Depardieu is creating a stronger Europe
Gerard Depardieu, one of our most famous and successful actors, has moved to Belgium to avoid sky-high taxes that were recently announced by the new socialist government of Francois Hollande. Depardieu was criticised from all sites as not patriotic and only interested in money.
I believe Depardieu is a high profile example of a trend that will strengthen the European Union. Free movement of people in the EU allows people to avoid too high taxes, go to where jobs are, get together with like-minded people, to start a business and to do whatever they want to do. We see this with Polish plummers in Belgium, Dutch bankers in London, French engineers in Eindhoven, English pensioners in Spain. And French millionairs in Belgium.
In the Middle Ages, the fractionated landscape and political situation in Europe made it impossible for the ruling aristocracy (the "rent seeking elite" as Fukuyama calls them) to suppress their serfs too strongly. If the serfs were dissatisfied they could leave and seek another lord for protection. Or they could go to one of the growing cities and be free. Tilly described this eloquently in 1990.
This lack of oppression, this impossibility to dominate the people in absolute terms is what allowed freedom, democracy and prosperity to develop in Europe, for the first time in history. The free movement has been interrupted for maybe two centuries (the great period of the nation states about which Theirry Baudet is so enthusiastic, but which I would call mainly bloody) and is now coming back.
The free movement of people in the European Union will force the governments of cities and states to compete for the preference of the 500+ million people that have a choice to go and live where they want. These governments will have to provide good living conditions, education, culture, logistics, security, employment, and all the other things people want. If they don't, or if they raise the taxes to a much higher level than other states, people will vote with their feet.
This is a competitive situation that the USA does not have: conditions between cities or states are much more equal there. And Asia is different because they do not have the free movement, the level playing field, rule of law and all the other things Europe has. This internal competition for talent will give a whole new dynamism to Europe.
Saturday, December 22, 2012
Monday, December 17, 2012
Is School Killing an unavoidable by-product of freedom?
New discussion in the USA about the recent massacre in Newton CT where 20 young school children and 8 adults were massacred by a lunatic with a sort of M-16 automatic assault rifle that he took from his mother (after killing her). A tweet today stated that the number of people killed in the USA by gunfire since 1970 is bigger than their losses in the last 4 major wars.
There is so much info on the net that it seems as if newspapers stockpile murder and gun statistics for release after a massacre, like they prepare obituaries of famous people.
The NRA is silent for the moment, but will speak up again when people, horrified by yet another bloodbath, propose laws to restrict the free availability of weapons. The NRA has political cloud based on weapon carrying voters and based on political contributions by the weapon producers. First amendment? Nonsense: it is a skewed prisoner's dilemma: every gun-toting idiot, sorry, every responsible father believes he can better survive armageddon and defend his family form anihilation by their gun-toting idiot neighbours, sorry, from the responsible, but gun carrying fathers next door, when he has the biggest gun.
Today the NYT published ideas from readers to solve the problem: most of them were aimed at arming the teachers or barricading the schools. The US is becoming more and more attractive as a country of destination. The land of the free, home of the brave.
It is probably impossible to convince the "frontier" people of the US, the descendants of the old colonists, that one can live a good life without an assault or riot gun, even without hunting rifle (you búy your meat? argh). Popular opinion on gun laws has become even more liberal the last ten years. We have to assume that it will be impossible to contain the voters, so any politician proposing anti-gun legislation will loose his seat.
From a more practical point it is probably completely unfeasible to collect 280 million guns that are out in the streets. Pandora's Box was opened and cannot be closed again, even if the majority would want that. Although: by collecting one million weapons each year, and no sales anymore, the problems can be solved in the year 2293.
A third point is the money behind the political campaigns and behind the lobbying in Washington and elsewhere. As long as the NRA & weapon producers can buy their votes, no proposal for legislation will be accepted. It would require a very courageous president in his second and last term to take on such a challenge.
So unfortunately the most likely outcome will be that guns will stay. Maybe Obama will succeed in banning the most atrocious assault rifles, together with missiles and hand granates. But this will not prevent the next lunatic from taking his freedom rights in his own hands and killing the next, albeit maybe smaller, group of innocent bystanders.
New discussion in the USA about the recent massacre in Newton CT where 20 young school children and 8 adults were massacred by a lunatic with a sort of M-16 automatic assault rifle that he took from his mother (after killing her). A tweet today stated that the number of people killed in the USA by gunfire since 1970 is bigger than their losses in the last 4 major wars.
There is so much info on the net that it seems as if newspapers stockpile murder and gun statistics for release after a massacre, like they prepare obituaries of famous people.
The NRA is silent for the moment, but will speak up again when people, horrified by yet another bloodbath, propose laws to restrict the free availability of weapons. The NRA has political cloud based on weapon carrying voters and based on political contributions by the weapon producers. First amendment? Nonsense: it is a skewed prisoner's dilemma: every gun-toting idiot, sorry, every responsible father believes he can better survive armageddon and defend his family form anihilation by their gun-toting idiot neighbours, sorry, from the responsible, but gun carrying fathers next door, when he has the biggest gun.
Today the NYT published ideas from readers to solve the problem: most of them were aimed at arming the teachers or barricading the schools. The US is becoming more and more attractive as a country of destination. The land of the free, home of the brave.
It is probably impossible to convince the "frontier" people of the US, the descendants of the old colonists, that one can live a good life without an assault or riot gun, even without hunting rifle (you búy your meat? argh). Popular opinion on gun laws has become even more liberal the last ten years. We have to assume that it will be impossible to contain the voters, so any politician proposing anti-gun legislation will loose his seat.
From a more practical point it is probably completely unfeasible to collect 280 million guns that are out in the streets. Pandora's Box was opened and cannot be closed again, even if the majority would want that. Although: by collecting one million weapons each year, and no sales anymore, the problems can be solved in the year 2293.
A third point is the money behind the political campaigns and behind the lobbying in Washington and elsewhere. As long as the NRA & weapon producers can buy their votes, no proposal for legislation will be accepted. It would require a very courageous president in his second and last term to take on such a challenge.
So unfortunately the most likely outcome will be that guns will stay. Maybe Obama will succeed in banning the most atrocious assault rifles, together with missiles and hand granates. But this will not prevent the next lunatic from taking his freedom rights in his own hands and killing the next, albeit maybe smaller, group of innocent bystanders.
The European Union was not built in one day...
Many people and especially columnists who need to fill their pages are anxious and even impatient about the progress that is being made in the European Union. They criticise politicians who haggle and deal and make compromises, but who also delay and wait and postpone. There is a crisis and the journals want a solution now!
Point is that Europe is an experiment. It is the first time in history that 500 million people voluntarily come together and give away part of their authority and authonomy to a central government. They all do that because they know that the alternative is continued war. Europe has a recorded history of more than 3000 years of continuous war fare and probably longer. This is what formed our continent. This continued fight without a clear winner has made us free (see e.g. Tilly). This is what created chivalry, serfdom, the renaissance, democracy, enlightment, the industrial revolution, capitalism and ultimately: an affluent society and freedom. The rest of the world looks upon Europe with envy (yes, also Kishore Mahbubani and also the USA).
But this experiment is going too fast. The politicians in Europe and certainly the journalists are more eager than the voters. Voters are not ready yet to give away all their local connections for the greater good of 500 million "others". People are conservative. They need to get used to the ideas and they need to see the benefits of change before they agree to further change. In the middle ages they voted with their feet and left feudal lords to join the free cities. In the same way the voters should get enough time to realize that the European vision is worth following.
So politicians should take their time. If we cannot agree this decennium, we will agree in the next. Or the next.
Giving away authonomy should be a careful and slow process.
Many people and especially columnists who need to fill their pages are anxious and even impatient about the progress that is being made in the European Union. They criticise politicians who haggle and deal and make compromises, but who also delay and wait and postpone. There is a crisis and the journals want a solution now!
Point is that Europe is an experiment. It is the first time in history that 500 million people voluntarily come together and give away part of their authority and authonomy to a central government. They all do that because they know that the alternative is continued war. Europe has a recorded history of more than 3000 years of continuous war fare and probably longer. This is what formed our continent. This continued fight without a clear winner has made us free (see e.g. Tilly). This is what created chivalry, serfdom, the renaissance, democracy, enlightment, the industrial revolution, capitalism and ultimately: an affluent society and freedom. The rest of the world looks upon Europe with envy (yes, also Kishore Mahbubani and also the USA).
But this experiment is going too fast. The politicians in Europe and certainly the journalists are more eager than the voters. Voters are not ready yet to give away all their local connections for the greater good of 500 million "others". People are conservative. They need to get used to the ideas and they need to see the benefits of change before they agree to further change. In the middle ages they voted with their feet and left feudal lords to join the free cities. In the same way the voters should get enough time to realize that the European vision is worth following.
So politicians should take their time. If we cannot agree this decennium, we will agree in the next. Or the next.
Giving away authonomy should be a careful and slow process.
Monday, December 5, 2011
Drones got Monti in the Italian Government
When Xerxes invaded Greece, he was beaten by the Greek phalanx, the disciplined line of hoplites, armed with a spear and a shield. The hoplites were highly motivated because they defended their home turf, their own small farms. They were land owning peasants, with enough money to buy their own spear and shield. The Athens had changed their laws to give everybody land, and created a (sort of) democracy in doing so.
For long time, the most dominant factor on the battle field had been the chariot, which necessitated an aristocrat to ride it, because a chariot is expensive and needs servants to drive the horses and maintain it. As a result, according to William McNeill in the great book “The Rise of the West”, society in those years was aristocratic. In the Middle-Ages, the most formidable war machine in Europe was the heavily armored knight on horseback, again necessitating an aristocratic society. Due to the introduction of the fire weapons, and unavoidable, under Napoleon, mass conscription, war was made available for the masses again and power depended on the biggest and best organized armies. No coincidence that the ancient regime was wiped out and a constitution and democracy were introduced. The first world war was the pinnacle of mass armies running against each other, and saw the introduction of general voting, including women.
The last 100 years saw the introduction of the combustion engine and huge firepower, atomic bombs, satellites and computers. This has brought technology into the battlefield. Precision bombardments and laser guns. Internet warfare. At this moment an arms race in space is taking place. A late fad is the un-manned airplane, the drone, that spies on the enemy and occasionally can kill too.
This suggests that the dominant power now is technology. As a result we will see technocrats pulling the strings. The far majority of the Dutch House of Parliament now has a university degree. Kyoto protocols based on academic climate models determine our industrial policy. Governments don't dare to make a decision without think tanks calculating it in models into 3 decimals. The appointment of the new Greek and Italian technocrat governments, to solve the financial problems, is just a step.
Nerds rule the world!
Tuesday, November 8, 2011
Chinese Housing Market is in trouble
A Construction bubble has fuelled the economic growth in China over the last 15 years in the same way it has in Ireland and Spain since the Euro and as it did in Japan in the eighties. When the bubble bursts, it will hurt.
The prices of houses in China have already reached a peak and have now started to go down. In response buyers will delay purchasing in the expectation that prices will go down further. This will become a self-fulfilling prophecy if sellers cannot pay the cost anymore and have to reduce prices to find buyers.
Dropping prices will be a strong incentive for construction companies to stop building, also because there already is a large reservoir of unsold houses in China. Construction is 10% of the Chinese economy (acc Mr. Wei Yao of Societe Generale). In addition, following a dip in construction all supplying industries will loose turnover (for many a substantial part of their existence). Especially the upstream companies, at the beginning of the supply chains, will see a significant dip because the whole chain will de-stock. This supplying industry is a much bigger part of the economy than the 10% mentioned by SG.
Dropping prices will also give strain on the banking system if the value of the houses drops lower than the mortgages. A Chinese banking crisis will be felt throughout the world. And dropping housing prices will reduce Chinese end market consumption, affecting all other industries as well.
The Chinese government might want to keep their trillion in the pocket to solve these problems, in stead of investing it in Greece or Italy.
The only consolation is that housing prices in China have gone so high that many ordinary people cannot afford a house. So if the prices drop 50%, a whole new market may emerge.
The prices of houses in China have already reached a peak and have now started to go down. In response buyers will delay purchasing in the expectation that prices will go down further. This will become a self-fulfilling prophecy if sellers cannot pay the cost anymore and have to reduce prices to find buyers.
Dropping prices will be a strong incentive for construction companies to stop building, also because there already is a large reservoir of unsold houses in China. Construction is 10% of the Chinese economy (acc Mr. Wei Yao of Societe Generale). In addition, following a dip in construction all supplying industries will loose turnover (for many a substantial part of their existence). Especially the upstream companies, at the beginning of the supply chains, will see a significant dip because the whole chain will de-stock. This supplying industry is a much bigger part of the economy than the 10% mentioned by SG.
Dropping prices will also give strain on the banking system if the value of the houses drops lower than the mortgages. A Chinese banking crisis will be felt throughout the world. And dropping housing prices will reduce Chinese end market consumption, affecting all other industries as well.
The Chinese government might want to keep their trillion in the pocket to solve these problems, in stead of investing it in Greece or Italy.
The only consolation is that housing prices in China have gone so high that many ordinary people cannot afford a house. So if the prices drop 50%, a whole new market may emerge.
Wirtschaftswunder?
Newspapers are writing about the German recovery as if it concerns a new Wirtschaftswunder. Nonsense. Germany has gone deeper in the crisis than most other West-European countries because they have such deep supply chains, with a lot of capital goods that are very cyclic because they fluctuate around demand in other busineses. Another reason for their strong dip is their large automotive sector, with deep supply chains.
The long German chains have responded to the crisis by active and reactive de-stocking, and when the de-stocking was over, by an elastic response in re-stocking, which I have called the Lehman Wave. The Lehman Wave is causing the steep recovery that is mistakenly seen as Wirtschafstwunder.
The strong recovery of the automotive sales has helped here too, and caused another, this time upward bullwhip effect in the chains.
We can be optimistic about the German economy: when the whole Lehman Wave is behind, and the curve is down again, the Germany industry will be at a higher production level than the industry in many other countries due to the particular situation of construction in this country. In Germany, construction has been declining slowly but steadily since 1990 and therefore it completely avoided the bubble that took place in countries like Spain and Ireland and to a lesser extent in UK and the Netherlands. Construction is now more or less on the level it was in 2007 and stable. This will give a solid new base for the economy in the coming years.
Robert Peels
The strong recovery of the automotive sales has helped here too, and caused another, this time upward bullwhip effect in the chains.
We can be optimistic about the German economy: when the whole Lehman Wave is behind, and the curve is down again, the Germany industry will be at a higher production level than the industry in many other countries due to the particular situation of construction in this country. In Germany, construction has been declining slowly but steadily since 1990 and therefore it completely avoided the bubble that took place in countries like Spain and Ireland and to a lesser extent in UK and the Netherlands. Construction is now more or less on the level it was in 2007 and stable. This will give a solid new base for the economy in the coming years.
Robert Peels
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