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by afew Tue Mar 7th, 2006 at 08:53:07 AM EST

Here's a fascinating factoid thrown up in a brief piece by Guillaume Duval of Alternatives Economiques in their March issue (not online). Under the title Foreign Investment : The Real "Patriots" he points us to a January 2006 report from OECD, Product market competition and economic performance in France.

Now this OECD working paper would be a wonderful linguistic deconstruction site. Just take a look at the abstract:

Over the past decade, French economic growth has been insufficient to bring down high and persistent unemployment. Available cross-country evidence suggests that enhancing competition is an important means to improve economic performance. France is catching up with best practice in competition policy reform. However, other policy considerations often hamper the emergence of effective competition. Relatively weak competitive pressures remain in a number of sectors, particularly in sheltered service industries. Restrictions on competition reduce productivity growth and hinder job creation in regulated sectors. Policy must focus on giving more weight to overall consumer welfare in the face of opposition from relatively small but vocal special interest groups.

Hmm, let's see:

  • insufficient, hamper, weak, sheltered, restrictions, hinder, regulated, opposition, small but vocal -- stigmatize what is BAD.

  • growth, enhancing, important, performance, best practice, reform, emergence, effective, creation, welfare -- hype up what is GOOD.

STO-O-O-OP!! That's not what this diary's about. As Guillaume Duval says of this kind of OECD report:

Leur lecture est généralement fastidieuse car très répétitive. On en connaît de toute façon la conclusion avant d'avoir commencé la première ligne: il n'y a pas suffisamment de concurrence et c'est pour cela que l'économie va mal, qu'il y a du chômage, etc.

They are generally tedious to read because they're very repetitive. Anyway, you know the conclusion before you start the first line: there's not enough competition and that's why the economy's doing badly and there's unemployment, etc.

No, the point about this one is in a graph shown on page 9 of the report, comparing restrictions on Foreign Direct Investment (FDI) in the OECD countries. Here's what the authors of the report say about it:

Indeed, import barriers are lower [in France] than in most other EU countries and there are relatively few direct restrictions on inward FDI. (Figure 3). But it is possible that inward FDI may be somewhat hampered by the perception of political influence weighing on certain investment decisions - a perception which is perhaps fuelled by merger control not being the responsibility of the competition authority.5

Oh, so what's that footnote n° 5 all about?  

5 Empirical work suggests that European regulatory intervention is more likely to take place when European firms are harmed by increased foreign competition, indicating that European regulatory stance is protectionist and only to a little extent focused on combating monopoly power and protecting consumers (Aktas et al, 2004). Moreover, other empirical work shows that lenient merger policy to create "national champions" may damage a country's international competitiveness, possible because the basis for strong international competitiveness is fiercely competitive domestic markets (Clougherty and Zhang (2004) and Høj and Wise (2004a))

Oh my, that's some footnote! It says "Europe" (the EU? who knows?) is duplicitous in claiming it is fighting trusts and monopolies and protecting consumers when it is in fact being protectionist! Ouch! And creating "national champions" can harm your health! Oooh! And "empirical work suggests" all that! Golly gosh!

So we'd better take a look at Figure 3, on which all this is a commentary. (I know, I've been taking you round the houses...). Here it is (click to enlarge) :

Where's protectionist "national champions" France? Er, to the left there (yellow). And who are the winners of this (silly, imho) OECD index race? Which are the countries that practise the most "protectionism" re direct foreign investment in their economies?

(Drum roll) To the right (orange): 1) USA  2) UK.

Well I never.

There must be some explanation. Like, lots of regulation in the American and British economies is GOOD, while less regulation in the French is BAD. Or, this OECD report is written by overpaid hacks who develop, first against France, then, by extension, to "Europe", a slew of propaganda that flies in the face of the facts they themselves present. But I don't want to believe that. Isn't it taxpayers' money that funds the OECD?

Good grief. I should stop reading ET today, or my jaw will never recover. It's slack again.

What a delicious piece of diary, afew. And very kind for the eyes, too. (How do you give your blockquotes that pleasant colour? Me like.)

Put this in the ever growing toolkit of weapons against neo-cons to box them on the head with it. Hard. The best bit of this, of course, is that they made it themselves...

by Nomad on Tue Mar 7th, 2006 at 09:19:21 AM EST
Thanks, Nomad.

The blockquote colour... The best way to see how to do it is use your browser's View menu which should contain a Page Source option. When you can see the source, scroll down (or use search) till you get to the text in the box. You'll see the html involved is a div rather than a blockquote. Copy it into a .txt file (for example) for handy use.

As for colour, you'll see the "color" setting in the div code chunk. To change colour, try this code page. Pick a colour and copy in its code or name. Here is a page where you can try out colour codes as background. The code is composed of three hexadecimal numbers representing Red, Green, Blue. The higher the value, the more you tend towards white, so, if you find a colour is too dark for background, raise the values and try again.

When you've found the one you like, save it with your div code for future use in diaries, or comments... Though I think in comments blockquote will be a handy quick choice for me...

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 7th, 2006 at 09:45:45 AM EST
[ Parent ]
But this div stuff, that sounds like a good challenge for a very calm and soothing Sunday afternoon... I'm already full scale frothing mad when I'm attempting to fit pictures into a diary...
by Nomad on Tue Mar 7th, 2006 at 09:57:44 AM EST
[ Parent ]
  1. Do Yoga breathing and concentration exercise;
  2. Put on the andante from Mozart's Piano Concerto 21;
  3. Repeat to yourself: "I am filled with calm, light, and grace, and gnarly bits of code hold no fears for me";
  4. Give up and have some chocolate pie.

I suppose you have to like fiddling with this sort of thing. If not, it can be stressful. ;)
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 7th, 2006 at 10:09:42 AM EST
[ Parent ]
This reminds me why I don't do software any more...
by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Mar 7th, 2006 at 03:38:21 PM EST
[ Parent ]
This fits in with my current hobby horse. Let's stop debating unproven economic theories brought up by the neo-cons and start using real data to demolish their arguments.

With the vast amount of data that is now gathered about worldwide economic activity one no longer has to rely on anecdotal evidence to support a position. Perhaps we should add a part to the wiki listing good sources of data for those trying to create charts like that above on their own.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Tue Mar 7th, 2006 at 09:36:23 AM EST
There are already some Economic And Social Data Sources in the ET Wiki "Tools for action" section.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Mar 8th, 2006 at 12:14:00 AM EST
[ Parent ]
Thanks for that, afew, you WILL be front paged!

Actually, I am not so surprised, and one diary I have long wanted to write is one on FDI, with a simple graph that will show the absolute amounts going to France, the USA, the UK and maybe a couple other countries. It's edifying - over the past 4 or 5 years, France has received the most foreign investment, despite its supposedly hostile-to-foreigners policies...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Mar 7th, 2006 at 09:50:49 AM EST
Great diary, afew.

What the free marketeers constantly decide wrongly on is an index on the number of regulations to decide whether a country has "good" or "bad" economic policies.  Regulations aren't inherently good or bad, in my opinion.  They are what they are, and there are good ones and bad ones.  Regulating natural monopolies, like, for example, utility companies, on prices and quality is a necessity, because, otherwise, they'll game the market and rape consumers.

However, regulating how many cars Toyota can ship to the American market is, in my opinion, incredibly stupid, because it artificially increases the price of a Camry and allows shitty companies like GM -- which can't innovate and is going to royally screw its employees -- to remain alive while punishing Toyota for being a better company with better products.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 7th, 2006 at 11:19:04 AM EST
The key here is that "pure quantitative" analysis just can't do the job. You need to sit down and make judgements about bad vs. good regulations.

I often feel that the neo-lib hallucinations in economics are rooted in an attempt to make conclusions from numbers alone.

by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 7th, 2006 at 11:34:14 AM EST
[ Parent ]
What's wrong with numbers alone?
by Jérôme Guillet on Tue Mar 7th, 2006 at 11:59:37 AM EST
[ Parent ]
They don't mean anything.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Mar 7th, 2006 at 12:00:19 PM EST
[ Parent ]
Well, perhaps it's OK in the case of a 5...

(Now who can be the mystery user who was Number 5 signing on to ET? Numéro, hey? French?)

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 7th, 2006 at 12:07:01 PM EST
[ Parent ]
One wonders...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Mar 7th, 2006 at 12:13:50 PM EST
[ Parent ]
A witty comment, anyway. Let's hope Numéro 5 chimes in with more...
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 7th, 2006 at 12:27:14 PM EST
[ Parent ]

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Mar 7th, 2006 at 12:31:14 PM EST
[ Parent ]
By the way, Miguel, I'm working on a diary in response to the ProsperityUK website.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 7th, 2006 at 12:42:03 PM EST
[ Parent ]
It's really rooted in ideology -- more specifically, the desire to make the numbers fit the ideology, rather than the other way around, as it should be.  But I do agree with you that economics can't rely only on numbers, because the economy is too large and complex (and constantly changing) to rely only on numbers.  You can draw all sorts of conclusions from using just numbers.  What separates the great economists from the Neoliberal Hallucinationists is the ability to look at the numbers, combine the analysis with solid intuition, and provide some general predictions on outcomes.  (The best ones, with the possible exception of Keynes, think of great analogies to explain their ideas.  Paul Krugman is incredibly talented at this.)

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 7th, 2006 at 12:40:36 PM EST
[ Parent ]
Thank you.

I fully agree on these indices, which OECD go in for a great deal. They're mostly aimed at handing out lessons in an oversimplified way. It's just funny when one of them turns against its master, that's all.

As for quotas, your Toyota/GM example is, not exactly extreme, but a fairly obvious one. Ideally, quotas should give the home industry breathing-space to adapt and become competitive with the imports. I think that has happened to some extent in Europe (though there's a way to go yet for Renault and Peugeot, for example, compared to Toyota and Honda). I don't support the British (Thatcherian) choice of abandoning the national industry to its sort (with the result that there's nothing left of it). And I'm not sure the sogginess and lack of fight of GM and Ford can entirely be ascribed to shielding by import quotas.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 7th, 2006 at 12:45:41 PM EST
[ Parent ]
I really enjoyed the build-up to the final graph (and conclusion), nice work afew!
by Alex in Toulouse on Tue Mar 7th, 2006 at 03:08:10 PM EST

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