The Plenary Session in Strasbourg is being characterized by taxes, more precisely by the collection of taxes. It is estimated that the EU countries are losing approximately one trillion euro as a result of tax fraud and tax haven operations. As this number might be difficult to imagine, I can say it’s comparable to the amount that the EU spends each year on health care. 

In an almost three hour long press conference May 16^th, President Hollande has called for a Euro-zone government to overcome recession in the EU.

It should dispose of a separate budget and wide-ranging competence to harmonise taxes and economic and social policy, possess the capacity to issue debts and meet regularly under the authority of a specially designated president.

This proposal, which is part of an initiative for closer political integration to be formalised within the next two years, sounds bizarre.

• According to past experience, the EU 28 will need at least eight years to accomplish a treaty revision. Whatever its substance, it will come too late to have an impact on the urgent challenge of combating excessive unemployment in the EU.

• The 17 Euro-zone countries have already installed a framework for monetary and economic policy issues years ago. Their finance ministers meet at least once a month, in the presence of the ECB president and the Commissioner in charge of economic and fiscal policy. This arrangement functions satisfactorily.

• The idea of a separate budget for the Euro-zone countries is old. Hollande has not offered new arguments to make it more acceptable to all member countries. It would not offer any visible value added, but only add to the complications of an already complex EU reality.

• Tax harmonisation is proceeding at EU level, but at snake’s pace. There is no reason to believe that it would advance faster in the Euro-zone, as long as member countries insist on unanimity, firmly anchored in the Treaty.

• Debt issuance within the Euro-zone, via so-called euro bonds, would encounter the same political difficulties as at EU level. The EIB serves as the most effective EU-wide instrument for issuing debt and lending for investments in infrastructure, energy, trans-European networks, and, more recently small business.

• A “European Energy Community” is a “French baby” more than 20 old. The Lisbon Treaty, with its new article 194, provides for everything that Hollande calls for. Here as everywhere else, EU needs action instead of new institutional frameworks

In conclusion, Member states and EU institutions should ”take note” of the “proposals” made by President Hollande and implement what is on the table.

The focus must be on fighting unemployment. Any discussion on new institutional frameworks will only distract from that overriding concern.

While having already addressed the argument which asserts a mechanical alleviation of the economic duress in the eurozone’s periphery by virtue of spontaneous or instigated rising inflation in the core, Germany in particular, I continue to feel an inclination to restate my position on the matter, after having been stimulated or inspired to proceed thus by a discussion I held with a friend earlier this day, which reminded me of the assemblage of questionable assumptions still prevalent in certain political or intellectual circles, concerning ideas on the most optimal response to the eurocrisis.

What I shall venture to deconstruct and to unmask its underlying tissue of fallacies, as I see them, is none other than the essentially europhobic and dubiously self-contained proposition that against the backdrop of the single currency there can be no genuine and sustainable recovery in the periphery unless the core tolerates relatively higher inflation rates for an extended period of time. Inflation is, in this context, regarded as the single most important factor for development and, moreover, as the midpoint of any and all measures that can and may be adopted with the two-fold objective of planting the final nails to the coffin of the crisis and setting the foundations for a future that will realize a more robust, inclusive and just economic model.

My critique of this understanding of the political economy of the euro area, which is often peddled as the most benign and expedient alternative to the inane orthodoxy of austerity, while occasionally being embellished with nebulous patriotic palaver, shall be separated in three sections concerning economic thought, with the tacit recognition that the broader political-institutional picture must also be accounted for, if one is to reach a holistic understanding of the interplay of forces in operation. The economic issues to be examined herein are as follows (each section has its own permanent link which can be copied, bookmarked or shared separately):

1. Zero sum games as antithetical to the endogeneity of increasing economies of scale,
2. The subjectivity of the inflationary process as a primary factor for credit allocation,
3. Macroeconomic magnitudes as phantasmagorized ontological entities.

1. Zero sum games as antithetical to the endogeneity of increasing economies of scale

Permalink | Top ▴

The conventional wisdom in macro-economics, in any and all of the schools of mainstream economic thought found therein, is concentrically fastened upon the chimerical general equilibrium of Léon Walras, adherence to which necessarily forces a remorseless analyst to draw the erroneous inference that economics is essentially all about a static approach to the optimal allocation of scarce resources. Consequently and against this backdrop, one beholds the emergence of a restrictive interpretation of the economic world as an inescapable antagonism between options on the management of a fixed world, where inevitably the competition for resources resembles what game theorists refer to as “a zero sum game”, i.e. a process in which one must necessarily win at the expense of the other and, conversely, where it is impossible for both to realize a simultaneous or mutual increase in utility or returns.

Thus, we are faced with the dubious assertion that the euro area’s periphery may only realize gains as against the core; a postulate that casts to the wind the insight that equilibrium and its fixed conceptions are irrelevant in an economy with perpetually new capital and labor divisions, combinations and interrelations; and that the trade which is necessary for these particularizations and specializations to be meaningful and possible, is beneficial for both sides, at least in an ex ante sense, by increasing the availability of resources that would have otherwise not been brought into being.

The error in the standard understanding exists in the fact that it blithely ignores the direct impact of labor and capital division in increasing returns that would have not been realized in the absence of these new and evolving inter-subjective structures while also neglecting the endogeneity and related variability of these impulses; for as Allyn A. Young correctly suggested in his Increasing Returns and Economic Progress and whose validity was further acknowledged by Nicholas Kaldor in his The Irrelevance of Equilibrium Economics it is pointless to labor under the illusion that a robust objectivity, the general equilibrium, is what determines economic progress, in the presence of the processes that engender capital combinations and their internal capital/labor ratios. As Young puts it:

It is generally agreed that Adam Smith, when he suggested that the division of labour leads to inventions because workmen engaged in specialised routine operations come to see better ways of accomplishing the same results, missed the main point. The important thing, of course, is that with the division of labour a group of complex processes is transformed into a succession of simpler processes, some of which, at least, lend themselves to the use of machinery. In the use of machinery and the adoption of indirect processes there is a further division of labour, the economies of which are again limited by the extent of the market. It would be wasteful to make a hammer to drive a single nail; it would be better to use whatever awkward implement lies conveniently at hand. It would be wasteful to furnish a factory with an elaborate equipment of specially constructed jigs, gauges, lathes, drills, presses, and conveyors to build a hundred automobiles; it would be better to rely mostly upon tools and machines of standard types, so as to make a relatively larger use of directly applied and a relatively smaller use of indirectly applied labour. Mr Ford’s methods would be absurdly uneconomical if his output were very small, and would be unprofitable even if his output were what many other manufacturers of automobiles would call large.

[...] Modified, then, in the light of this broader conception of the market, Adam Smith’s dictum amounts to the theorem that the division of labour depends in large part upon the division of labour. This is more than mere tautology. It means, if I read its significance rightly, that the counterforces which are continually defeating the forces which make for economic equilibrium are more pervasive and more deeply rooted in the constitution of the modern economic system than we commonly realise. Not only new or adventitious elements, coming in from the outside, but elements which are permanent characteristics of the ways in which goods are produced make continuously for change. Every important advance in the organisation of production, regardless of whether it is based upon anything which, in a narrow or technical sense, would be called a new “invention,” or involves a fresh application of the fruits of scientific progress to industry, alters the conditions of industrial activity and initiates responses elsewhere in the industrial structure which in turn have a further unsettling effect. Thus change becomes progressive and propagates itself in a cumulative way.

The gist of the argument thus far is that what really matters is the size of the industry or of the market and the forces that are at play in allowing for labor and capital division. In this respect, the very idea of inflation qua factor for recovery is specious, since there is nothing intrinsic to it that could, in and of its own, determine the existence, manner, function and end of capital-labor constructs and contribute to the real expansion of industries and/or markets in which these will be made operational and, above all, there is nothing inherent in either inflation as such or the legal-cultural, political-economic and institutional morphology of the Economic and Monetary Union that provides evidence to the existence of a causal relation between the rise of aggregate nominal prices in one part of the monetary union with recovery/growth in another. To understand why that is so, we may proceed to the next section on the subjectivity of the inflationary process.

2. The subjectivity of the inflationary process as a primary factor for credit allocation

Permalink | Top ▴

Inflation, just like everything that exists in the human world, the inter-subjective world or, to use a term of Edmurd Husserl, the lifeworld, is the product of a complex, interweaving web of factors traced to the actions, decisions, expectations and perceptions of individuals, in an incessant process of created-and-creating differentiation. While this philosophical tenet of thought may beg for further elaboration, I shall abstain from treading in such fields and, instead, venture to pit further stress upon two notions familiar to economists, expectations and incentives, as couched in the terms of the inflationary process. Contrary to conventional economic wisdom, or rather to the belief that has been bestowed upon us as a re-branded version of the quantity theory of money originally developed by Nicolaus Copernicus and the medieval scholastics, the phenomenon of inflation does not attain the form of a universal, proportionate, equilibrated and uniform expansion in some unrealistic abstraction called “the price level”, but rather appears as a series of ripple effects, of gradual, cascading, cumulative increases in the amount or velocity of transactions in some industries or even classes of goods as against others in the passage of time, something than even John Maynard Keynes, whom many claim to be followers of, had recognized in his The “Ex-Ante” Theory of the Rate of Interest.

New media of exchange, which in a fiat monetary system usually make their first appearance in the expansion of the money supply by the central bank that injects liquidity through the credit channels all the way to the real economy, do not have a single destination and, even if they did, their reaching that end does not take place either instantaneously or simultaneously. Put differently, the credit canals from the central bank to the real economy, which pass through financial intermediaries—banks—do not necessarily furnish credit to the real economy in a one-off expansion; for in between the central and the presumed destination of the new money—the real economy—a number of incentives and expectations of widely dispersed economic actors exists, exerting a powerful influence on the prior direction of this liquidity into the markets for sovereign bonds, commodities, capital goods and money before any issuance of loans to the real economy is considered.

To avoid a lengthy and tedious exposition of the theoretical underpinnings of this proposition and to rather appreciate it in more concrete terms, one may only be reminded of the failure of the European Central Bank’s Long Term Refinancing Operations to not only restore the then-and-still crippled credit channels, but most importantly to smoothly transmit the approximately €1 trillion to the real economy. In addition, the very fact that the ECB proceeded with the introduction of the Outright Monetary Transactions programme while it currently is contemplating ways of raising additional credit to SMEs, which comprise the vast corpus of the European economy, are evidence of the fact that certain powerful and pervasive expectations and incentives are in force which decisively contain the injection of new money to the financial system. For as long as these psychological, subjective factors remain in operation, any inflationary impetus can only feed into a bottomless pit or else a liquidity trap, with all its concomitant side-effects and the sub-optimal outcomes it may lead to.

Generally speaking, it is the lifeworld’s factors that determine credit allocation and in the specific framework of the Euro Area’s political economy one could identify and enumerate the following three parameters, which in no sense constitute an exhaustive list:

• capital adequacy: new regulation that requires banks to increase their capital adequacy ratios provides the incentive—or rather constitutes an edict—for investment in sovereign bonds of a fair quality, which necessarily entails a misdirection of credit away from the real economy and into state coffers,
• zombification: the crippling of the credit channels is both caused by and causes mistrust between banks, impelling financial institutions to opt for remaining dependent on ECB liquidity, so as to be on the safer side, effectively confining credit to the rigid boundaries of the financial system; which by the way is a clear indication of a dangerous trend towards the zombification of the European banking system,
• regime uncertainty: the manner in which economic integration in the midst of the eurocrisis is realized leaves much to be desired in the areas of predictability and foreseeability of institutions, thus fostering a regime uncertainty that forces those who gain first access to ECB liquidity, in the time context, to place money in unproductive areas that are presumed to be more robust to the vicissitudes of the market with its increased risks manifested across the real economy and the financial system.

The incentives and expectations may vary substantially, but what remains is the realization that their impact on the actual allocation of credit in the inflationary process through the passage of time cannot be dismissed, nor can their function be sacrificed to the altars of a spurious method of inquiry on the subject matter. Lastly, as Ludwig Lachmann put it in the introduction to his Capital and its Structure:

The fact remains that the two greatest achievements of our science within the last hundred years, subjective value and the introduction of expectations, became possible only when it was realized that the causes of certain phenomena do not lie in the ‘facts of the situation’ but in the appraisal of such a situation by active minds.

While this may appear as a superfluity arising from the recognition or presupposition of is self-evident character, at least to anyone conscious of the profound distinction between the social and the natural sciences, it should be stressed that inflation is not and can never be tantamount to a law determining the behavior and movement of liquids in communicating vessels that a researcher diligently searching for a new discovery would identify by holding controlled experiments. Adherence to the monolithic prejudice in the talismanic impact of inflation in the eurozone’s core being the prolegomenon and the prerequisite to the periphery’s recovery, appears to be an oversimplification of reality, to the point where it distorts the very picture it seeks to paint. This should not strike us as a surprise, for there exists an even more profound and egregious misunderstanding underlying this conception of that monetary aggregate, and it is none other than the conviction in the quasi-natural, ontological existence of macroeconomic magnitudes, as independent from the forces and the historical-institutional context that engender and sustain them, to the variable extent, manner and duration that they do. This theme shall be outlined in the following section.

3. Macroeconomic magnitudes as phantasmagorized ontological entities

Permalink | Top ▴

Another fundamental misunderstanding of conventional macroeconomics, apart from those mentioned above, is its pretense to intellectuality and the scientism found in the ascription of mechanical interrelations and causalities to macroeconomic magnitudes, which is structured on the questionable predisposition of them being ontological entities in their own capacity, rather than mere accounting figures and, therefore, products of the imaginary. Indeed the plonky macroeconomist of our era, who may also enjoy widespread recognition and a good press, customarily treats such macro indicators as “inflation”, “investment”, “spending” as decontextualized parameters, hypostesized forces singularly and jointly determining the “optimal” distribution of scarce resources in the context of the profound though unrecognizable exteriority of those elegant curves of supply and demand.

The argument now under scrutiny, assumes the ontological presence of inflation and fallaciously proceeds to concatenate a series of other such aggregates qua beings (in the ontological sense), ultimately reaching the conclusion that inflation in the euro area’s core is on its own accord the ultimate determinant to the development of the periphery, and that, conversely, the absence of such inflationary pressures in the core will doom the periphery, in splendid determinist fashion, to years of grinding and irreversible austerity.

The kind of critique a subjectivist and relativist such as the present author may level against this sort of oneiric understanding of the complexity of the world, is to unequivocally reject any quasi-natural, spectralized ontological property bestowed upon these macroeconomic aggregates on the epistemological grounds that such figments, even once provided with the patina of scientific formalism and the veneer of geometry, constrain the potential capacity of our organon, courtesy of their illusory underlying assumptions, rather than contribute to—or facilitate—its unencumbered operation beyond the hermeneutics of stylized facts. In simpler terms, this means to deny the very idea of them having any mechanical interrelations, without however refusing their existence as accounting figures and average measures of an interplay of factors that occur at a much more organic and evolving milieu.

Understandably, a knowledge of the real world and of economics as process, not mechanics or counterfeit physics, can only result in the issuance of the modest pronouncement that inflation as such is irrelevant or of minor significance to whatever dynamics between the eurozone’s core and periphery. An increase in the “price level” in Germany does not necessarily result in an equivalent rise in aggregate demand for, say, Portuguese exports nor does it necessarily, by the operation of the mysterious determinism underpinning the macroeconomist’s scurrilous misconceptions, impel consumers and producers in Germany to automatically allocate their excess media of transaction to the importing of those specific goods and services that the periphery can provide them with.

Inflation in the core may eventually contribute to rising demand for imports from the periphery, but this can only be known a posteriori, and only as a secondary element, provided that the primary factors discussed in the preceding two sections are favorable to such a shift. There is nothing germane to inflation that “will” or “shall” decisively work its way towards a benign symmetrization of the macroeconomic figures across the eurozone, in what can be visualized as a spectacular ironing out of all imbalances and erratic fluctuations between core and peripheral countries. To assume thus, is to assign to inflation a status of omnipotence layered upon the presumption of ontological presence and, even worse, to disregard the range of possibilities that arise in the lifeworld, courtesy of the decisions, incentives, expectations of individuals and of the specific capital and labor divisions as well as social institutions that all together play their part in the economic process.

Concluding remarks

In conclusion and as a corrective to the erroneous and arid controversies of macroeconomic policy in Europe, the scrupulous critic should turn attention away from incorporealities of national accounting towards the insight that capacity building is a product of the inter-subjective world, manifested in new capital and labor structures, combinations and interrelations, rather than it emerging in nihilo and cum nihilo by a change in the aggregate figures of another state of affairs not sharing insoluble ties with the one under consideration.

Development springs from new combinations of resources, expanded division of labor and capital, in what Eugen von Böhm-Bawerk referred to as “roundabout methods of production”, which give rise to new opportunities for further investment by freeing resources for use in more economically productive areas, in a cumulative and self-invigorating manner. In times of economic tranquility this is realized, efficiently or perhaps inefficiently, through the operation of the imaginary institution of the market economy; but in the midst of a severe and persistent depression, where plentiful idle resources exist across all sectors of the economy and where the social imaginaries related to the market are brought into question, the initiation of concerted action ought to be deemed necessary, legitimate and desirable, to solve coordination problems and to engender agglomerative or other forces that can set in motion processes for the formation of a new constellation of capital structures that will absorb unemployed labor and other resources on a solid basis of renewed confidence in these imaginary constructs.

What remains to be noted is that the default response to inflationist calls must be the illustration of the inherent complexity of the lifeworld, as contrasted to the simplistic, mechanistic and thus unrealistic nostrums of those who delude themselves in thinking that a single parameter, an exalted incorporeality, tacitly and perhaps unwittingly elevated to the level of an ontological entity, constitutes the epicenter of any solution to the systemic crisis of the Euro, if not its only panacea. Simplification is a necessary part of learning, but in the absence of a firm understanding of the complexity from which it emanates, can only impregnate ideas whose application would definitely result in adverse effects, sometimes misanthropic and calamitous policies, courtesy of their incompatibility with the given-and-varying state of affairs in the spatio-temporal and political-institutional dimensions.

At any rate, the obstinate concentration on inflation, the “fetishization” (if I may use a very Marxian term) of this macroeconomic magnitude, the exaggeration of its significance as permeating and penetrating all that there is in the macro sphere of the Euro Area’s political economy, may only be understood as an opportunity forgone, as a lamentable waste of talent, as a loss of intellectual strength and valuable time in the elaboration of fallacious theorems that can only lead to a robust terminus, a dead end; and if the periphery is to recover from austerity, at least those people who really care about their livelihood and their prospects for liberty and eudaimonia, should consider allocating at least part of their vital energy to the ideas that exist outside the little box they concocted or accepted as a heteronomous, self-alienating given.

Published on May 17, 2013

Picture credit: Wikipedia | Prometheus chained by Vulcan. Painting by Dirck van Baburen.

The two major global powers have long accommodated their geopolitical interests in the international field. Actually they have never been enemies, but rather competitive to each other. Since the fall of communism, China was deeply infiltrated by a combined statism and capitalism, whereas the USA was eagerly turned to be the dominating soft power, that when necessary it could exert power politics to secure its economic and political interests. The question lies elsewhere: what about the case of sensitive geopolitical players and to what extent China and the USA are antagonizing each other?

Greek PM Mr. Samaras has been verbally decisive in bringing investments in Greece, especially now that the country is in desperate need of them. The international competition for the privatization of the state company of gas has been dominated by the Russian Gazprom which has declared strong interest in buying it. The competition is still open, and lately the Azeris had come to provide their strong interest in taking part in the competition. Let us here stress out that both Russia and Azerbaijan are considered as amongst the strongest players in the field of energy being equally suppliers and producers for the entire basin of the Mediterranean, Europe, and the Caspian Sea, but also in international field being involved in gas pipeline projects in Middle East and Europe.

Meanwhile, the Greek PM is also vying for the investment capacity of China centering the attention of the “Big Dragon” in the exploitation of transports that could easily accelerate Chinese access to the European markets. The perspective deal? After the buying out of the port of Piraeus, one of the biggest ones in the Mediterranean, China is also interested in railway routes connecting Greece with the Balkans, Eastern Europe, Central Europe, and further North Europe, Germany, and the Scandinavian Peninsula. A big plan, and definitely a prosperous one.

But where is the United States actually? Nowhere, but yet everywhere. In fact, the United States while not being tempted to invest in Greece, they can actually undermine the geopolitical role of country when conditions bring it into surface. Actually, the geopolitical game and the turmoil in Middle East and North Africa have been of a big concern for Washington and for this very reason Turkey has been called to assume the burden-sharing of stability in the region. Turkey was “picked” in the place of Greece or of another country in the region in order to secure that regional stability will be preserved and maintained and that no escalation will be evaded from the US control. And what is the implication of Greece vis-à-vis Turkey? That when the first is sided by China or Russia, the second is upgraded simultaneously as geopolitical watchdog. In other words, and in deeper sense, it is not a period for Greece to negotiate bilateral issues with Turkey as actually the weight has been put to the latter and consequently any effort to reach a final solution in the Aegean is timely unacceptable for Greece (i.e no matter who is wrong or right).

And what is the conclusion after all? In the case of Greece, it is well-observed that the game between China and the United States find its fit in this small country with the beautiful islands and the vast landscape, that is actually found in one of the worst periods of its late history. But this is only one case. In every geopolitically sensitive area, where economic interests are mixed with military turmoil and political control, the result is one: China and the US will not get directly entangled each other, but they will try to impose influence to their interlocutors. And this is what Greece has to deal with strategically: To balance delicately between both China and the United States.

North Africa and the Arab peninsula are among the best insolated regions on earth. There are very few other areas with comparable duration and intensity of sunshine. If anywhere, it is in the huge Arab desert areas that solar electricity could be generated at competitive terms, provided it will be possible to cope with the dust problem.

So far Arab countries have failed to exploit this golden resource, preferring to live on their huge oil and gas wealth.

This situation is slowly starting to change, not because of fears about climate change but because of the need to find long-term alternatives for depleting oil and gas resources. Several countries therefore aim at developing solar power capacities for replacing oil and gas in domestic electricity generation, reserving oil and gas for exports and as feed stuff for their rapidly expanding petrochemical industries.

However, only a few Arab countries have ambitious plans for investing in solar or wind energy. Algeria, Saudi Arabia and the UAE are the most advanced in terms of volume of planned investments and policy formulation.

• Algeria aims at covering one third of its energy demand from renewable sources by 2030 and investing $ 100 billion to that end.
• Saudi Arabia wants to generate 54 GW electricity from solar and wind by 2032 to free scarcer oil for exports.
• The UAE are in the process of preparing a comprehensive regulatory framework including a feed-in tariff incentive scheme. The Emirates Solar Industry Association supports the government in pushing ahead the use of solar power.

But these three countries counter-act their drive for solar power by subsidies on fossil energy, which exceed 50 per cent of the full cost of supply.

As a group the 22 Arab League member countries are among the worst climate polluters on earth. In terms of per capita C02 emissions they easily beat Western champions like USA, Canada or Australia.

As long as most Arab countries keep subsidising fossil fuel and refuse to impose even minimal excise taxes, solar power will not be competitive and no more than a fig leaf.

From a global climate perspective, they should focus on reducing their excessive fossil fuel consumption rather than promoting solar or wind energy. Phasing out fossil fuel subsidies must be the first priority. This should be the key message for the EU-Arab policy dialogue and economic cooperation.

The United Nations Education Scientific and Cultural Organisation (UNESCO) announced its digital  publications will now be inclusive to the public and free of charge. This announcement is a result of its recent adoption of The Open Access Policy. UNESCO is the only member of the United Nations to carry out the policy so far. The principle of open data and the element of progress have been recognised by other institutions including The World Bank and The Wellcome Trust, who have started to operate the Open Access Policy.

The policy states that anyone can freely download, translate and distribute UNESCO’s publications and data. The irrevocable right of access to copy and make derivative works in any format to the organisation’s collection of publications however must be within reason and under lawful conditions. Moreover, the Open Access Policy stipulates that from July 2013 hundreds of downloadable digital UNESCO publications can be made available for the utilisation of users through an Open Access Repository which has a multilingual interface.  This feature allows people of different backgrounds to access the same information globally according to their linguistic preference.

The reason behind why UNESCO is allowing a broad and unfettered access to its informational knowledge is due to its commitment to the rhetoric that open data equates to human development. Open data will also enable policymakers, researchers, and the general public to build and expand on their  existing knowledge. As UNESCO is an intergovernmental organisation, its fundamental interest is to ensure data and resources are made available to the widest possible audience.

This progress is of interest to Open Discovery Space as it focuses on how information can be made more accessible through ICT innovation to ensure human development and progress in education.

We have a wonderful word in Swedish, ’lagom.’ Its meaning, like all wonderful foreign words, gets lost in translation, coming out as something like ’sufficient’ or ’adequate’ in English. But these synonyms fail to capture the contentment or perfect balance lagom entails.

I like to think of it in reference to the classic fairytale, ’Goldilocks and the three bears’, where a thieving little girl breaks and enters into the family home of three bears and proceeds to sample all their possessions. In the kitchen, for instance, she tastes three soups, one which is ’too hot’, the other ’too cold’, but the last is ‘just right’. That final soup is lagom!

This fine balance is summed up perfectly by that most Swedish of axioms, ’lagom är bäst’, or ’the right amount is the best.’ Astronomers talk of ’Goldilocks Planets’, which are those planets, like Earth, which are not ’too hot’, not ’too cold’, but ’just right’ for supporting life. My question then, is this: what makes a ’Goldilocks society?’

To answer this, it helps to remember that Lagom has social connotations too. According to a popular legend, the word’s etymological roots stretch back to the Vikings. Apparently, mead, their drink of choice was passed, ’laget om’, or ‘around the team,’ in a horn flask so that each got his fair share.

So as well as being the ‘just right’ balance of elements, the lagom society must also be equitable. To complete the analogy (and mix myths), imagine Goldilocks passing the soup around the bears.

In my view, the building of the welfare state in 1930s Sweden represents one attempt towards a lagom society. After a decade of crisis, business, unions and government worked together to negotiate a fair balance between differing outlooks and vested interests.

Guided by strong leadership, stakeholders forged a society characterised by:  equitable wage policy; investment in industry; and egalitarian education, housing and social systems.

Today, after a decade crisis, the 21^st Century is having its own 1930s moment.

Nations are divided and increasingly unequal. Our economic model is dependant on unsustainable, unfettered consumption and has proven itself to be extremely destructive. On top of that, we face global challenges that have never been more daunting (see: Anders Wijkman and Johan Rockströms book, Bankrupting Nature).

We are living beyond our means and distributing the spoils unevenly. In short, we are a long way off the lagom society. It’s like a Viking halfway around the circle chugging down all the mead, or that greedy little trespasser Goldilocks sipping all the soup before the bears get home.

Resources must be shared across generations as well as between them. In much the same way that the welfare state was created by Swedish society for future generations and is still enjoyed 70 years later (though eroded due to the best efforts of the free-marketeers), today, we as a global society must work together to ensure that in 70 years time there will be a society worth inheriting, not one wrecked by corporate excess and environmental chaos.

It is up to us to start building this society, to emulate the spirit of the welfare state generation.  Governments need to engage stakeholders from industry to civil society and create a fair and sustainable future.

A quick survey of the Western national political landscape doesn’t offer much hope. Only one European government in recent times has attempted to set a policy agenda for sustainable development: Britain’s (former) New Labour administration. In an all-too-predictable instance of weak leadership, the Commission that resulted from this pioneering agenda was abolished by the current government, despite Prime Minister David Cameron’s rousing pre-election pledge to be the ’greenest government ever.’

It is at the lower levels of government, however, where the lagom ethos can be found. Here, a handful of groundbreaking, forward-looking regional and municipal authorities are enacting admirable policies, including: international trade and procurement for sustainable social investment programs in infrastructure and transport, energy efficiency programs, alternative energy, local farming, social care and job creation. It is high time their example, and that of the 1930s Swedes, catches on higher up the political hierarchy. Time is running out. We must make it happen.

Here’s to a society of equitable balance – a balance between capitalist models and social policies, between economic growth and environmental sustainability, between national interests and international responsibilities, and between contemporary populations and unborn generations. I’ll raise my horn of mead to that.

Kaj Embrén

If a non-governmental organization releases a book on an educational topic, it means that it contains information that is not included in the school curriculum. This is happening frequently and all over the world. The appropriate ministers can then decide if they want to allow the issued book into the schools program, or not.

When writing this, I’m referring to the book „Lekcja równości” (lesson of equality) written by Kampania przeciw Homofobii (Campaign against homophobia), which received necessary recommendations from Agnieszka Kozłowska- Rajewicz, Minister for Equal Treatment. There is an argument being evoked by the Law and Justice (PiS) and United Poland (Solidarna Polska), around the issue of the way homosexuals are being treated. It shows that the parties’ only response to the issue is to sweep it under the rug or shout about it.

The European Commission recently carried out a massive study on the behaviour towards homosexuals in the European Union. After interviewing more than 90,000 people in the European Union and Croatia, 25% admitted that they had experienced physical violence, and another 25% had been verbally attacked. How much of the hostility comes from ignorance? Probably a lot.

The problem is not so much homosexuality, but the way it is treated by society.

However, to make it less sad, I have enclosed a reprint of the American press,”10 Reasons to Oppose Marriage Equality.”

1. Being gay is not natural. Real Americans always reject unnatural things like eyeglasses, polyester and air conditioning.

2. Gay marriage will encourage people to be gay, in the same way that hanging around tall people will make you tall.

3. Legalizing gay marriage will open the door to all kinds of crazy behaviour. People may even wish to marry their pets because a dog has legal standing and can sign a marriage contract.

4. Straight marriage has been around a long time and hasn’t changed at all like many of the principles on which this great country was founded; women are still property, blacks still can’t marry whites, and divorce is still illegal.

5. Straight marriage will be less meaningful if gay marriage were allowed; the sanctity of marriages like Britney Spears’ would be destroyed.

6. The only valid marriages are those which produce children. Gay couples, infertile couples, and old people shouldn’t be allowed to marry because our orphanages aren’t full yet, and the world needs more children.

7. Obviously gay parents will raise gay children, since straight parents only raise straight children.

8. Gay marriage is not supported by religion. In a theocracy like ours, the values of one religion are imposed on the entire country. That’s why we have only one religion in America.

9. Children can never succeed without both a male and a female role model at home. That’s why we as a society expressly forbid single parents to raise children.

10. Gay marriage will change the foundation of society; we could never adapt to new social norms. Just like we haven’t adapted to cars, the service-sector economy or longer life spans.

Today AEGEE was invited by the Dutch Minister for Education, Culture and Science Jet Bussemaker for a conference that was part of a whole programme centered around IDAHO (International Day Against Homophobia and Transphobia). We participated in the presentation of a thorough EU LGBT Survey conducted by the Fundamental Rights Agency (FRA) which shows the situation of different aspects of LGBT discrimination in the EU27+Cratia. A very worrying picture, showing that high percentages of EU citizens still live in fear, having to become invisible and pretend being a different person to avoid discrimination or violence.

You can see here a video with a summary of the survey (click the image):

You can download the report here and see the whole information in the website. And the good news is that the Council of Europe committed to reproduce the survey in the remaining member countries.

After the presentation of the report, there was a round table were representatives from some NGOs (like Evelyne Paradis from ILGA-Europe), and also some ministers. The survey’s results were analyzed and there was a consensus that these shameful numbers are a sign that we are not performing as well as we want to believe, especially regarding legislation to protect the rights of the transgender citizens.  The results of this survey should act as a wake up call for Europe to get back in tack, and the people present in the room urged the EU Commission to lead an urgent action on European Level to change the situation. This action should be a coordinated strategy involving each of the Member States through active legislation, but also with the participation of the justice, the media and the whole civil society, all over the continent.

For closing the conference, the EU Commissioner Viviane Reding took the stage and began her intervention by remarking that Homophobia and Transphobia go against the fundamental core of the European Union (concretely Art. 2 of the Treaty of the EU). Fighting against Homophobia and Transphobia is fighting to defend European values. Furthermore, she highlighted the achievements of the EU Commission in making sure that the EU Charter of Fundamental Rights is respected across the EU legislation, and also enforcing it in the MS by demanding amendments in the legislation of the Member States. You can download a complete report of how the charter is applied in this report. She also took the opportunity to publicly demand the Member States (and there were several ministers in the room) to commit themselves to legislate in favour of LGBT rights, and to unblock several initiatives in the European Council. She used, as a reason to keep hope, the interministerial declaration that was signed yesterday by ten EU ministers (+ Croatia). Let’s see if there are changes in the future. To close, and in response to the very emotive request of one of the participants of the conference for the EU to do something in other parts of the world where the situation is dramatic and where LGBT people can only hope on external support to change their fearful reality, Viviane Reding reaffirmed the support of the EU to LGBT rights inside and outside the Union, through diplomacy and through strengthening of the civil society.

It was a very interesting conference for AEGEE, showing how closely related are the fight for LGBT rights and the idea of Europe; a motivation to keep the current work in the field and maybe explore possible partnerships for the future. Thanks to the FRA for their great work, reports like this one prove how important role this agency plays in Europe.

And remember: LGBT Rights are Human Rights!

These are challenging times for Europe and for the manufacturing industry. “Unresolved public and private financial imbalances within the EMU and the subsequent decline in business confidence are now leading to low demand for engineering products in the EU” is how Orgalime reported this ‘impasse’ in November 2012. Indeed, it has been a number of years that we in Orgalime have been warning policy makers that Europe was not on the right track for providing growth and jobs. As the industry which supplies capital goods to all other sectors of the economy, we have seen the signs of low investment in Europe in the internal market. As with all things that come to a head, politicians are at last waking up to what is happening.

We are of course grateful that, at a political level, our message is beginning to be heard and understood. For the first time in Brussels, this is at the highest level, since Commission President Barroso voiced his clear support for our industry when he attended our event in the European Parliament, during our General Assembly, where we launched a joint manifesto ‘Manufacturing a Stronger and Greener Europe’ with our sister organisation, CEEMET. It has been well received and was a timely answer to the Commission’s Communication on re-industrialising Europe.

Obtaining recognition at the political level in Brussels is, however, just a start. It is only just over a year ago that, in a joint letter to Presidents Barroso and Van Rompuy, twelve Heads of State and Government suggested that in terms of priority areas for growth in Europe, “action should start in the services sector” with industry being hardly mentioned. Now the Heads of State have, for the first time, decided to hold two specific debates on industrial policy and industrial competitiveness in June this year and in February 2014.

And then will come the hard part: implementing those reforms which are needed to make Europe a more attractive place for manufacturing investment. Our manifesto gives clear indications of what needs to be done. It will however be rather difficult for many governments and indeed for the European institutions as a whole to move away from business as usual – printing regulation, much of it ill-conceived and punishing for industry. This has become a habit and only now are regulators beginning to understand the cumulative impact that this is having on manufacturing and therefore the wider economy. This is rather late given the horrendous reality of unemployment in much of Europe and particularly youth unemployment: in several EU member states 30-40% of school and university leavers who are unemployed and in a few other countries this is even higher. Other countries of course are in better economic health.

If we are pragmatic, we cannot expect that the European taxpayer is going to provide extensive funding whether at national or European level to boost the European economy. We have been hoping to a see a shift of spending towards more investment in innovation, in modern technological infrastructures all of which would provide a boost to jobs, but old habits – die hard: the agricultural sector although it employs relatively few people today is still considered as the strategic sector by a number of governments. Therefore more efforts will have to be made to ‘re-industrialise’ Europe through other avenues and this means creating the right framework conditions which will incite manufacturing investment in the EU and allow companies to grow, generate a profit and employ more staff.

Extracts from our manifesto explain what we are seeking:

• The cost of doing business needs to be reduced

• Investment and operating conditions in Europe need to be improved

• A supportive framework is needed to keep a full industrial supply chain

• High-tech infrastructure modernisation must be fostered , thus facilitating the early adoption of new technologies in Europe by implementing a policy framework which promotes competition, investment and innovation in these markets

• Regulation must really aim to ensure the right framework for more growth, jobs and investment: policies must be goal-oriented without prescribing technologies; the impact of new regulation on companies and the cumulative impact of regulation must be thoroughly assessed in advance; regulation must be more stable and predictable and also reflect investment cycles; ex-post evaluation of implemented legislation must be the standard

• There must be better market surveillance, adopted regulation must be respected – not only that: policy adopted must be followed

• A more welcoming attitude towards manufacturing investment

Maybe, just maybe, we should all pull together in order to market ourselves better – it appears that our image is sometimes portrayed in some quarters, in a rather outdated manner. After all whilst our technologies are there to solve tomorrow’s problems (as well as those of today!), we are proving that we can indeed combine the jobs and prosperity required by our citizens whilst still respecting the environmental and ecological needs that our fragile planet demands of us. The engineering industries in Europe in particular, have probably contributed more to ‘greening’ the planet than we are given due credit for.

A last word on this to underline what we mean: a CEO from our industry recently commented that when he was looking at where to site a new production facility in Asia, an ambassador from one of the countries he was considering travelled up to his company offices here in the EU to discuss with him what the country’s government could propose to attract the investment there. When first considering the alternative – investing at home, the welcome given to him by the local authorities had first and foremost included the list of regulations and restrictions to respect and permits to be obtained. There are no prizes for guessing where the investment was made. We will not stop companies from investing close to their markets abroad – clients often expect it – but we must never forget that Europe is the first market in the world and that our industry’s success is based on this and on our exports.