Entangled Alliances

Check out this FT articleby Richard Milne in the FT’s “Future of Capitalism segment: Nordic model is ‘future of capitalism’

photo credit: Today is a good day

“The world should consider adopting the Nordic approach to capitalism and learn from the region’s response to its financial and economic crisis in the 1990s in the attempt to stave off recession, according to the chairman of two of Europe’s biggest companies.

Jorma Ollila, chairman of Nokia, the mobile phone maker, and oil major Royal Dutch Shell, said the Nordic style of capitalism was characterised by openness to globalisation balanced by strong government programmes to protect people from its excesses and an egalitarian education system.”

I’m a huge fan of the nordic model for Government, economics and to some extent even society.  The Scandinavian economies and even their welfare system have proved remakrably resilient in recent years, despite being targets for right-wing attacks (particulalrly in the US) and bizarrely O’Reilly feels Sweden is a nightmare communist state.

They’ve shown that globalisation need not be a negative as long as the state acts as a levelling tool, of course such engineering would be far harder in more economically diverse countries such as the UK and France, but in principles the direction is a positive one.

photo credit: JFabra

If you Read Ed’s article on the need for stimulus packages in Europe you may have come across a debate Ed and I had over the nature and merits of a stimulus. Regardless of which side you fell on, there were further issues at stake than just economics. Economists like to see their subject as a science: numerical and evidence based, rational and objective. No doubt,  many of their research tools are scientific but economics is also the backbone of the modern world and often not an end in itself, more a vehicle for achieving other ends.

As James Surowiecki argues in the Financial Page of the New Yorker, economics is by no means a science and as the recession draws on, we’re able to examine the cultural memories that can and do direct economic courses of action. From recessions and inflations, each country will have its own preferences and fears that alter the importance attached to different parts of the economy.

In the US, the focus has fallen on the stimulus package and Paul Krugman has made the case that europe should follow suite. He makes a convincing case for a European stimulus package, but is it correct to lampoon European economic policy and decision making as woefully inadequate or to equate US economic policy so readily with Europe? Well in some sense yes, it’ s perfectly fair, the rationale for the stimulus is not so difficult,  it could even lead to greater gains if correctly invested in infrastructure which could grow economies in the future, from transport to broadband aswell as tiding Europe over during a recession. In fact, many economists, (despite what many think) advocate deficit spending. They argue that if done correctly it will more than pay itself back through the higher tax-receipts of the economic growth it will yield.

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In 1996, Stryker McGuire launched the age of “Cool Britannia” with an ode to the city’s burgeoning chic in Newsweek magazine:

Right now, London is a hip compromise between the nonstop newness of Los Angeles and the aspic-pre-served beauty of Paris, sharpened to a New York edge. In short, this is the coolest city on the planet.

photo credit: *spud*

Thirteen years later, Stryker is back with an altogether more despondent vision.  Looking back over the Blair-Brown era, he casts back to the millennial optimism of the 1997 Labour victory and London’s world leadership in fashion, the arts and architecture.  The contrast, and it’s a stark one, is with a modern-day London heading into deep recession – the symbols of its former glory now insistent reminders of its current predicament:

Glitzy restaurants and cutting-edge fashion that used to be signs of welcome creativity reek of excess in a time of belt-tightening. Heavily mortgaged homes that looked like brilliant retirement nest eggs when property prices were soaring year after year now just look like basket cases. Construction sites and street works that once raised expectations of things to come now seem like major inconveniences. 

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photo credit: U.S. Department of State

Israel’s next Prime Minister Benyamin Netanyahu – leader of the right-wing Likud party and staunch opposer of the two-state solution – has just about finished assembling his government. His coalition now includes the right-wing racist Avigdor Lieberman and Ehud Barak, leader of the centre-left Labour party – a combination that must surely make Netanyahu favourite for this year’s “Weirdest Team-up” award.

Lieberman, leader of the extreme right-wing nationalist party “Israel is our home”, has been appointed Foreign Minister.  Foreign minister. This is a man who campaigned on a platform of forcing Israeli Arabs to sign loyalty oaths; a man so opposed to any concessions to Palestinians that in 2003 he reacted to a commitment made by Ariel Sharon to give amnesty to approximately 350 Palestinian prisoners by opining that  “It would be better to drown these prisoners in the Dead Sea if possible, since that’s the lowest point in the world”. In January 2009, during Israel’s military operation in Gaza, Lieberman argued that Israel “must continue to fight Hamas just like the United States did with the Japanese in World War II. Then, too, the occupation of the country was unnecessary”… Yes, that’s right. He’s referring to Hiroshima and Nagasaki. Oh, and he’s also under investigation for corruption and has been convicted of beating up a twelve year old boy. Even “The New Republic” editor Marty Peretz – a vocal member of the Pro-Israel lobby – has  denounced Lieberman, calling his party a “neo-fascist” outfit and the man himself a “certified criminal” who is “the Israeli equivalent of Jorg Haider of Austria and Jean-Marie LePen”.

The idea of Lieberman being the face of Israel’s diplomacy is the kind of thing that makes you wonder whether the Joker from Batman is controlling Israel’s foreign policy. This guy is going to negotiate peace with the Arab governments of the middle east? You’re kidding, right? I can’t wait to see what kind of reception he gets in Europe!

What about yesterday’s entry of the centre-left Labour party into the new government, including the appointment of its leader Ehud Barak (pictured, with Hillary Clinton) as Defence Minister? Labour was split right down the middle on whether this is a good idea – seven of its 13 MPs opposed joining Netanyahu’s coalition and the vote of  Labour’s central committee was a fairly narrow victory for its leader: 680-570. Barak claimed that they would not serve as anyone’s fig-leaf and they would “ensure there will not be a narrow right-wing government, but a real government that looks after the State of Israel”. However opponents of the coalition within Labour felt that this was simply an unprincipled grab for power on Barak’s behalf; a case of being “bought off with portfolios and empty promises”.

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photo credit: Mossaiq

They are two perennial problems facing the European Union: a lack of a clear, coherent vision for the future of European integration and a lack of any real leader to implement this vision. Answering “who is the head of the European Union?” is far more complicated than it should be. The President of the Commission? The head of the largest party in Parliament (joking)? Or perhaps the head of the European Council – the leader of the state which happens to hold the rotating EU Presidency?

This problem has suddenly got that much more difficult to answer, as yesterday the Czech government, the current holder of the Presidency, lost a vote of no confidence. How can you lose power in your country but retain it over a much wider area, the EU? According to EurActiv, the Czech Prime Minister Mirek Topolánek said “At the moment, this situation has no effect on the role of the president of the European Council,” in a statement issued by the Czech Presidency.

Three things support the Czech Republic’s retention of the Presidency. First of all, the post is actualy held by the rather outspoken President Václav Klaus. And secondly, as EurActiv also points out, “Governments of EU countries have collapsed while they were holding the Union’s reigns twice before – in 1993 in Denmark and in 1996 in Italy.” It continues, however, by pointing out that it has never happened in an economic crisis before – and this is no small crisis.

It is worth considering the extent to which these events led to Topolánek’s outspoken attacks on Obama’s stimulus package in the European Parliament today. Indeed, as the BBC reported:

He attacked the US’s growing budget deficit and the “Buy America” campaign, saying “all of these steps, these combinations and permanency is the way to hell”.

Maybe something was lost in translation – but that’s pretty strong stuff.

The third thing that really supports Klaus’ position is the fact that, because the President doesn’t really do all that much (as has been repeatedly demonstrated in the past), nobody really cares. Yes, the President of the Council theoretically has power to significantly drive the agenda, but it doesn’t really make that much difference (compared to the status quo) if he doesn’t. One area in which Klaus may be seen to have affected the agenda is through his country’s refusal to ratify the Lisbon Treaty – but even this may be seen more through the prism of domestic politics than a deliberately obstructionist policy as President of the Council. My point is – yes, he’s put something of a break on further integration, but there’s no reason to suspect that this wouldn’t have happened if hadn’t been in this European role.

Nevertheless, it’s certainly not a great situation: the government of the country that holds the Presidency of the European Union has just collapsed, significantly (it seems) due to the way they’ve handled the economy. Which makes these problems that much more difficult to handle at a European level, when, despite the weak institutional powers, strong leadership could have a significant positive effect.

The Presidency will be held by the Czech Republic until a mere three weeks before European Parliament elections. It’s not a great advertisement for why people should care about – or engage with – the EU.

Update: Mark Mardell thinks it could have a bigger effect, particularly on ratification of the Lisbon Treaty, and sensitve negotiations over the Working Time Directive. Maybe this could indeed be Sarkozy’s moment to come to the rescue.. but don’t hold your breath

photo credit: vaviolino

Remember the old Chinese curse “may you live in interesting times”? It’s worth keeping in mind as we head towards April and the meeting of the 20 richest nations in the world: London’s G20 summit is going to be very interesting indeed.  As Mark Bailey reported in his recent post “G20 Preview: Gordon and Goliath”, Gordon Brown and Barack Obama are both calling for a global fiscal stimulus. The likes of France and Germany, however, are rejecting talk of more stimulus, choosing to focus solely on bank regulation – specifically the regulation of hedge funds and tax havens.

Now I like a good campaign against hedge funds and tax havens as much as the next man, yet it must be said that Gordon is completely right to demand that global stimulus packages be pursued at the same time as international bank regulation. As far as Europe is concerned, a large influx of government public spending would work  particularly well, as thanks to the free trade policies of the European Union any stimulus one country puts in place will immediately benefit their neighbours. This, however, is what concerns the likes of France and Germany: the fear that heavy national spending will simply leak out and end up as international spending.This particularly irks Germany who are already gritting their teeth at the prospect of having to bail out the troubled states of Eastern Europe (who, it turns out, are just rubbish at that capitalism malarkey).

But what the likes of Sarkozy and Merkel are forgetting is that with more and more Europeans losing their jobs, governments are facing lower tax revenues and higher welfare costs. The higher cost of paying benefits is particularly onerous on European governments, as unlike America the welfare systems of Europe are commendably generous (Britain excepted). Large stimulus packages, therefore, are essential to get people back to work and kick start Europe’s economy.

However, though Gordon Brown’s logic is sound his pan-European ambitions are leaving a bitter taste in the mouth – well, in my mouth anyway – because, despite his calls for a global stimulus, Britain has hardly had one worth the name. Indeed, so far the only “stimulus” we’ve had is last November’s £20 billion scheme, the majority of which went on a much derided cut in VAT. Let’s compare this with other countries, shall we?

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Will Steele win his battle with the cool “liberal media” or will it disastrously backfire?

photo credit: mohammadali

As Mark announced on the update to his post, Cameron has formally reasserted his desire for the Conservatives to leave the European People’s Party, the centre right coalition for the European Parliament. Then he will attempt to form a new bloc, which  supports the economic benefits of Europe but keeps away from the federalist leanings underpinning that the EPP displays.

The problem as the FT’s Brussels Bureau Chief, makes clear is that the alternative to the EPP doesn’t look that  promising and worse, where there is promise for a new bloc, that may cause Mr Cameron as many problems. Yet the Conservative Party’s European alliances are only a small part of the bigger picture. Cameron’s move away from the EPP is not unusual or without precedent in British politics but it is one that has been tried and tested before and has invariably come up short. Furthermore, Cameron risks isolating the UK from Europe precisiely at a time when greater cooperation is, and will be necessary, all to secure control of a rebel wing of his party.

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My post yesterday on the Pope’s unhelpful comments re. condom distribution to prevent aids has, unsurprisingly, caused some controversy in some circles. One reader messaged me this response:

Quite frankly if people listened to the Pope then there wouldn’t be the problem of Aids. Aids is a problem because of sexual promiscuity. The Catholic Church’s teaching is perfectly consistent with Christ’s who calls everyone to lead a chaste life- if people abstained from sex outside of marriage then Aids would not exist. Its opposition to condoms as stated in Humanae Vitae stems from what is an accurate fact that it prevents life and encourages promiscuity. Sure I accept condoms prevent HIV and Aids but that doesn’t mean its use should be condoned- the point is to use condoms is to go against the natural law- it is to prevent life from occurring, plus it encourages sexual promiscuity. The Church as far as I can see offers the only way to battle Aids successfully whereby people are not compromised morally- that is to say to have sex within marriage with one partner as opposed to being sexually promiscuous.

I have three points in response to this:

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photo credit: roblisameehan

The Pope was on a flight to Africa the other day and, presumably deciding there wasn’t enough misery in the continent to begin with, unleashed this gem:

“(Aids) is a tragedy that cannot be overcome by money alone, that cannot be overcome through the distribution of condoms, which even aggravates the problems”.

As a myriad of Aids campaigners immediately pointed out in the hours following this frankly mental statement, though condoms are not the only tools necessary in the fight against AIDS  they are a massive help. Indeed, the idea that condom distribution makes the problem worse is particularly barmy, akin to saying that the Heimlich manoeuvre leaves you in danger of choking.  Abstinence on the other hand is fine until the abstainer, forgetting they’re meant to be perfect, commits the awful sin of having sex. Given that almost 20% of the population of Africa is Catholic – and many of the rest are Christians of some sort who are apt to take the Pope seriously – you have to wonder how many deaths will be indirectly caused by this desperately irresponsible and downright evil statement.

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