For an update: globalisation & inequality; world investment

IPE Zone has a good overview of recent reports released:

- by the IMF on globalisation and inequality

- by UNCTAD for its annual World Investment Report.

Infrastructure determines Superstructure, or what?

Karl Marx’ saying was that when it comes to opinions, culture, and ideas, as well as laws and institutions, the “infrastructure” determines the “superstructure”. Your position in the economy (production relations) and society (class) determines what you think and all the related output – from art to law. Economy-society is the Infrastructure and culture-ideas-institutions are the Superstructure.

Recent polls in Western Europe suggest that opinions related to globalisation and the market economy vary widely across countries. It is striking to notice how the countries that have better adapted their economies and societies to globalisation are also the countries where positive attitudes to globalisation prevail, or attitudes towards globalisation are the least negative. This mainly the Nordics (I know my Swedish colleagues here at ECIPE will slightly disagree, but they are not Italians), and the Anglo-Saxons. Where support wanes most is where economic stagnation prevails – Italy is the worst case.

For example:

Attitudes towards free trade:

According to the German Marshall Fund: [American and ] French respondents wish to keep trade barriers to protect businesses, even if this means slower growth. They showed the highest levels of opposition to trade liberalization - 55% of French and 31% of American respondents do not favor freer trade. American (59%) and French respondents (58%) say freer trade costs jobs. But French respondents also showed the lowest confidence in freer trade providing consumer benefits (63%), helping poor countries (39%), increasing global prosperity (49%), and supporting democracy (45%).

Attitudes towards entrepreneurship, innovation:

Edmund Phelps, in a study on entrepreneurial culture, showed:
“The values that might impact dynamism are of special interest here. Relatively few in the Big Three report that they want jobs offering opportunities for achievement (42% in France and 54% in Italy, versus an average of 73% in Canada and the U.S.); chances for initiative in the job (38% in France and 47% in Italy, as against an average of 53% in Canada and the U.S.), and even interesting work (59% in France and Italy, versus an average of 71.5% in Canada and the U.K). Relatively few are keen on taking responsibility, or freedom (57% in Germany and 58% in France as against 61% in the U.S. and 65% in Canada), and relatively few are happy about taking orders (Italy 1.03, of a possible 3.0, and Germany 1.13, as against 1.34 in Canada and 1.47 in the U.S.).”

Attitudes towards the single currency:
An FT/Harris poll showed recently that “More than two-thirds of the French, Italians and Spanish - and more than half of Germans - believe the single currency has had a “negative impact “. In France, just 5 per cent said the euro has had a positive effect on the French economy.”

It is interesting to note how this persistence of negative attitudes is more pervasive in the “Mediterranean” and “Continental” countries.

Very quick tour d’horizon - trade, migration, China

I’ve been a bit short and bluntly political lately in my blog.  No time to write longer, more reflective piece these days. Gearing up in a new job swallows lots of energy! But let me try and share what I’ve been trying to keep up with.

Migration and Immigration. A lot is going on here in Europe. France is introducing a restrictive bill on immigration. It will be imposing DNA tests for family members of immigrants who want to join their relatives in France. This is creating a national uproar. There’s enough on this blog about this topic (see this, and this a bit too long post in French)For my French friends: do have a look at Liberation. Alexandre Delaigue has a good post on one of Libe’s blogs too).

At EU level a lot is happeing on migration these days as well (an excellent FT article gives an overview): EU trends on integration are being assessed by the Migration Integration Policy Index. Do have a look! The country that scores best on everything from non-discrimination to access to nationality of immigrants is Sweden. While the Nordics tend to score well in general, when browsing the maps on the website, Denmark clearly stands out as the black sheep. Eastern European countries will need to make some efforts. I was surprised to learn that Germany makes access to its nationality easier than France. The index is managed by the Migration Policy Group in Brussels. In terms of relatively constrictive approaches to immigration, there have been moves this summer by Spain to allow for legal but managed immigration of workers from Africa. The EU Commission is set to launch a “blue card” for skilled migrants next week, so the FT. More background here and here. A very far way off what others propose: see Dolado and Legrain.

International trade. The US is growing more protectionist (see this post). Ben Muse posted Hillary Clinton’s proposals on trade policy as candidate for the US presidency. Trade Diversion has something on how much trade protection has actually cost the US. The EU is going to be sued because its recent decision to raise tariffs on energy efficient lightbulbs from China (how deliciously ironic!). The WTO ruled against the US’s cotton subsidies: efforts on reducing them are insufficient. Oxfam is campaigning in the US against agricultural subsidies (courtesy of the Econoclastes and Trade Diversion).

China. The annual Communist Party Congress usually leads to a flurry of media coverage on already extremely media-covered China. Two pieces I recommend: the recent Analysis by Richard McGregor in the FT, A piece in Die Zeit. China is growing richer and climbing up the value-added ladder. It is now starting to tackle its huge challenges: growing inequality and the environment.

Politique d’immigration en France. Pétition contre les tests ADN

http://www.touchepasamonadn.com/

Un petit geste contre une énorme monstruosité.

European left is supporting the well-connected and privileged [update: unwillingly, of course]

Vox.EU recently published an article by Alberto Alesina and Francesco Giavazzi on Why the left should learn to love liberalism. It is based on a book that came out last year (again, one of those I wanted to read but never came round to!), The Future of Europe: Reform or Decline.

Continental Europe is in the midst of a burning discussion about the pros and cons of market-friendly reforms and greater economic liberalism. We all know what the package contains – competition, labour-market flexibility, liberalisation of services, lower taxes, and privatisations.

The traditional debate runs as follows. These reforms are “right wing” policies. They may increase efficiency – perhaps even economic growth – but they also tend to increase inequality and to be detrimental for the poorest in society. Therefore – and here comes the typical “socially compassionate” European argument – be very careful moving in that direction. Governments should proceed cautiously and be ready to backtrack at any point.

Much of this reasoning is fundamentally wrong. Labour-market flexibility, deregulation of the service industry, pension reforms and greater competition in university funding is not anti-equality. Such reforms shift financing from taxpayers to the users themselves and, as such, tend to eliminate rents. They tend to increase productivity by basing rewards on merit rather than on being an insider. They tend to open up opportunities for younger workers who are not yet well-connected. Pursuing pro-market reforms does not imply facing a trade-off between efficiency and social justice. In this sense, pro-market policies are “left wing”, if that means reducing the economic privileges enjoyed by “insiders”.

The debate is already a few years old. The British Labour Party is practically over it. Germany’s SPD is reversing the moves made by Schroeder, the French Left is in a coma because of its refusal to accept this. I am not commenting on the Italian Left, which Alesina and his colleague are targeting in particular. Come on guys, wake up! Don’t leave reform and its electoral rewards to the right-wingers!

A www.cpc.(gov.)cn website?

 

No, no, there is none.

Richard McGregor has a fascinating piece on how China’s ruling party is currently tightening its grip over the country. Among many other interesting things, I learned The Party has indeed no website!

Certainly, the party makes no pretence of transparency. In a country that has embraced the internet and mobile telephony (China had 162m estimated internet users by the end of June and about 450m mobile phone accounts), the party does not even have a website.

[A teacher in a] party school – in Yan’an, an old revolutionary base – dismisses an internet presence as redundant. “All the important media are owned by the party, so we have no need to set up a website,” he says.

Worried about French protectionism? Look at the US!

I’ve been bashing French protectionism all along. But as good Frenchwoman I will now do some US “bashing”….In Europe, one can say that individual member states’ protectionist impulses are tempered in Brussels and the liberal interests of other member states. But who can stop the US government? Maybe the sense of statehood of political advisors? Or an undestanding that if the US wants to continue leading the world protectionism is certainly not the right policy to embrace since that means a straight road to economic decline. So here a few morceaux choisis:

Republicans:

In the WSJ, found on Greg Mankiw’s site:

By a nearly two-to-one margin, Republican voters believe free trade is bad for the U.S. economy, a shift in opinion that mirrors Democratic views and suggests trade deals could face high hurdles under a new president.

At a seminar held yesterday by the libertarian think tank Centre for the New Europe on the current online gambling case in the WTO won by Antigua and Barbuda, I learned that the US are now trying to pull out of the express committment in the WTO to allow cross-border supply of gambling services.

Democrats:

Hillary Clinton announced she would consider revising NAFTA if she comes to power. The FT reports:

Hillary Clinton, frontrunner for the Democratic party’s presidential nomination, yesterday said that all US trade agreements should be evaluated every five years and, if necessary, amended.

The process should start with the North America Free Trade Agreement, which was the signature trade pact of her husband, Bill Clinton, when he was president.

And as we know, the Democrats have been delaying the ratification of the bilateral agreements with Peru, Colombia, Korea, etc…

Here is an excellent analysis, again from the FT.

Sarkozy on economic development in Africa

Un peu tard, morceaux choisis du Discours de Nicolas Sarkozy tenu à l’Universite de Dakar en juillet dernier. Il a fait un tollé en Afrique, mais été largement ignoré en France/Europe. Accrochez-vous.

Although late, here a few quotes from Nicolas Sarkozy’s speech held in from of students Dakar last summer. The speech sent shockwaves through Africa but was hardly noticed in Europe (A tentative translation of the quotations follows the French version).

“Le drame de l’Afrique, c’est que l’homme africain n’est pas assez entré dans l’histoire. Le paysan africain, qui depuis des millénaires, vit avec les saisons, dont l’idéal de vie est d’être en harmonie avec la nature, ne connaît que l’éternel recommencement du temps rythmé par la répétition sans fin des mêmes gestes et des mêmes paroles.

Dans cet imaginaire où tout recommence toujours, il n’y a de place ni pour l’aventure humaine, ni pour l’idée de progrès.”

 

“Voulez-vous qu’il n’y ait plus de famine sur la terre africaine ? Voulez-vous que, sur la terre africaine, il n’y ait plus jamais un seul enfant qui meure de faim ? Alors cherchez l’autosuffisance alimentaire. Alors développez les cultures vivrières.”

Sarkozy a-t-il de la place pour une idée de progrès dans sa primitive cervelle de co-développeur de l’Afrique?

Africa’s tragedy is that African Man hasn’t yet entered History. The African peasant, who for thousands of years has been living with the seasons, whose ideal of life is to be in harmony with nature, who knows only the eternal return of time, sequenced by the never ending repetition of the same gestures and words.

In this mentality where everything always repeats itself there is no place for human adventure nor for the idea of progress.

(…)

Do you want there no longer to be famines on African soil? Do you want there no longer to be children dying of hunger on African soil? So seek food self-sufficiency . So develop subsistence agriculture.”

Is there any place for progress in the primitive mind of Sarkozy, “Co-Developper” of Africa?

Hate Big Business? Me too! But not for the same reason

Foreign Policy –  usually an interesting magazine publishing refreshing articles came up with a sorry, very sorry article in its latest edition. Robert Reich’s  published on: “How Capitalism is Killing Democracy” Tagline: “Free markets were supposed to lead to free societies. Instead, today’s supercharged global economy is eroding the power of the people in democracies everywhere. Welcome to a world where the bottom line trumps the common good and government takes a back seat to big business.”

Yet this  terribly misguided article is a good excuse for me to get into a few clarifications on what “capitalism” is all about. Definitions of capitalism differ according to the ideological stance one has towards it. Just try to google the term… I for my part defend capitalism. I defend capitalism as an economic order based on market principles. What I don’t defend, however, is Big Business. This because I don’t believe Big Business is “proper” capitalism – it is not a system of “natural liberty” (term inspired from Adam Smith) .

WTO Public Forum. To harness or to unleash, that is the question

Every year since 2001, the WTO hosts a two-day Public Forum at its headquarters in Geneva. This year about 1800 delegates from all over the world are attending an impressive number of seminars organized by “civil society” itself within the premises of the WTO. The public is a ragbag of the most varied interest groups. One meets hippie-types with deep-environmental agendas, students with future jobs in minds, academics selling their ideas, and all sorts of business lobbyists in suit-and-tie that are here to network hard. This year’s topic is “How can the WTO help Harness Globalization?”

The opening plenary session  on Thursday morning reflected the very ambiguous position the WTO has driven itself into. I was wondering whether it was still the guardian of a liberal economic world order or drifting towards becoming a development agency? The Secretary General Pascal Lamy displayed - in small - his big political skills. In his opening address, there was mainly talk of “Civil Society” Contributing, Aid-for-Trade, TRIPS, the-WTO and-the-Environment, Fisheries subsidies, Sustainable development, etc. Somewhere he does remind us that the core mission of the WTO is trade liberalisation – oh yeah, really? Almost forgot!

Although Lamy spoke of “civil society” in general his speech was addressed to the vociferous half of civil society that contests globalisation and free global markets. Lamy forgot – deliberately? - that the audience was also made up of people strongly in favour of “opening markets”. Fisheries issues are important, of course. And the problem of overfishing a question of lack of markets and too much subsidies. But the real bread and butter issues – opening markets further - are just stuck in the rut of the stalled “Doha Development” Round.

Lamy was in fact very clever in his choice of panel. He played the perfect “politically correct” game. He chose two women speakers – ah, yeah, gender equality: Tarja Halonen, President of Finland, and Olubanke King-Akerle, Foreign Minister of Liberia. One from a developed country, one from a Least Developed Country. One blond, the other black in traditional costume. Then he chose a man – a Singaporean diplomat-turned academic Kishore Mahbubani. Coloured, as opposed to Lamy’s white maleness. And what did the left-leaning-climate-change-obsessed-worker-right-policy-space-fanatics targeted in Lamy’s opening speech get served? Nothing to please them. Hard business talk. Ms Halonen, as good European, was the most “mainstreamy” speaker. Talking too of worker rights, fair deals, etc. But broadly supportive of the WTO and globalisation. Ms King-Akerle? Of course gender equality and fair and balanced trade deals. But the heart of her long, detailed and lively speech as minister of a postwar country not yet member of the WTO was: market access, business opportunities to raise income. Survival, real life. A “trade, quick!”- of sorts. Not, as one panel only peopled with Northern organisations (see programme) put it: “Slow Trade”.

The high point of the plenary session was the excellent speech of Mahbubani. Core message: contrary to what the theme of the WTO public forum indicates, one should not “harness” globalisation. The question should be: how to “unleash” globalisation! OK, he is Singaporean…. Yet Mahbubani’s speech is full of facts, figures and stories of how integration into the world economy – i.e. globalisation via economic liberalisation – lifted hundreds of millions out of poverty, namely in Asia. High live free markets and related access to mobile phones, TV sets, house and home, so says he. He apologized for his “naïve enthusiasm” for globalisation, but his speech was a reminder of hard, politically incorrect facts. 

Outside the conference room after the plenary session, a lady, hippie-style-deep-environmentalist-fitting-the-cliché, came to me (Why Me?) and said something along the lines of ”with globalisation one forgets about the environment! Millions more can now pollute and send gases into the atmosphere!” I didn’t want to provoke her and kept my thoughts for myself: So you want to keep all those millions in poverty? Environmental problems need to and can be tackled. But complaining about millions of people now polluting because they are finally having a decent life I did think scandalous after having heard the speeches of the Liberian and Singaporean. Some people just never learn.