European Union

A Possible Explanation for Greece’s Economic Woes

Brandon Christensen Current Events, History , , , ,

And one that does not have to do with Athens’ infamous bookkeeping practices. From the New York Times:

But property ownership in Greece is often less than clear cut. So Mr. Hamodrakas put a padlock on his gate and waited to see what would happen. Soon enough, he heard from neighbors. Three of them claimed that they, too, had title to parts of the property.

In this age of satellite imagery, digital records and the instantaneous exchange of information, most of Greece’s land transaction records are still handwritten in ledgers, logged in by last names. No lot numbers. No clarity on boundaries or zoning. No obvious way to tell whether two people, or 10, have registered ownership of the same property.

Yikes. There is more here. I highly recommend it.

Forget fiscal and monetary policy, Greece needs to instate a decent property rights regime before it can become a wealthy and healthy property-owning democracy.

This should not be surprising for a couple of reasons, but only if one is somewhat familiar with the modern history of the region. The Balkans has been, until very recently, under the thumb of various empires governed from afar (Ottoman and Austro-Hungarian). Once independence from foreign despots was attained (through war) in the nineteenth century, these states then had to survive more war (World Wars), endure more occupation (through the same world wars), and then navigate their young states through the Cold War (where dictatorship was sometimes preferable to ideological considerations, and sometimes integral to ideological considerations). In addition, Balkan states have had to constantly deal with threats from each other as well.

If anything, the inclusion of these states into the European Union is probably the best thing to happen to them in a long, long, long time. It is unfortunate that bureaucrats in Brussels decided to hastily implement a single currency without first ensuring that each of the member states possessed the institutions necessary for protecting clear and well-defined property rights.

Update: On the other hand, entry into the EU was probably (correctly) seen as a way to strengthen institutions associated with protecting property rights.

“Europe’s Job Seekers Flock to Germany”

Brandon Christensen Current Events, Liberty , , , , , ,

That’s the title of a recent piece on immigration in Europe, as told through a Greek family settling down in Germany, by the Wall Street Journal. Among the gems:

Despite the enmity often directed at Berlin for its insistence on painful austerity as the cure for Europe’s sovereign-debt crisis, Germany has become a new land of opportunity for tens of thousands of people fleeing their recession-racked homelands.

Data released Tuesday by the German statistics agency showed immigration hit a 17-year high last year, with the increase from Europe’s crisis-riddled nations “particularly evident.”

And this:

Germany has long had an uneasy relationship with migrants. Previous generations have often integrated poorly, facing high hurdles to gain citizenship—if they even try. Many Germans also believe that migrants come to live off welfare benefits or criminal activity [but] experts say today’s renewed influx of migrants is good for Germany. As its population declines and ages, the nation badly needs qualified workers to fuel economic growth and support its pension and health-care systems […]

The youngest, Nikos, at 15 years old, told his parents he missed his friends. Don’t worry, Mr. Karoustas replied. He’d see them again.

“I don’t hope for it,” the father told his son, “but all of them will come to Germany too.”

Read the whole thing. You can get around the WSJ‘s subscriber firewall by copying-and-pasting the title of piece and Googling it. Once you do that, just click on the article.

See our past notes on the EU here.

Has Foreign Affairs Been Reading NOL?

Brandon Christensen Current Events, Links , , , , , , , , , , , , ,

Hello all, I signed up for a pretty challenging final quarter here at school, so my postings will probably be scarce for the next two or three months. It seems Foreign Affairs, one of the more sober foreign policy journals out there, is finally starting to read us here at the consortium. I’ll get to that in a minute but first: editorial duties call!

  1. Be sure to read Dr. Delacroix’s Bush-worshiping piece for an example of how obstinate ignorance works. The very man who mocks smart, well-educated people for their acceptance of scientific consensus on global warming as ‘cultists‘ seems to believe that “there were very good reasons for any reasonable person to be misled about the existence of  [WMDs] in Iraq.” You have to admit, the man has a lot of brass!
  2. I still have to get to co-blogger Andrew Roth’s recent comment chastising conservatives and libertarians for failing to recognize the many nuances associated with Bismark’s statecraft and Roosevelt’s New Deal.
  3. We’ve got a couple new writers who will be blogging here at the consortium. One is an economics major at UC Merced and the other is a Guatemalan national doing graduate studies in Denmark, so stay tuned!

Political scientists Roland Benedikter and Lucas Kaelin have a fascinating piece in Foreign Affairs focusing on the one bright spot in Europe these days: Switzerland. Libertarians who have read the political and legal works of Friedrich Hayek, Ludwig von Mises and James Buchanan will recognize the gist of the arguments right away. To summarize: small, democratic states are the best form of government available to man, given our vast shortcomings, and these small states are, in turn, much better off operating within vast free trade zones that do not hinder the small-scale democracy at work in these states. From the piece: Continue reading →

Cyprus, the EU and Competing Currencies

Brandon Christensen Current Events, Economics , , , , , , , , , , , , ,

There have been many critiques over the European Union from many different quarters over the decades since its inception. With the seizure of cash from customers of banks in Cyprus, the worst threat imaginable has now come to pass for Euroskeptics. Economist Frederic Sautet explains how the heist has so far gone down:

Some depositors at Cyprus’ largest bank may lose a lot of money (e.g. see article in FT). Those with deposits above €100,000 could lose 37.5 percent in tax (cash converted into bank shares), and on top of that another 22.5 percent to replenish the bank’s reserves (a “special fund”). Basically “big depositors” are “asked” to pay for (at least part of) Cyprus’ bailout (the rest will be paid by other taxpayers in the EU).

I cannot think of a faster way to completely destroy a banking system than to expropriate its depositors. This is the kind of policies one would expect from a banana republic, not from a political system that rests on the rule of law. But this is the point: the EU does not respect the principles upon which a free society is based.

An economist over at ThinkMarkets also has a good piece on the Cyprus heist. The EU has taken an incredibly good arrangement – free trade throughout Europe – and turned it into an attempt to unify Europe into a single behemoth of a state. And all under the auspices of “federalism.” This is a bad development for a number of reasons. Continue reading →

Shoot the Shorts

Warren Gibson Economics, Law , , , , ,

European bank stocks have dropped sharply in recent days, presumably because they hold large amounts of shaky debt issued by the governments of Greece, Portugal, Spain, Ireland and Italy.  Several European governments have found someone to blame for their financial problems, and their target is that perennial favorite, speculators. And not just any old speculators, but the darkest of that shady lot, short sellers. Short sales of major European bank stocks are banned for a period of time so that traders can’t spread false rumors and trigger a downward spiral in these stocks.

(To sell short means to sell borrowed stock in the hope that the price will decline.  If the stock does fall, sellers buy the shares cheaply, return them to their original owner, and pocket the cash difference.  If the shares rise instead, short sellers have to pay a high price and suffer a loss.  When a number of short sellers cover their positions out of  fear of rising prices, it’s called a short-covering rally.)

What a dreary and stupid move the Europeans have made. They might have learned from the ban instituted in 2008 by U.S. authorities, which accomplished nothing.

Real Fears

There is good reason to fear for the European banks – the problems with European sovereign debt are evident.  Rumors are hardly necessary when the banks’ exposure is well known.  And if false negative rumors justify intervention, what about false positive rumors? Why not ban purchases of stocks when the all-knowing regulators determine they were boosted by bullish rumors? Continue reading →

Scotland and Secession

Brandon Christensen Current Events, Links , , , , , , , , ,

From the New York Times:

Scotland would have to renegotiate membership in the European Union and other international organizations if it votes for independence in a referendum next year, according to legal advice expected to be published Monday by the British government.

Read the whole thing.

A couple of thoughts:

  1. Wow, the British government published a report on the possibility of secession. Can you imagine Washington ever doing something so outside the box?
  2. The rest of the analysis falls in line nicely with my own arguments (if I do say so myself!) that secession/devolution will only succeed in Europe (or elsewhere) if the new states are allowed into the EU (or other regional and international bodies not named the UN).

Horse Meat and the European Union

Jacques Delacroix Current Events, Liberty , ,

Big scandal in the European Union about horse meat masquerading as beef. Neither in Europe nor in this country do people really understand the story. Good thing I am here with my cross-cultural skills!

First things first and a confession: I ate much horse meat as a child, something like twice or three times a week. It was cheaper than beef. The horse butcher was half a block from the beef butcher. Horse meat was cheaper. My mother was concerned that her sons would not develop the right kind or quantity of hormones if they didn’t get red meat at every meal. Well, I don’t want to appear immodest or lacking in humility but it appears that my mother was right about the effect of horse meat on virility!

We ate ground horse meat barely singed. It tasted good, a lot like beef, in fact but also a little sweet. We did not feel sorry for the horses. There was a horsey set in France but it did not live in the government housing where I grew up. We did not know any of them although we read about some of them in the tabloids. Long story short: There is no particular health hazard associated with horse meat if it’s normally inspected. It’s probably less dangerous than say, chicken. Continue reading →

The Holy Roman Empire was…

Brandon Christensen History, Law, Liberty , , , ,

…_______________ (fill in the blank!).

I’ve been meaning to link to a fascinating article in the Economist on the parallels between the Holy Roman Empire and the European Union, but travels, getting ready for school, and other stuff has gotten in the way.

Among the gems:

The empire faced the same problem as today’s EU, only worse. The EU currently has 27 member states. During its final 150 years, the empire had more than 300 territories (the number varied). Should each member get one vote? If so, any hillbilly could block progress. Or should votes be weighted by territory? If so, big princes could bully little ones. Should decisions be taken by simple majority, qualified majority or unanimity? The empire answered these questions as the EU does: with a characteristically decisive it-all-depends.

Do read the whole thing.

My only critique of the article is that it misses a huge piece of the puzzle: the presence of the US military, as a conquering power, on the continent. As long as Uncle Sam is around, Europeans don’t have to worry about descending into yet another war. None of them will ever admit this, though. Europeans would rather spend their time ignoring this point while simultaneously assaulting the very political and economic system that enables the US to provide for Europe’s security.

I’ve written about this before, but due to the inevitable fiscal constraints of empire I think American military policy towards Europe needs to go one of two ways: 1) either withdraw our troops completely or 2) start implementing trade policies that would make living, working, and traveling between the US and Europe much, much easier. Like moving to Louisiana from Languedoc should be as easy as moving from California to Connecticut.

Taking the second route would pay for itself and much, much more. Unfortunately, there are too many isolationists and too many reactionaries (mostly on the Left) on both sides of the pond that would oppose such a policy no matter how much it would benefit themselves and everybody around them. The second route might be the one we need to take. Both, as I mentioned, are going to have to be necessary if the US is going to get its fiscal house in order.

The Rationality of Anti-Antisemitism; The Currency Issue Made Simple

Jacques Delacroix Current Events, History, Liberty , , , , , , , , , ,

The most interesting thing I have read in years about anti-Semitism is in the Wall Street Journal today. A poll in Europe indicates that 50% of Spaniards have a somewhat unfavorable, or a very unfavorable impression of Jews. The percentage in Germany is 25, in France it’s 20, in the UK, it’s 10. There are large number so Jews in France and in the UK.

What makes Spanish anti-Antisemitism interesting is that there are no Jews to speak off in Spain. All Spanish Jews were expelled from the country in 1492. The bulk of those who did not die in the expulsion went to the Ottoman (Turkish) Empire were they were welcomed by the Sultan. Others scattered around Muslim North Africa and Italy. Until WWII, many Turkish and Balkans Jews spoke 15th century Spanish. I knew a Spanish-speaking Turkish Jew at Stanford in the sixties myself. His last name was Cardona.

Between 1939 and the 1970s, the Fascist regime of Francisco Franco promoted a brand of Catholicism that was unfriendly to Jews, as “Christ killers.” For most of the intervening period the Inquisition promised to make life miserable enough for Jews that they did not come back.

So, here you go: The ultimate judgment on the rationality of anti-Antisemitism: The less the chance that you ever met a Jew, the more likely you dislike Jews. At least, that’s true in Europe. Continue reading →

A European Union of More Nations?

Brandon Christensen Liberty , , , , , , , , ,

Wouldn’t that be so bad ass? Or am I just a geek?

The New York Times picks up on concepts that libertarians have been talking about for years. From the article:

The great paradox of the European Union, which is built on the concept of shared sovereignty, is that it lowers the stakes for regions to push for independence.

Has the NYT been reading Notes On Liberty? That’s a tongue-in-cheek question, of course, but one that makes me feel smug and sexy at the same time!

I have largely addressed the crisis in Europe from a political standpoint on this blog, and I don’t see that changing much over the next few years. Fiscal responsibility and civil society can only flourish if political institutions are well-defined.

The NYT article decided to quote a scholar at the European Council on Foreign Relations (which is not *sigh* a think tank dedicated to furthering the interests of a small, elite circle of bankers and industrialists) instead of me: Continue reading →

Separatism (Secession) in Spain, and the Rest of the World

Brandon Christensen Current Events, Liberty , , , , , , , ,

Separatist agitations in Spain have prompted some observers to reconsider the concept of secession as a viable option in politics again. The BBC has a very good report here, and the Economist has an even better one here.

When I was taking an Honors course on Western civilization and we got to the European Union, a thought immediately came to my head and I shared it with the class: does the European Union mean the demise of the big nation-states of Europe?

My hope is that it will, but my Professor and my Left-leaning classmates either thought ‘no’ or had not thought about this question at all. One sexy girl did think it was possible, though I think she was just humoring me so that I would ask her out on a date (yes, I did, but she couldn’t get into UCLA, though, so she ended up at Berkeley!).

I thought about the confederation of states in Europe that the EuroZone has created, and remembered that many regions within the nation-states of Europe have harbored separatist sentiments since being absorbed into the nation-states of Europe (sometimes hundreds of years ago, sometimes decades ago), as well as the peaceful split-up of Czechoslovakia into two states within the EuroZone.

The purpose of the nation-states was to streamline trade between regions by standardizing trading policy and eliminating parochial tariffs that regions within the nation-states had erected over the course of centuries. So, in what is now Germany, for example, there were hundreds of small states that each had their own economic policies, and most of these states had erected protectionist tariffs, even on neighboring states. The German state standardized trading policy in what is now Germany so that a tariff-free zone of trade eventually emerged within Germany. The federal set-up of the United States accomplished the same thing.

Now, though, the European Union has essentially taken the place of the nation-state as the chief entity in charge of standardizing trading policies in Europe. My line of thought leads me to conclude that this political setup is a great opportunity for regions that have been absorbed into larger nation-states to assert more fiscal (local taxes) and political (local elections) independence because of these region’s new interdependence with a larger part of the European economy thanks to the elimination of tariffs between the larger nation-states currently in place. In short, the confederation has provided the opportunity for smaller states to emerge while at the same time eliminating the parochial and self-defeating aspects (trade policy) of small state polities that often accompanies “smallness.” The best of both worlds has the chance to flower: local governance and total participation in world trade.

I realize that the EuroZone shot itself in the foot with the creation of a central bank and the attempts to delegate to itself ever more political power, but with these two blemishes notwithstanding the European Union is a good thing for both peace and prosperity.

The question of secession in political science has recently emerged as a good one for many scholars, but unfortunately their focus has tilted heavily towards Europe and Canada (Quebec and Nunavut). If we apply this concept to other regions of the globe – especially China, Africa, the Middle East and India – then the notions of violence and despotism that Westerners largely harbor towards these regions disappears.

I hope this makes sense. If it doesn’t you know where the ‘comments’ section is!

States and Secession: Lamenting the Failure of the Euro Zone

Brandon Christensen Current Events, Politics , , , , , , , , ,

The Guardian has a so-so map on secessionist movements in Africa that’s worth checking out. I say it’s only so-so because it doesn’t really cover all the secessionist movements in the region, just the violent ones or the ones favored by Western diplomats.

I’m interested in secessionist movements because of the effects that they have on nationalism, one of the most dangerous ideologies to haunt mankind since the industrial revolution. Nationalism is probably worse than racism, or at least on par with it, when it comes to ideas gone horribly wrong.

That’s why I support free trade between states, and the deeper the better. The true tragedy of the EuroZone crisis is not the inevitable and predictable collapse of the euro but the fact that anti-liberal policies like the central bank and more political integration between states (and away from the people) are being misconstrued as liberal, in the classical sense.

The smaller the states the better, and the freer the trade the better. Mexicans should be able to travel and live in the US and Canada the same way that Nevadans are able to travel and live in California. The EuroZone could have been beautiful, but the pressure for a central bank and more control from a center, in Brussels, has probably ended it. It’s a good primer on how beautiful ideas often don’t pan out the way people would like them to.

Here’s how to fix the EuroZone crisis:

  1. Eliminate the monopoly of the central bank on creating money and credit.
  2. Open up the EuroZone market to more goods from the rest of the world (especially agricultural products from developing states).

I also think it’d be a good idea to keep Brussels as limited as it is. Doing so will not only allow more room for local policies to be experimented with and tested against other policies, but it will continue to erode the nation-state as well. What we were seeing prior to the crisis in the EuroZone is more calls for autonomy from state capitals throughout the EuroZone,  and a powerlessness on the part of states to do anything about it.

So instead of France and Spain, two states, the world may have seen up to five or six states in their stead, all interacting with each other economically while retaining nominal political independence from each other.

What a shame.

One Sure Thing About Globalization – The American Motion Pictures Industry World Hegemony Part 3

Jacques Delacroix Economics, History , , , , ,

[Editor’s note: this lecture was delivered to the Leavey Institute of Santa Clara University in 2003. You can find it reproduced in whole here]

Broken Promises

Harm to the poor on a considerable scale occurs when rich countries suddenly violate the principles of free trade they publicly support, on the main. The US government and those of other post-industrial countries will periodically make a show of vaunting the merits of free trade on stages (such as the World Trade Organization) that guarantee worldwide publicity. These actions must encourage at least some of the most enterprising poor in poor countries to produce for distant markets they are not in a position to understand.

When the governments of rich and large entities, such as the US, Japan and the European Union, suddenly inhibit the free movement of products, those enterprising poor people in poor countries suffer, and suffer disproportionately. Thus, the recent passing of new American farm subsidies legislation (in 2002) makes it difficult or impossible for small farmers in the Sahel area of Africa to compete on the world ‘s cotton markets with American growers (Thurow and Kilman, 2002)(6). The steel tariffs erected by the Bush administration – with the full complicity of Congress – must have similar effect on steelworkers in some of the Third World and Eastern European steel-producing countries.

Neither of these policies nor the broken promises they imply, can be easily defended on moral or rational grounds. Directly, it can probably be shown that the economic actors of poor countries who embraced free trade end up worse off than they would be if they had toed to a more parochial (“autarkic”) line. Indirectly, such breaches of faith by powerful rich countries contribute to the stagnation of the Third World by seeming to prove wrong those who adopted a stance leading most surely to economic development: embracers of production for worldwide markets. (In my experience, well-educated defenders of national economic ”self-sufficiency” rarely care to argue against free trade in principle; instead, they rely on evidence that there is no real free trade but a poisonous international game where the dice are loaded against the poor in poor countries. Sometimes, they have a point.)

The American Motion Pictures Industry’s Hegemony Continue reading →

Italy and National Debt and Everyone Else

Jacques Delacroix Current Events, Economics, Politics , , , , ,

I have been inactive. Some catching up to do. I will go straight to the Italian situation because I don’t see it addressed in the media with anything resembling insight based on good information. I am it by default.

It’s human nature I suppose to want simple solutions to complex problems and easy solutions to hard problems. Italy is out of the swamp and therefore, the Euro is saved and therefore, the sterco is not going to hit the fan on this side of the Atlantic. Reason: Old bad boy Silvio Berlusconi resigned. Not much analysis, not much going below the surface by the American press. I have to do their elementary work for them.

First, I suspect there is a monstrous confusion in the minds of many in the media between the accounts of Italy, the state, the Italian republic on the one hand, and the figures pertaining to the Italian economy, on the other hand. The Italian economy comprises a few highly visible major corporations such as Fiat and myriads of small businesses.

The Italian Republic is in debt. The Italian economy is doing well. It’s on the healthy side of economies of developed countries. It’s a lot better than Japan’s for instance. It’s also true that, as elsewhere in Europe, the budget of the state is large relative to the national economy. My bet is that it is smaller than say, in France, or in Sweden, or even in Germany, because the black economy in Italy is so large. The Italian government is just not able to get its grubby little hands on much of what’s generated within Italy. Nevertheless, it’s true that the government budget and the private sector economy influence each other in Italy, as they do elsewhere. That’s not excuse to confuse the one with the other. My wife and I influence each other. It does no mean that we are one and the same. (For one thing, she is both attractive and intelligent.)

Berlusconi did not accumulate the large sovereign debt of the Italian Republic. The debt goes back a long way, some say to the aftermath of WWII. Successive governments just left it alone or they contributed to it. Continue reading →

Around the Web

Brandon Christensen Current Events, Links , , , , , , ,
  1. Secessionist Movements in Europe. I have always thought that the EU would be great for more decentralization, but once the central bank became established and Brussels agitated for more political power I knew that the experiment in confederation would become the failure that it is today.
  2. Economist Bryan Caplan on Left-wing historical bias and Benito Mussolini. You’d be surprised what the history books keep out of Italy’s socialist movement…
  3. Has Africa Always Been the World’s Poorest Continent? Be sure to read through the ‘comments’ section too.
  4. Mini-DREAM and the Rule of Law: Executive Discretion. A number of libertarians have come out in support of Obama’s executive order prohibiting immigrants from being deported just for moving here as children, but I am not so sure that this is a good move. Politically, it’s great, especially when one considers the fact that the Obama administration has deported more immigrants in 4 years than GW Bush did in 8. I am more worried about the Rule of Law. It’s the legislative branch’s job to implement immigration policy, not the executive branch’s. As somebody who supports open borders, this is a tough call.