European Union

France Does not Export Wines, nor Mexico Guacamole, nor Does the US Import Cars, etc. “National Competitiveness” for the Intelligent Ignorant

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

It’s national election season again. As always happens in this season, in every developed country, the old battle horse of national competitiveness gets a new coat of shiny paint and is led out by its sparkle-strewn tether to support politicians misconceptions and mis-talks. There is a very widespread misconception that nourishes unreasonable thoughts and false notions on the economy.

Sorry but at this time, in this season, I feel a compulsion to resort to teaching, so, pay attention. There might be a quiz.

The misconception: Countries, (or “nation-states”) such as the US, Canada, Mexico, Belgium, or France don’t compete with each other like soccer teams, for example, compete against each other. In soccer, when one team wins a point, the other team loses a point. When the economy of one country picks up speed however, it is not (NOT) the case that the economy of another country (or of several countries) must slow down. The reverse is true. When the Mexican economy grows, some Mexicans are better able to buy American corn, or American video games, making some Americans richer than would be the case if the Mexican economy stagnated.

The confusion has three sources. The first source is simply ignoring that the producers of one country are also potential customers for the producers of all other countries. Those who compete with American workers, are often also buyers of American-made products. If they are not at the moment, the richer they become, the more likely they are to become buyers. One of the international functions of those who compete with American producers is thus to enrich American producers, perhaps different ones. The relationship may be more indirect. Foreign worker A competes with American worker B and he uses the money he gets from beating B to buy from American worker C. If I am C, my interests are not well lined up with those of my fellow American B. That’s a fact, no matter what politicians say in the language of football. However, if I am American worker C, in the long run, I am better off if fellow American worker B becomes richer than if he does not. For one thing, he will be able to support better equipments, such as schools, from which I will profit. Continue reading →

Immigration and the Welfare State: Incompatible (With A Comment on the Middle East Too)

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

A Facebook friend of mine (who I met at a FEE seminar a couple of years back) posted the following link in Forbes about British plans to begin targeting certain citizens of states within the EU in regards to immigration. Individuals from states in the troubled Latin region of the EU would no longer be welcome to reside in Britain. The cause of this:

However, immigration is a sensitive issue for Britain which runs one of the most generous health and welfare protection schemes in Europe.

Can’t be much clearer than that. Along with the fiscal problems that welfare programs create for societies, there are also political and social consequences to be had. For one thing, the very notion of a welfare state creates a type of “ours, not theirs” mentality within a populace, which no doubt contributes the shocking nationalism and racism to be found everywhere in Europe.

Although welfare programs in the US, Australia and Canada have to deal with these social consequence, in the Old World the welfare state also taps into a sort of tribal conscience that the Anglo world cannot really fathom. I hypothesize that the “tribal identity” is actually the main factor behind the stubborn refusal of the welfare to state to go away not only in Europe but throughout the entire Old World. Continue reading →

The Future of NATO

Brandon Christensen Liberty , , , , , , ,

The recent NATO summit in Chicago that produced absolutely nothing has opponents of the alliance smelling blood. Indeed, the only thing that the Chicago summit may have produced is a healthy recognition by many factions that the future of NATO itself is increasingly in doubt. This should come as no surprise to any of us here at the Notewriter’s consortium, but in some ways this development is surprising.

Even mainstream pundits, ensconced as they are in Beltway ideology, have begun to notice that the alliance is on its way out. From CNN’s Security Clearance blog (“security clearance”? Really?):

Europe’s collective fatigue with NATO’s globetrotting has often left the United States shouldering most of the burden, which is considered one of NATO’s greatest shortcomings. The United States now covers 75% of NATO defense budgets, while the majority of allies don’t even allocate NATO’s benchmark 2% of gross domestic product to defense.

Sharp reductions in European defense budgets have only increased dependence on the United States.

While realists have been bemoaning the alliance for decades, it has become apparent that the reality of the situation has finally smacked some sense into the Beltway consensus. This must be kind of like how libertarians felt after the collapse of the Berlin Wall in the late 1980’s.

Like the collapse of the Soviet Union, though, there are many things to be worried aboutwith the impending collapse of NATO. The major issue that the US should be worried about is deteriorating relations with Europe. While the American taxpayer got stuck subsidizing the defense of Europe for well over half a century, the relationships brought about by working together have proved fruitful, and in order to keep these relations on good terms, Washington should undertake policies that will further integrate American and European societies: freer trade.

There is no reason why there shouldn’t be a free trade zone between the whole of the US and Europe on the scale of the US itself or the EU (the same goes for the US and its nearest neighbors: Canada, Mexico, and the Caribbean).

One thing that American policymakers should not fear is the rise of a competitor in the form of a European superstate. This fear (or hope, if you are an American socialist) is off-base. Just think of Europe’s sclerotic answers to the worst economic crisis in its history, and then imagine a European Union trying to implement a common, cohesive foreign policy on a global scale like that of the US.

It isn’t possible. Not even states with highly centralized power structures like China can compete with the US in this regard, and the thought of Brussels actively trying to compete with the US in international relations is ludicrous.

The demise of NATO is ultimately a good thing. There is no need for a collective security alliance to combat a menacing Russia any longer. Moscow’s empire of Soviets is long gone, and its focus in the near future will be domestic and along its borders. NATO’s demise will also save the US a lot of money, and will spare the European people from the negative effects (like terrorist attacks) associated with supporting a worldwide hegemon. We can only hope that NATO’s demise comes sooner rather than later, and that each party involved will recognize that continued relations with each other, especially in regards to trading policy, are still vital to peace and prosperity.

Around the Web

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

Co-editor Fred Foldvary is participating in a symposium over at Bleeding Heart Libertarians.  Check him out.

Michael Mungowitz bags on Greece and the Euro Zone.

Zach Gochenour has a complimentary follow-up piece on Dr. Foldvary’s essay: Progress or Poverty: The Economics of Land and Discovery.

All Hail Azawad.  A blogger obsessed with maps from the New York Times writes about the new state’s prospects .  I have written about Azawad here, here, here, and here (oh God I hope I don’t sound like Walter Block!).

Jacques Delacroix provides even more insights into the French elections and its implications for the Euro Zone.

The collapse of the Euro Zone is kind of a big deal.  Personally, I hope the collapse only destroys the currency of the zone, and not the ability of its members to trade and work freely anywhere throughout the zone.  I also want a pony and never-ending supply of really good weed.

The European policymakers and technocrats should not have been so brash as to believe that they could unify Europe politically.  Not only is that bad for democracy, but it has also given the underlying principle behind the EU – free trade – a very bad name.  Repeat after me: large polities that are economically united and politically divided are good for everybody, but large polities that are economically and politically united are bad for everybody.

It’s even worse when you throw in concepts like Old World identities such as ethnicity into the mix and try to get everybody to play nice through the democratic process.

French Elections: Redux

Brandon Christensen Economics, Politics , , , , ,

French elections are ongoing.  Here is Dr. Delacroix one more time:

The first thing to know is that France is a country where common conservative and libertarian ideas about market efficacy are rare. A conservative stance is absent from the public discourse.

I think Hollande is going to be elected. He is the worst the French Socialist Party has to offer. He has never done anything in his life, like our current president, or worse. He does not even have the merit of being a member of an interesting minority. He is the pale consort of a former big loser in a French presidential election (Segolene Royal). How much lower can you get?

All this because Sarkozy annoyed too many people, swing voters, with his bad manners and because Strauss-Khan couldn’t keep his second thinking tool where it belongs long enough. Yes, Strauss-Khan was going to be the Socialist candidate. He understands money, unlike Hollande who knows nothing about money except that the “rich” have too much of it and that it’s the root of all evil.

Hollande is the worst of a Socialist Party that has had few new ideas, has not updated itself, in the past thirty years. However, his colorlessness, the fact that he barely exists may be a blessing. It’s possible that economic technocrats in his Continue reading →

Chocolate for Thought

Jacques Delacroix Politics , , , ,

There is a pervasive feeling among thinking people that this country is not just facing a severe economic crisis but that we are losing something exceptional. That something is American exceptionalism precisely. Lech Walesa, the blue-collar hero of Polish freedom from communism put it well in a recent piece in the Wall Street Journal. There is only one of America and if it ceases being itself, the world is left in the dark, goes the thinking. It’s not reasonable to count on the debt-ridden government pension-sucking Europeans to hold up the flashlight. The fact is that several European countries are disappearing because they don’t make enough babies to replenish themselves. That’s the ultimate form of pessimism. (And no, this is not a racist statement, I am completely pleased with the fact that brown-skinned Mexicans and their children are keeping the American population growing. They make good immigrants. See my article on Mexican immigration, with Nikiforov, in the Summer 2009 issue of the Independent Review.)

Unfortunately, there is an innate humility among Americans which makes it difficult for them to think aloud about American exceptionalism. If there were not, twenty years of cultural relativism in the schools would make the very thought difficult to formulate: “Everybody is equal. We are not any better than those who suck their grandmothers’ brain – but only after they die, or than those who practice horrendous sexual mutilation on little girls, or than those who still practice slavery. Only American slavery was atrocious. Slavery in exotic locales is kind of nice, actually, if you look at it in its proper cultural context.”

One way to overcome this shyness and diffuse sense of equality in order better to grasp what we are losing is to consider Swiss exceptionalism about which no one gives a damn, not even the Swiss. It turns out that in the main respects, there is not one America, there are several. Switzerland is one. Continue reading →

From the Comments: A Note on the Upcoming French Elections

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

Jacques Delacroix has belatedly responded (he’s retired!) to an inquiry about the upcoming French elections. Happening History posed the following question to Dr. Delacroix:

I found your post very interesting. One thing I found particularly interesting was your remarks on the French left. Since the presidential election is coming up soon, what do you think would happen to how the financial mess in Europe is being handled if the Socialist candidate were elected considering the major role France plays? How likely do you think it is that Hollande could win?

Dr J’s response deserves to be read by all: Continue reading →

Greece: What’s Going On?

Jacques Delacroix Current Events, Economics, Liberty , , , , , , , ,

The Greeks are rioting in the extreme cold. They have been rioting now for weeks to protest austerity measures their coalition government is attempting to impose on them. It’s an emergency government trying like hell to borrow money from richer countries, especially Germany so Greece, the state can pay its bills. The creditors and would-be creditor countries headed by Germany are saying such things as (I am paraphrasing):

You have many more public servants per 10,000 citizens than we (Germans etc, ) have. You will have to reduce the number by so many thousands by such and such a year as a condition of our lending.

Your government’s tax receipt as a percentage of GDP is much smaller than ours. There is also abundant evidence of massive tax cheating that is unheard of in our countries. You are going to have to improve the collection of taxes by such and such. (Note that this say nothing about tax increases.)

The creditor countries are all democracies whose tax-payers have the ability to express what they think about the bailouts of other countries. It’s their money. Their national politicians are lending to a nation-state that my local banker in his best days would not have given a second look to. The long and the short of it is that Greece, the country, is a bad credit risk. That’s why its government would have to pay something like fifteen percent interest if it could borrow money on the open market. For a comparison, I have US Government bonds purchased six years ago that pay 4,6 %. That was considered very good then. It’s even better now.

Note that there is no info about what private Greek concerns have to pay to borrow on the open market. I would not be surprised if they were able to borrow at normal rates. I wonder why this information is lacking. Massive privatization surely looks good with respect to a country where government finances are such a debacle. Big innovations work out best when it’s impossible to say: Situation normal; everything working just fine.

Ordinary Greeks are rioting against the prospect of cinching their belts a lot tighter. They are even thinking Communism again because this all comes as a surprise. For thirty years, they were allowed to believe that Greece was economically more or less a kind of southern version of Germany, not quite as prosperous and productive but pretty damn close and on its way there. Continue reading →