Irish no vote (slight upd.)

Well, looks like the EU Constitution, watered down to an incomprehensibly complex Lisbon Treaty is now definitively dead. The Dutch said no, the French said no, and now the Irish say no.

Let me just bring in two quotes by Oxford’s Jan Zielonka:

It has been evident from the very beginning of European integration that ambitious and straightforward cooperative projects have a fairly good chance of being shot down.

European policy-makers [are] faced with a choice: integration in disguise or no integration.

I have been thinking: can Europe be popular? And is there a Europe of “the people”? Quick Friday-afternoon brainstorm: there is a nationalist-competitive and an integrative Europe at play. What do I mean?

- The nationalist-competitive: concluding from the status updates one gets to read on Facebook, for sure, there is one single thing that focuses minds in Europe: Euro 2008 (definitely not the Irish referendum)!

- The integrative: concluding from my recent cheap and quick flight from Belgium to Southern France: low-cost airlines! And not least the mythical, and very Irish, Ryanair!

Précisions

Suite à mon précédent billet, je tenais à faire deux précisions.

- Mon introduction au sujet par l’idée de l’économie de guerre et de l’autarcie /autosuffisance agricole pour parler de la Politique Agricole Commune avait pour objectif d’illustrer ce que peut signifier, et où se trouvent les filiations historiques, de la PAC lorsque ses principes sont poussés à l’ extrême : étatisme extrêmement coûteux et nostalgie romantique pour un passé agraire qui en réalité veut dire misère. Les lois de l’économie s’appliquent aussi en agriculture. Une plus grande division du travail et une extension du marché permet à chacun de produire ce qu’il sait faire mieux et se procurer ce que les autres font mieux… et ainsi d’accroître notre diète. Rien de mieux pour notre santé et nos palais. Des transferts « technologiques » sont aussi rendus possibles par l’accroissement des échanges, par exemple l’introduction de nouvelles plantes qui répondent à de nouveaux besoins.
- J’ai été rapide dans une phrase. Non la PAC n’est pas la cause de la hausse des prix agricoles. Mais, en stimulant un système agricole rigide qui ne sait pas répondre à l’augmentation de la demande, il contribue au renforcement de la rareté qui se fait sentir actuellement. Celle-ci est due à une combinaison de plusieurs facteurs : demande croissante de produits alimentaires et notamment de viande en Chine et en Inde, ce qui augmente la demande de grains pour nourrir le bétail ; quelques mauvaises récoltes que l’on peut attribuer ou non au changement climatique ; la promotion notamment aux Etats-Unis et au Brésil de carburants biologiques, notamment par le biais de subventions et de mesures protectionnistes, ce qui augmente la pression sur l’utilisation de terres arables et contribue à une diversion de production qui accroît la rareté de biens comestibles produits.

Guerre des tranchées agricole

Historiquement, l’autarcie économique est associée aux régimes totalitaires et à la guerre totale. Le tout accompagné d’expansionnisme militaire et territorial, ou du moins de subjugation de pays satellites aux volontés de l’Etat surpuissant. Inutile de faire référence à l’Allemagne nazie ou à l’Union Soviétique du temps to COMECON.

L’autarcie, c’est l’économie de guerre avec un Etat hyper-puissant mobilisant par coercition l’ensemble de la société. Mais on peut aussi considérer l’autarcie ou l’auto-suffisance dans l’agriculture comme reflétant une arriération pré-industrielle. Les paysans d’Ancien Regime étaient certainement plus ou moins autarciques. Mais on vivait dans la misère, et le régime alimentaire était extrêmement limité. Fort heureusement, même sous l’Ancien Régime, nous ne vivions pas en complète autarcie ! Les pommes de terre, partie désormais du folklore germanique entre autres, ou les tomates, sans lesquelles la cuisine méditerranéenne est impensable, nous viennent originairement de Nouveau Monde, la découverte duquel marque plus ou moins les débuts de la « mondialisation ». Tout cela pour dire que,

The causes of tax evasion

Random comment today.

In the context of the current tax evasion row opposing Germany and Liechtenstein: Wolfgang Münchau in his blog said last week that the causes of tax evasion are high taxes. Indeed, Germany has one of the highest marginal tax rates in Europe. And: Crush Liechtenstein and earn votes, but you’ll get the Cayman Islands. Despite the government’s popularity I find it a very sad sight, a government of one of the world’s most sophisticated countries boasting with stolen files- it’s all becoming very dodgy…. It is also very symbolic that Zumwinkel, head of Deutsche Post, the postal monopoly in Germany, who earned credit for imposing a minimum wage not for lofty social reasons but to drive out competitors of the market was the first high-profile tax evader to be caught. This somehow reflects a crumbling social and economic model inherited from the postwar period and the 1970s. 

Policies towards Russia: reaping what one has sown? [update]

It is increasingly clear that “the West” has got Russia badly, very badly, wrong. Europe and the US have accumulated errors towards Russia and are now reaping what they’ve sown. Hard statement, I know.

Dmitri Trenin from the Carnegie Moscow Centre recently wrote one of the first books – entitled “Getting Russia Right” - that tries to undo the mythical fear and loathing in which Russia’s policies are held in the West. Not that the recent slide in both democratic achievements and economic freedoms combined with growing international sabre-rattling is not worrisome: on the contrary! Yet it could be that the West should have been able to see it coming. It even probably could have averted some developments had it acted rightly on time, based on more realistic perceptions. Just a few random illustrating examples:

Chatty book commentary: for a concentric, fuzzy, and differently democratic European Union

2007, to which we are now saying good-by, celebrated the 50th anniversary of the Treaty of Rome, the founding document of the European Union.

2007 was a year of crisis for the EU: it needed to find a way out of the impasse created by Dutch and French no-votes to the Constitutional treaty back in 2005. With the entry of very poor and still deeply corrupt Romania and Bulgaria in the same year 2007, this foreign-policy-bureaucratic, foreign-investment-economic-convergence machinery called Enlargement has been called into question. Enlargement fatigue is prevailing…. But now, in December 2007, the gloom slowly starts dissipating.

So, is it the End of History for the former Soviet bloc?

It is now almost twenty years since the Berlin Wall was torn down and Francis Fukuyama announced the End of History, a world full of democratic capitalist countries and boring Western-style normality…. So, is the former Soviet bloc there now?

In an authoritative book already mentioned in my recent posts, Anders Aslund from the Peterson Institute undertook a first systematic stocktaking of Transition in Central and Eastern Europe, Russia and Central Asia. The former Soviet bloc has known a great number of convoluted developments since then. The uncertainties surrounding Russia’s future and place in the world, as well as the controversies raised by the accession of Bulgaria and Romania to the European Union make this book a timely contribution to the debate on what went right, and what went wrong. Certainly, Aslund’s book makes a few points that will raise some controversies.

As one cannot be too long in a blog post, I will try to be short on the main conclusion drawn by Aslund on reform: the quicker and more systematic the better.

Oh, Belgium

A tiny country of 10 million inhabitants at the heart of Europe. It hosts the EU’s capital, Brussels: a mere 1 million inhabitants. The country can be crossed in a couple of hours by car or train. It hasn’t had a government for about five months, due to infighting between two native tribes: the Flemish and the Walloons. Everywhere there is talk of a split. The country was founded in 1830 after a revolution uniting two Catholic groups that felt uneasy under Dutch hegemony. Today, apart from religion not much seems to be uniting both parts of the country. In the past the French-speaking Walloons were the richer and culturally dominant group in the country. Belgium was one of the first and most dynamic economies in the 19th century, a pioneer of European industrialization. Now, the Flemish are the richer majority of the country – one just needs to take a 30-minute train ride from run-down Brussels to flourishing Antwerp, and the difference blows into one’s face.

Europe’s free trade agreement strategy: the road to nowhere?

In November 2006, the EU launched a new project entitled “Global Europe” which aims at linking external trade policy with the so-called Lisbon Agenda, a programme designed to turn Europe into “the world’s most competitive economy” by 2010. Fundamentally Global Europe announces a shift towards negotiating more bilateral free trade agreements – FTAs - directly with partners in Asia: South Korea, ASEAN, India. It is also about getting more hands-on with China, now the EU’s second trading partner in goods after the US, and integrating other ongoing bilateral trade negotiations with, say the Gulf countries and Mercosur into the broader picture of a shining new Europe in an Era of Globalisation. [Or rather: "as a protector, a life-enhancer, as a magnifier of strength, and as a shining cultural and political example”, as Mr Sarkozy put it?.]

In fact Europe’s practice of signing bilateral agreements is not new, by far. But so far it has concentrated on: countries in the European periphery with potential prospect of joining the EU (Neighbourhood Policy – today enlargement is in crisis, however); or countries with special interests in linking up economically with the EU and where the EU has big political stakes (Mediterranean, or “Euromed” countries). So-called EPAs with African, Pacific and Caribbean countries are trade-and-aid agreements that need to become reciprocal on trade issues to be compatible with WTO requirements: let’s call them post-colonial political beasts. What is new

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.