1 out of 10 goes ahead and does it. Is life so great in a welfare state that 10% of the population is driven to suicide? These kinds of statistics seem to add to my notion that Europeans simply don’t seem to know what to do with the time their subsidized welfare states so generously guarantee them….

  22. Actual suicide rate in belgium is 20 deaths per hundred thousand people, representing about 2 percent of deaths. Annoying facts, as usual.

  23. Markku,

    there is no way to say which one is “the best” economic system per se. It all depends on the actors and our assumptions about our behavior.
    While I am with you in stating that a system that incorporates as much freedom (and thus free markets) as possible, I am not libertarian to the extent that I believe that a free market system’s outcome is a, maybe the only, “just” distribution. One of the key insights of economic research is that markets are not always the most useful mechanism of economic coordination. As you seem to adhere to that opinion, I would like to refer you to Ronald Coase’s classic 1937 essay on “The Nature Of The Firm”. Or, to Oliver Williamson’s treatment about “The Economic Institutions Of Capitalism” (1985). He recently began to think about a way to discern transactions for which a state actor (as a governance institution) would be most appropriate.

    The institutions that can most efficiently handle transactions, economic and otherwise, depend on the transaction costs they incur. These are likely to vary across different economies/polities. Accordingly, the comparatively better solution for specific transactions may vary.

    I would also like to draw your attention to a recent strand of econnomic literature whose attempt it is to justify state intervention in terms of positive external effects (community enhancing) rather than failure of market provision.

    This is clearly a most exciting subject to discuss. It is, however, prone to prejudices and misconceptions. To assure a helpful discussion we should all try to rid ourselves thereof.

    As for American “greater Wealth”, try taking Manhattan out of the statistics ;). And here’s two links that you might find helpful:

    http://www.theatlantic.com/issues/2003/01/halstead.htm
    http://www.pkarchive.org/economy/ForRicher.html

    Also, as for Europeans not buying American products – could it be they are interested in European goods for the same reasons Americans are? Where American goods are of competitive quality I can’t really see how Europeans aren’t in buying mood. Think export surplus in entertainment, software? As for cars, no one wants to buy American cars – not even Americans, it seems, given the problems of US auto makers – and I tend to think there might be a reason rather unrelated to the welfare state…

  24. Linca: This was published yesterday…

    “One in 10 Belgians has attempted suicide and nearly 20 percent say they have thought about killing themselves over the last 12 months, according to a survey of 2,034 Belgians published in the quarterly Test Sant?. Suicide has become a bigger killer in Belgium than road accidents, and is now the main cause of death in men aged 25 to 45, the report said. ??(Agence France-Presse)

  25. Markku, what on earth leads you to believe there is a correlation between the propensity to commit suicide and the extent of the social system of the country one lives in? Any statistical evidence at hand? Comparative numbers for different countries available? And how do you measure the “social system” – what is the unit you use?

    Or is it maybe the high level of consumption of frites, moules and pralines who is the culprit?

  26. Doug: you are actually quite competent. Especially in assessing that there is a correlation to the lack of grand entrepreneurship in Europe as opposed to what is going on in America. People simply are not given an incentive to achieve in a social welfare state…

    Chris K: Well, Chris, I guess I do indulge in the same sort of broad strokes Europeans do when assessing the merits of American culture and society. It must be the European in me….

  27. Bob:
    “The more I’ve probed, the bigger the differences seem – which is one reason I believe the Euro was unwisely pushed through prematurely for political reasons.”
    Yes, I totally agree, at least the initial *size* of the euro zone was larger than it should have been. And now the whole game for Europe is whether, despite the rush to the Euro, the common currency can be “defended” succesfully.

    And as for the suicide rate in Belgium… it’s the damn weather folks… I nearly went nuts in Brussels when I had to wear a coat in June. And it seemed like there were 350 rainy days a year.

    Still you realise that the only way Markku Nordstr?m’s quoted statistics are compatible with Linca’s, is if the Belgians are world leaders in *failed* suicide attempts: 998 failures out of 1000 attempts. The relevant stats corroborating Linca’s ballpark figure are here:

    http://www.nationmaster.com/graph-T/hea_sui_rat_mal&id=EUN&id=us

    http://www.nationmaster.com/graph-T/hea_sui_rat_fem&id=EUN&id=us

    Apparently the suicide statistics show that, according to Markku’s logic, Greece is by far the most interesting society to live in among EU countries and the US.

    I think its because our economic model (corruption, imbecility etc.) makes a society so much more interesting…

  28. “And now the whole game for Europe is whether, despite the rush to the Euro, the common currency can be “defended” succesfully.”

    Looking at the miserable performance of the Eurozone economy, it seems that is in urgent need of a defence against the Euro, especially now the US administration has opted for a weak Dollar policy.

  29. Markku – I’m not sure why you believe the concept of ‘grand entrepreneurship’ actually helps society. In fact, here in the US it’s simply a way of exploiting the working poor for the enrichment of a few individuals. There are plenty of statistics showing the huge gap between the rich and poor. And here, if you are poor – frankly your life sucks in a way the life for the poor in Europe doesn’t. The concept of the ‘welfare society’ that makes people want to not get jobs is a simple right-wing fantasy to justify personal enrichment without any concern for others. Its very Thatcherite – “society ‘does not really exist’. Only individuals do”. Or to put it more simply – “Fuck the poor”.

  30. Mark: As an American, I’m quite familiar with the inequities of wealth distribution here in the US. But I do know from my extensive contacts and direct experience of life in Europe that the European welfare states do not guarantee a good life for all of society equally (believe me, there is plenty of poverty in Europe). What’s more, their society puts obstacles in the way of entrepreneurship in a way that would astound the average American, – even those who don’t own businesses, and work for others to earn a living.

    All of society suffers when the talented are discouraged to pursue their talents. This is probably the most important aspect of American freedom (all the other freedoms, – speech, press, etc. – are already shared in Europe).

    Europeans will be quick to deny that they put obstacles in the way of entrepreneurship. And, officially, they of course encourage enterpreneurship. But in practice, the businessman is viewed as someone who must be forced to accept social responsibilities, first and foremost. The businessman is viewed as a potentially irresponsible exploiter that must be monitored closely all the time, rather than an economic force that should be encouraged all the time.

    I’ve spoken to plenty of Europeans who’ve set up businesses, and compared that to what Americans face – the difference would leave you flabbergasted.

  31. Maarku – just as background, I’m British, I’ve been self employed in Britain, and have worked as an employee in Britain, France and the USA. I see little real difference in the steps necessary to form and run a small business in these places – anyone who actually wants to do it can, Indeed, I estimate that it takes me 10 times as long to do my personal taxes here in the US than it did to file my business accounts in the UK. The point, I think, is that once an entrepeneur becomes a little more successful and owes their wealth to the efforts of others as well as his or her own, then he or she does owe a responsibility to society to provide reasonable conditions and benefits for his employees , and history shows time and time again that unless monitored and held to law, entrepeneurs will screw every penny they can out of their employees. This holds true anywhere in the world, from the sweatshops of China, to the small businesses of London, to the meat-packing plants here in the US. Now, if that means that the successful entrepeneur only makes $500,000 a year in the UK as opposed to $1M a year in the USA, I’m pretty comfortable with that, and I don’t think many entrepeneurs would be discouraged either.

  32. Mark:

    The political rhetoric got better and less honest:

    “The gap between rich and poor in Britain is at its largest in 13 years and poverty levels under Tony Blair exceed those under Margaret Thatcher, government statistics reveal.

    “Figures from the Office for National Statistics for income inequality show that differences in disposable, post-tax income at the top and bottom of society have returned to levels last seen in 1990.

    “The report shows that the “Gini coefficient”, an international measure of inequality, has increased from an average of 29 points under Baroness Thatcher to 35 points under Mr Blair. The figure for 2001-02 was 36 points.

    “The gap between rich and poor, which was relatively static in the early Tory years, soared in the late 1980s and then declined slightly through the early 1990s. It began an upward trend in 1995 and continued to rise under Labour, which came to power in 1997. . .”

    – from (subscription): http://news.independent.co.uk/uk/politics/story.jsp?story=405436

    But it must be a great comfort to the British government that:

    “Profits of British companies have fallen for four straight years, according to the latest Experian Corporate Health Check. Profitability measured by average return on capital fell to 5.76 per cent in the first quarter of 2003 from a peak of 14.18 per cent in early 1999, the survey said.

    “The fall, down from 6.35 per cent in the 12 months to December last year, was the first time that UK corporate profitability has fallen below 6 per cent and represents a longer period of sustained decline than in either of the last two recessions, said Experian after examining audited financial results of the 2,000 largest companies in the UK.”

    – from: http://news.independent.co.uk/business/news/story.jsp?story=441251

  33. Mark: I take my experience mostly from what I’ve learned of Finnish and Swedish companies (though I’ve also worked with British and Italian companies), – operating in perhaps the most thorough social welfare societies in the world. The fact remains that there is little incentive to open a business in these countries, because of the barriers to entry, and also because of the social responsibility imposed. Failure in these countries – bankruptcy – often means that you’re treated worse than a criminal. According to Finnish law, for example, the state has the right to strip a person even of their clothes to satisfy debts (the tax authorities usually limit the clothes to luxury items, such as leather or furs). There are only two things that by law cannot be taken: eyeglasses, and a person’s bed. So that leaves the bankrupt person outside, naked, in bed, but at least able to see…

    In these conditions, it becomes much easier to let others take the risks… and freeload on top of their efforts, by taxing their businesses to the max.

    Anybody who opens a business can plough through paperwork, but things become even more complicated when the entrepreneur seeks capital. I agree with you on the fact that an employer should take care of their employees, – but mainly because it makes good business sense. However, I don’t agree that a company should be held unduly responsible for non-employees, outside the company, in the society at large… though this is a question of degree.

    Anyway, I don’t want to expand the discussion too widely, as it seems that this would mainly become a long exercise in political rhetoric, but I think you underestimate how much the social welfare state dampens the entrepreneurial spirit. When life is comfortable, people basically stop trying harder.

    Bob: interesting statistics. I wonder how it all portends for the future.
    Based on your earlier posts, you seem to be adverse to Tony Blair’s government. I’m wondering what options you support from the other political contenders?

  34. Markku, I will second Mark. I’m in the fine wine trade and I had tons of lenghty discussions with colleages from all over the world. I operate inside the EU (Germany) and all I can tell you is that I pity my US colleages because of the bureaucracy they face (BATF) which totally dwarfs the one I face (German bureacracy mostly). The EU bureaucracy is something I am infinetely thankfull of because it blows away (=overrides) tons of national bureaucracies. Brussels helps entreupreneurs. I cannot in any way endorse the widespread view of the creeping EU bureaucracy. The EU regulations are minimal, simple, transparent and straightforward. It is more difficult to type an order than to fill up EU duty forms. So much for the famed “Brussels Bureaucracy Hell Myth”. Bureaucracy in my trade is national: Champagne labeling rules, Sektsteuer, Swedish alkohol laws, British excise duty and so on. And the US states beat them all hands down. Why on earth does it take more paperwork to get California wine into Georgia than into Germany? In my trade US national myths are divorced from reality.

  35. Mark and Chris K: I appreciate your points, but I wasn’t really referring to paperwork as a main barrier to entry (though, of course, it is). I was mainly referring to raising capital, taking risks and, most of all, paying taxes.

    Either way, interesting to hear about the experiences of others on this blog…

  36. Maarku – I’m not sure whether there really is a correlation between entrepeneurialism and the welfare state.

    1. Most successful entrepeneurs would have been (or were) successful employees anyway, and welfare would never be a part of their lives.
    2. Despite the classic stories about ‘welfare scroungers’ , most people who depend on welfare are humiliated to have to use it, and would give anything to move off it into permanent, secure employment.
    3. The ultimate upside of this, is of course the layoffs in the US tech sector, where many workers found themselves laid off by entrepeneurs with no severance or benefits and totally dependent on – welfare.

    Bob – Hey! she said it, not me. But surely rising inequality in incomes is proof the entrepeneurialism can thrive in Europe [ or maybe it’s just a sign that senior management is awarding itself inappropriate pay rises, if profitability is falling. ]

  37. Markku,

    “Based on your earlier posts, you seem to be adverse to Tony Blair’s government.”

    I share the view of the longest serving Member of Parliament: http://www.thescotsman.co.uk/politics.cfm?id=619072002

    “I’m wondering what options you support from the other political contenders?”

    I last belonged to a political party in 1976. Since then I’ve voted Conservative, Labour Social Democrat and Liberal-Democrat. Few seem to realise that political activists are an extreme minority. In Britain, the total membership of all the mainstream political parties is about three-quarters of a million in a total adult population of 44 million. The lowest estimate of the percentage of floating voters in British elections I’ve come across is 20% of the electorate – there are over 10 times more floating voters than political activists.

    From long experience, anyone posting criticism of Blair’s government is apt to get painted a xenophobic fascist or senile or worse and their computer gets hacked – and they call it democracy. For those who search, there is plenty of evidence that Blair’s government is tinged with corruption. This is what Dr John Reid said as Party chairman when asked about a donation to the Party by the publisher of top-shelf porn magazines: “If you are asking if we are going to sit in moral judgment, in political judgment, on those who wish to contribute to the Labour party, then the answer to that is no.” – from: http://news.bbc.co.uk/1/hi/uk_politics/2357617.stm

    An ombudsman was appointed to rein back political corruption and this is what happens: http://news.bbc.co.uk/1/hi/uk_politics/3054675.stm

    But there is much more, believe me. Rhetoric about “modernisation” and “our souls” is a good cover.

    Btw on the record of Blair’s government on income distribution, try: http://news.bbc.co.uk/1/hi/business/3017042.stm

    Blair’s New Labour = Big Con

  38. “surely rising inequality in incomes is proof the entrepeneurialism can thrive in Europe [ or maybe it’s just a sign that senior management is awarding itself inappropriate pay rises, if profitability is falling.”

    Only the benighted few will begrudge rewards commensurate with commercial success. What sticks in the throats of most is rewarding commerical failures. The Trade and Industry select committee has just reported on: Rewards for Failure – at: http://www.parliament.the-stationery-office.co.uk/pa/cm200203/cmselect/cmtrdind/914/914.pdf

    “The committee investigated rewards for failure following the controversy over large payments to Lord Simpson and John Mayo of Marconi.” – from press report at: http://www.guardian.co.uk/print/0,3858,4762483-103676,00.html and

    Who is Lord Simpson? He was awarded awarded a life peerage in 1997 by Tony Blair and takes the Labour whip in the House of Lords. More info at: http://news.bbc.co.uk/1/hi/in_depth/uk/2000/newsmakers/1527551.stm

    As said: Blair’s New Labour = Big Con

  39. Bob: thanks for the links. It seems to me that Tam Dalyell represents the way the Labour Party used to be.

    I don’t know what to think of Tony Blair myself. I’m only amazed to find him supporting the US. Frankly I always thought he was a hindrance for Bush, – perhaps Europe’s best secret weapon against the US, considering he was Labour…

    The thing that strikes me about the pre-Blair Labour Party, when comparing it to left-wing movements in other parts of the developed world, was that it was the party most embittered by class divisions. While the French Marxists could generate a fascinating body of theory attempting to deconstruct capitalism, the British Labour Party was still the party of grumbling proletarians muttering into their pints of beer at night, after spending long days in the coal mines, – yet still accepting this as their social lot. After the Thatcherite revolution, with all its wrenching socio-economic changes, the Labour Party was forced to adapt, and I always thought that Tony Blair was a rather appropriate leader for such a change.

    Tony Blair’s status as a “Big Con” to me sounds like the kind of treatment Clinton (whom I supported, by the way) got from the far-right Republicans.

    Please understand that I write as a complete outsider (though I’ve visited Britain often, as I have friends, and Finnish-Indian relatives living there), so I’m not even going to pretend that I have an informed opinion here. I’m just offering it for the sake of an outside perspective.

  40. Markku – Your assessment of the Labour Party is broadly correct IMO. There have always been a few neo-Marxists in the Party but it was never much influenced by Marxism, most likely because we Brits have an aversion to encompassing political theory of the variety espoused by French intellectuals. Disraeli encapsulated this well: “Read no history; read only biography for that is life without theory.” He was a Conservative but that reflects a British trait. The term “intellectual(s)” has distinctly pejorative overtones in Britain.

    Curiously, in fact we have a strong tradition of political theorising with Locke, Hobbes, Edmund Burke and JS Mill and Marx wrote his turgid Das Kapital sitting in the British Museum Library while living off subventions from Engels after being hounded out of mainland Europe in 1848. It might have saved a lot of misery in the 20th century had he read JS Mill instead. Another oddity is that from 1935 through 1976, the three Labour leaders in that period had each been university teachers and so were entirely able to invoke political theory but chose not to.

    You are right too about the social class thing. For reasons I’m not sure anyone understands, we Brits tend to be strong on social class consciousness. Just how much I came to realise on visiting Japan. The Japanese have a liking for polls and surveys defining their national character and these regularly showed c. 90% of Japanese identify themselves as “middle class”. In contrast, a sizeable slice of Britain’s population is apt to feel insulted if called middle class.

    The credit for Modernising the Labour party probably belongs to a group of people among whom Blair was (rightly) judged to be the most electable. Looking back, habits of rewriting history and bending the facts were displayed early on. And the recent hiatus over the death of Dr Kelly probably owes something IMO to the use New Labour made of leaks from government when they were in opposition. Mindful of the damage that leaks can do to the credibility of a government, New Labour in power has been building in safeguards to stop the same thing happening to them.

    The print edition of Monday’s Financial Times has a front page report of new measures being proposed by the Blair government to politicise the civil service by appointing placemen to head the administration in government departments. Understandably, the civil service is opposed although, of course, that is the regular practice in America. In France, both political leaders and the heads of government departments are usually all graduates of Ecole Nationale d’Administration, which perhaps helps to ensure a unity and continuity of perspective and purpose that other nation states lack. In Japan, there is a tradition of senior bureaucrats on retirement moving into the ruling party, the LDP, which is seldom out of government and that doubtless smooths over potential frictions between politicians and the civil service.

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