Andrei Martyanov — You Can Not Fix Stupid (In Terminal Stage)

Andrei Martyanov fisks the latest "competitiveness" ratings and adds his own. (Quotes Michael Hudson, too.)

Reminiscence of the Future
You Can Not Fix Stupid (In Terminal Stage)
Andrei Martyanov

Merijn Knibbe — The 10% of GDP Greek *surplus* on its services trade balance

Yesterday, as part of an attempt to raise the level of discussion about the Eurozone problems, I spent the better part of ten minutes to download a 98 page Excel-file from Eurostat containing data about the last sixteen years of European Union macro economic history. It turns out that Greece has a surplus of almost 10% of GDP on its ‘international trade in services’ account (among other things: shipping, tourism). That’s a lot by whatever standard and surely when compared with 2% of GDP German deficit. In the EU it is only topped by tiny Malta, Cyprus and Luxembourg. It is caused by the fact that Greece is not only home to one world-class economic sector (tourism) but even to two (the other being shipping), which is a lot for a country the size of Greece.… 

But the point: There is a discussion going on about the ‘competitivety’ of countries. Often, current account data are used to prove that countries are ‘competitive’ or ‘uncompetitive’. Which is a bogus discussion. Large current account deficits (or surpluses) are not a sign of ‘competitivety’ of a country but a sign of unbalanced macro-economic spending in the country itself as well as in its trade partners.…

Real-World Economics Review Blog
The 10% of GDP Greek *surplus* on its services trade balance
Merijn Knibbe
ht Random in the comments

Merijn Knibbe — The 10% of GDP Greek *surplus* on its services trade balance

Yesterday, as part of an attempt to raise the level of discussion about the Eurozone problems, I spent the better part of ten minutes to download a 98 page Excel-file from Eurostat containing data about the last sixteen years of European Union macro economic history. It turns out thatGreece has a surplus of almost 10% of GDP on its ‘international trade in services’ account (among other things: shipping, tourism). That’s a lot by whatever standard and surely when compared with 2% of GDP German deficit. In the EU it is only topped by tiny Malta, Cyprus and Luxembourg. It is caused by the fact that Greece is not only home to one world-class economic sector (tourism) but even to two (the other being shipping), which is a lot for a country the size of Greece....

Real-World Economics Review Blog
The 10% of GDP Greek *surplus* on its services trade balance

Merijn Knibbe

Also

The sting in the tail: there will be another undemocratic ‘federal’ institution, an investmentbank, backed by the ECB. Maybe this institution might, to an extent, make up for the lack of fiscal policy on the Eurozone level, at least by restoring part of the monetary transmission channel, i.e. provide a level playing field when it comes to financing projects in the different countries in the Eurozone. While it might also make up for the present lack of government investment in at least some countries. And it might make the present, asset price increasing, kind of QE superfluous. My idea: the European Parliament will have to get large supervisory powers over this bank....

Is an ECB funded backed a better idea than QE? Varoufakis thinks so.

Dirk Ehnts — IMF’s Blanchard: fiscal policy part of the solution against stagnation

In a modern economy with a sovereign currency, both banks and the government can create additional deposits for the private sector. Banks achieve that through lending, and the government through bond issuance. A third way, which doesn’t work for everybody, is to have exports higher than imports, which must result in a net inflow of net financial assets, among them deposits (ex-post). In the euro zone, the private sector does not want to borrow even though interest rates are at zero. If you want a cause, then name it confidence: the firms and households are pretty confident that in this situation of weak demand, high unemployment and falling prices they do not want to more borrow. 

It seems like the only way to get the monetary circuit going in Europe is through the creation of private sector deposits by a) cutting taxes (for those who can reasonable expected to use the additional deposits for spending) or b) increasing government spending (which directly creates deposits for the private sector). What this does not mean is a) government has to be bigger (let them hire private companies to do public jobs if you think that it is welfare-improving) or b) that this will become a permanent feature of the economy. As long as the private sector does not spend, government jumps in. When aggregate demand runs hot, taxes can be increased and the central bank’s interest rate hiked up. This would constitute a return to normal. No mass unemployment, the usual bickering about higher taxes, and savers getting money for nothing.

The problem lies in the insistence on "structural reform" (lower public spending and instituting wages "flexibility") in order to become "more competitive" globally, which is a race to the bottom that is deflationary.

econoblog 101
IMF’s Blanchard: fiscal policy part of the solution against stagnation
Dirk Ehnts | Berlin School for Economics and Law

Francine Mestrum — Promoting the Social Commons

Firstly, the term ‘social commons’ is meant to be analogous with the protection of the so-called ecological ‘commons’. Defending ‘the commons’ means focusing on that which is shared by all human beings. It is the very foundation of collective life of humanity. It also means resisting the current commodification of everything and a breakaway from the dominant logic. The ‘social commons’ are human-made commons, meant to protect individuals and societies.

Secondly, the notion of ‘social protection’ is, paradoxically, being hollowed out by the new global initiatives of the ILO, the World Bank and other international organisations. Some of their proposals have an important potential for improving the situation of poor people, but others barely go beyond the already existing poverty reduction policies. We think that in the long term, more is needed.

Thirdly, we noticed that the concept of ‘social protection’ has a very low appeal to young people who were raised in a neoliberal world in which individual freedom and competitiveness are presented as being natural. But these same young people do understand the value of solidarity and sharing with others. Changing the concept of social protection to social commons may change the perception and the understanding of an idea that may positively shape their future. It may also open up new analytical insights and lead to a new praxis fit for the 21st century.

Fourthly, and most importantly, we think that not only individuals need to be protected, but also societies. With its focus on competitiveness, neoliberalism is destroying social relationships, societies and communities. This collective dimension is particularly important when one knows that poverty is never a problem of poor people alone, but is the problem of societies with a skewed income distribution. It thus cannot be eradicated if the whole of society is not involved in solving it. This requires solidarity and active participation of all. Universalism will therefore be a major characteristic of ‘social commons’. This is based on the fact that social relationships are not purely contractual but are constitutive of each one’s individuality. Indeed, society is necessary for the survival of individuals.

Global Social Justice
Promoting the Social Commons
Francine Mestrum
(h/t Michel Bauwens at P2P Foundation Blog)

Joshua Sperber — Krugman’s Austerity Blinders

Yet what is critical here is Krugman and other liberals’ understanding of precisely what “work” in fact means. 

Liberals are of course correct that European austerity, as well as the US version, has not generated an immediate economic expansion. But to get a clearer idea of the actual purpose of austerity, it is far more useful to listen not to liberal economists but to the politicians who actually decide to implement it. Greek European Commissioner Maria Damanaki recently noted, “‘The strategy of the European Commission over the past year and a half or two has been to reduce the labour costs in all European countries in order to improve the competitiveness of European companies over the rivals from Eastern Europe and Asia.’”

Similarly, in her recent keynote speech at the World Economic Forum, Angela Merkel was admirably frank in asserting that high unemployment is, according to the Guardian, the “price Europe had to pay to become more competitive.” Merkel’s statement that austerity is intended to “ensure the prosperity of our people” is an oxymoron only to those liberal economists who do not see capitalism as a class-based system. For, Krugman’s contention that recessions are merely “technical malfunctions” ignores what both politicians and capitalists have long asserted: recessions are “correctives” that reduce the cost of the one commodity that is more adjustable and often more expensive than any other: labor. 

Austerity, via slashing social spending and expanding a surplus labor pool that is ever more desperate, achieves its aim via making labor cheap enough so that it can again be profitably exploited by capitalists. That is, our recession will come to an end, and the standard of living will be ever-lower, once business can again make a profit off of an ample number of workers, which of course is wage labor’s raison d’etre in capitalism in the first place. While the consequences of further impoverishing millions of people in order to more effectively profit off of them might engender political instability, this is not part of the economic equation. After all, political instability is what police states are for.

Counterpunch
Krugman’s Austerity Blinders
Joshua Sperber

(h/t Kevin Fathi via email

Austerity was never about "fixing the debt" or reducing the deficit. Just another tool for wage suppression and reduction of worker benefits and protections in a race to the bottom with emerging markets and the undeveloped world. This race will occupy the better part of this century unless something intervenes.

Al Jazeera — Ford to stop making cars in Australia

Closure of two production units, blamed on high costs and low volumes, to result in loss of 1,200 jobs by 2016.

Al Jazeera

Ford to stop making cars in Australia

AFP — Thailand to distribute 1.7 million tablets to schools

Thailand plans to distribute about 1.7 million tablet computers to students and teachers this year in the world’s largest handout of the devices for education, officials said Thursday. Nine firms from countries including China, India, Germany and the Netherlands are set to join an online tender in April to supply the tablet computers, according to the Ministry of Information and Communication Technology (ICT). 

The Raw Story \
Thailand to distribute 1.7 million tablets to schools
Agence Presse-France

 Looks like Thailand can "afford" it. Easy to justify based on public purpose and competitiveness.

Fabius Maximus on "The Great Game." A reason for the US military expansion into Africa

In 2004 the US military began to expand into Africa. In 2007 they created Africa Command (Africom). Since then they’ve accelerated and expanded operations. Africa has great natural resources, but why more interest now? 

Here is one possible explanation: the great game. A rival great power expands its reach and things of no interest to us suddenly become worth contesting. China has become a major importer from many African nations, and the US replies in the only way it knows how.

Fabius Maximus
A reason for the US military expansion into Africa

Ed Kilgore — How Mitt Romney Wants to Make America Like China

Near the end of a transcript of a Mitt Romney speech to donors revealed by MoJo’s David Corn (who brought the famous Boca Moment to our attention), Romney makes this plenary comment about the United States and China that goes a little deeper than claims of currency manipulation: 

"When I heard the head of Coca-Cola say that the business environment in America is less hospitable than the business environment in China, I knew we had a problem. I want to make sure that America has the most attractive business conditions in the world—that every entrepreneur once again says, “I want to be an American.” Whether it’s energy or regulation or tax policy or labor policy or legal policy or health care policy—I want America to be the best place for business."

This is interesting because Mitt is looking at a country with a wildly different history, political system, culture and economy and focuses strictly on what he clearly considers to be the cost advantages it offers to businesses . Yeah, China’s a semi-communist authoritarian gerontocracy with a horrendous human rights record, but man, look at those low wages and lack of regulation! I’m sure Mitt also admires China’s “labor policy,” which has no room for free unions, and its “legal policy,” which insulates companies from liability for their behavior.

AlterNet
How Mitt Romney Wants to Make America Like China
Ed Kilgore | The Washington Monthly

Of course, this is not just Mitt Romney talking. Mitt is expressing the desire of "job creators," who are the big donors to political campaigns, for a playing field tilted against workers so that adopt America can adopt Sam Walton's business model:  "I pay low wages. I can take advantage of that. We're going to be successful, but the basis is a very low-wage, low-benefit model of employment." — Attributed in Adam L. Penenberg, "Why Google Is Like Wal-Mart", Wired, 21 April 2005

How does Sam Walton's business model work when it doesn't pay a living wage? People get second or third jobs, and government welfare and Medicaid pick up the difference. See, for example, Taxpayers Should Stop Subsidizing Walmart by Tina Dupuy. Of course, this doesn't scratch the surface of corporate welfare at Walmart or other welfare in corporate America.

But we need to "broaden the tax base."

Oh, and then there's the bit about rolling back regulation (which led to the financial crisis). I have a professor friend who was telling me that he was travelling to Beijing to give courses on a periodic schedule. I said that it sounded great. He replied that it was the worst thing he had ever agreed to in his life, the pollution was so bad. What was that about abolishing the EPA to free up business?

Steve Waldman — Competitiveness is about capital much more than labor

Read it at Interfluidity
Competitiveness is about capital much more than labor
by Steve Randy Waldman

Blah, blah, blah

If the U.S. is to recover from its doldrums, it seems, innovation will need to take center stage once again.

This is a lofty goal, and by all accounts, the summit's participants only got incrementally closer to it. Days were spent tossing out suggestions, not crafting and polishing a game plan. At times, the scene even recalled the leaderless potpourri of Occupy Wall Street, another group of earnest problem-solvers struggling to focus their energies to a single point. But the summit’s organizers say this week's events were less a self-contained process than a jumping-off point for something bigger.

"A lot of ideas are just stewing right now," said Dan Bierenbaum, a senior research associate at the Batten Institute at UVA's Darden School of Business, which arranged the summit.

This week was about "planting seeds," Bierenbaum told The Huffington Post....

In a few weeks, the group will finalize and publish a mission statement -- tentatively known as a Declaration of Innovation, in a nod to Thomas Jefferson’s most famous piece of writing.

After that, it’s not clear what will happen. A summit attendee told HuffPost that once the Declaration is finished, its authors -- a handful of participants from the original group who attended the summit -- will try to circulate it among politicians, federal agencies, business leaders and anyone else who might be interested in a road map for generating economic growth and a culture of creativity.

Read the rest, or don't bother, at The Huffington Post, Jefferson Innovation Summit: Business Leaders Brainstorm A New Era Of American Creativity

This is right out of a Scott Adams Dilbert cartoon.