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Anglo Disease: Optimism and Dismay in the Narrative

by Jerome a Paris Sat Dec 8th, 2007 at 04:22:38 PM EST

The optimists argued that profits could stay high because the balance of power had moved in favour of capital and away from labour, thanks to the globalisation of the workforce. But perhaps profits had been boosted by accommodating monetary policy, a credit boom and the associated surge in asset prices. In other words, financial services may have dragged the rest of corporate America up. If the credit crunch has a long-lasting effect, the banks may end up dragging corporate America back down again.

European officials have reacted with dismay to this week's US announcement that Iran halted its nuclear weapons programme in 2003, arguing that the findings give a misleading impression of the country's progress towards the bomb and weaken international leverage on Tehran.

The Europeans' disappointment is particularly acute because, until the report's main conclusions were published this week, the US and European Union had appeared to be making headway in their goal of persuading Russia and China to sign up this month to a new wave of UN sanctions on Tehran.

So, from the first link (in this week-end's Economist), we learn that the optimists see a future with no wage increases, because that's the easiest way to increase profits.

And from the second (from today's Financial Times), one can note that "Europeans" (unnamed) are unhappy because Iran has not broken rules like the neocons had claimed it had, and the "Europeans"  cannot go on with their macho posturing and Bush asskissing.

And these are brought to us as statements of fact, not as ideologically loaded opinions. Just like this other one, also from today's Financial Times:

Merkel blamed for Berlin's drift to left

Berlin's creation of a minimum wage for postal services is the government's worst policy mistake and Chancellor Angela Merkel is alone to blame for a "populist" drift in German politics, according to the leader of the country's largest opposition party.

The "biggest danger is that this measure will destroy jobs", Guido Westerwelle, chairman of the pro-market Free Democratic party, told the FT in an interview. But it would have political consequences too, he said, forcing politicians seeking re-election to campaign for higher wages.

"From now on, the level of minimum wages will infect every electoral campaign, every political discussion. One economic sector after another will be dragged into election campaigns."

For the neutral MSM, a "shift to the left" is, naturally, a bad thing that someone can be blamed for. Oh, it's a neolib politicians saying this, but the headline has no quotes in it, reflecting the FT's fundamental agreement with that assertion. The Financial Times is a business paper, for sure, but it prides itself in also being the main European quality paper, a forum for the continent's political debate, and it claims to be providing even-handed coverage. Its news coverage is usually pretty good, but its headlines and the underlying narrative is, sadly, atrocious.

The last sentence is the last paragraph is quite representative of the today's "common wisdom" (the Narrative): wages should not be a political topic - they should certainly not be discussed around elections. God forbid that politicians come and tell businesses how much they should pay their workers! Because the only thing that can tell us if something is good and efficient (or not) is the profit it generates - ideally the growing profits - which can then be monetised via the stock market or via leveraged buy-outs and the value captured right now in the financial world.

This is the world we live in - where wages are a problem to be minimized, where the global elites have the same sole value - the shareholder kind - and the same vision of the world as the Bush junta: we're the bosses, we get to tell everybody else what they should do and like, and we demonize them if they don't. In Europe, you can add the deep sense of fealty to the White House, current or future - that's where the top dog is, and he's always right. (If a Democrat is elected in 2008, that fealty will be there - but remember that it will be directed towards the boss, not towards the reasonable Democrat, and will expect the same corporate-centered vision).

A new European Elites Survey by the University of Siena and the Compagnia di San Paolo, made available to guests at the European Trilateral Commission's annual meeting in Turin, indicates an enormous and ominous discrepancy between popular European attitudes towards American international leadership and those of Europe's elites.


Ordinary Europeans are far less approving of close relations with Washington than are members of the European Parliament and the European Commission, still heavily committed to the American alliance. (...) Only 39% of the general public in Europe thinks American leadership in world affairs desirable, as against 75% support for American leadership from EU officials and 73% from European parliamentarians. Only 29% of the public wants closer EU-U.S. relations, and only 19% approves of President Bush. (...) Only 59% of the public thinks NATO is essential to European security, as against 85% of the EU officials.

Europeans have no alternative right now - all their leaders toe the corporate line. And just like Blair's Labour was considered as not-left-wing (no "drift" he was blamed for, oh no), the next Democrat's presidency will start under expectations that it will not rock the (Wall Street/City dominated) economic boat, or else.

Which brings us back to the first quote, from the Economist. Willingly or not, they acknowledge that our current apparent economic prosperity is an economic mirage, driven by financial profits accrued from the combination of a huge monetary bubble and the massive accompanying looting of the real economy by financial raiders backed by virtual, but huge, financial assets. As these are finally found to be worth much less than revealed by earlier market prices, the soufflé is crumbling. The looting has stopped - but only very partly, as that applies only to the future. Those  claims on the future profits of the real economy that were made earlier by financiers are still in existence, and will be enforced with even more alacrity that they cannot count on more pretty bubble to be bought out at a profit as before.

The problem is that the looters now provide such a big chunk of recent "growth" that the end of their racket will have - and indeed has - consequences in the real world. The other problem is that the repartition of current value creation has been decisively tipped towards profits over wages, and it is unclear at this point whether the coming economic downturn will change that in any way, given that today's sharing arrangements are still considered unfair by the profit-capturers, and that the whole Narrative of our times is to support them. Wages are to go down, it's efficient, successful and inevitable (and if you oppose it you are a reactionary, over-pampered, and of course communist).

The interlude about Europeans in the middle of this diary was to point out that the West's leadership of the "international community" is closely related to the above point on wages and efficiency, as is the USA's leadership of the West itself: presented as inevitable, deserved, efficient and good for the masses-even-if-they-don't-know-it, hiding selfishness, greed and righteousness, profoundly hypocritical, and  built on very shaky foundations.

I have increasing doubts that one can be brought down without the other, something that makes our tasks, as the left in Europe and the USA, all the more complicated. :: ::

Previous "Anglo Disease" content:

Where I wrote it without using the "Anglo Disease" moniker, but i think it fits.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Dec 8th, 2007 at 04:23:15 PM EST

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Dec 8th, 2007 at 04:23:34 PM EST
[ Parent ]
There are some interesting political/business undercurrents in the Scandinavian/Baltic region, that are accelerating at the moment. 11 metropolii (inc. Warsaw and St P) are working together to finance continued full welfare-based approaches to society (there is some diversity, but v. small in comparison to, say, US or UK) by a concerted effort to attract FDI.

In order to be strong in the European and global scale, Baltic Metropolises have to be prepared to take an active role in the development of the innovation area which goes well beyond their national boundaries. Therefore, the Baltic Metropolises have started to build up a closely networked "Archipelago of Innovation". The BaltMet Inno project has pooled a diversity of competences by bringing together cities, regional development agencies, universities and science parks for closer innovation policy co-operation.

Baltic Metropolises - Pool of Potentials

  • Baltic Metropolises*, together with the surrounding areas, are home to 21 million inhabitants ? every fourth citizen of the Baltic Sea Region
  • The joint annual GDP of the 11 cities is approx. EUR 400 billion
  • There are 92 universities, 145 polytechnics, university colleges and academies with a total number of students and academic staff of 1.3 million
  • Every fourth inhabitant has attained higher education
  • There are 86 science and research centres; over EUR 20 billion is invested in research and development annually (47% of the total R&D input of the Baltic Sea Region)
  • The total budget spending of the metropolises was EUR 43 billion in 2006

*Baltic Metropolises: Berlin, Copenhagen, Helsinki, Malmö, Oslo, Riga, St. Petersburg, Stockholm, Tallinn, Vilnius, Warsaw

Of course the Nordic welfare system is expensive, and taxes are already high. Added to this Finnish nurses recently won a 10%+ wage increase, and striking Finnish pharmacists settled with 12% yesterday. There was much public support. Then we have to add in the Bulge of retirement peaking in 2010, and low birth rates.

The BaltMet Inno project is an attempt to finance all this with a better creative innovation and entrepreneurship infrastructure, rather than cut down on social services or put pressure on wages.

The key is state and corporate R&D investment. I am not sure about figures for the other countries (except for Sweden and Norway), but Finland invests 3.4% of GDP. In the past, a high proportion of Finnish R&D investment was state-sourced (ie via taxes and propitious use of EU funding), but now that a culture and infrastucture of innovation has been established, it is easier to draw in corporate investment.

The availabilty of a skilled and literate workforce is one of the pillars to this strategy. Brains are, perhaps, the most sustainable resource we have. But you don't get brains without education, and you don't keep brains without a good balance of reward and quality of life.

You can't be me, I'm taken

by Sven Triloqvist on Sat Dec 8th, 2007 at 06:05:32 PM EST
[ Parent ]
The EU is soooo Last Century.

Let's reinvent the Hanseatic League....

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Dec 8th, 2007 at 06:18:57 PM EST
[ Parent ]
It's starting to happen. And why isn't Scotland in this? And was Helsinki part of the original?

You can't be me, I'm taken
by Sven Triloqvist on Sat Dec 8th, 2007 at 06:23:47 PM EST
[ Parent ]
Scotland (or rather, most of it) is in a couple of other different EU zones: the "Northern Periphery" covers the Highland and Islands and much of the North; the rest has a very strange name.

I don't think Helsinki existed back then: Tallinn was quite important though.

The key Hanseatic cities were the German coastal cities eg Lubeck, Hamburg, Danzig as was, although London and Bergen were both very important trading hubs which had "Kontors" - sort of trading enclaves: London's "Steelyard" was where Cannon Street station is now.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Dec 8th, 2007 at 06:34:22 PM EST
[ Parent ]
Turku/Åbo certainly existed ;-)

But anyway Chris - let's just continue with our program of re-education for everything in Europe north of 52 degrees lat. ;-)

You can't be me, I'm taken

by Sven Triloqvist on Sat Dec 8th, 2007 at 06:47:47 PM EST
[ Parent ]
Sure, let's have a Baltic Union, a Euromediterranean Union, a Black Sea Synergy and a North Sea Partnership.

We have met the enemy, and he is us — Pogo
by Carrie (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 06:35:33 PM EST
[ Parent ]
For various interesting and diariable reasons (some, physiological) around 7 seems to be the optimal number of units that can sit round a table and come to an agreement - be it people or nations. Beyond 7 you get clustering. Maybe we need the 25 divided into the 4 you mention in order for this anecdotal effect to bring about real unity?

You can't be me, I'm taken
by Sven Triloqvist on Sat Dec 8th, 2007 at 06:42:18 PM EST
[ Parent ]
I have suggested this one before, but breaking up Europe into the drainage basins of the various rivers and grouping these by which sea they empty into gives a "natural" grouping of European countries and regions. You can see a lot of historical political units in this map:


Examples: the Ostsee basin is the Hansa you're talking about now. Donau is the Austro-Hungarian Empire. You can see the contour of Switzerland at the south end of the Rhine Basin. The border between Castilla and Aragon, between the French speaking and the Germanic regions are visible, and so on...

We have met the enemy, and he is us — Pogo

by Carrie (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 06:52:44 PM EST
[ Parent ]
interesting concept...

You can't be me, I'm taken
by Sven Triloqvist on Sat Dec 8th, 2007 at 06:55:24 PM EST
[ Parent ]
Finland doesn't appear to have any significant drainage. Is the 'stability' of lakes archetypal? ;-=

You can't be me, I'm taken
by Sven Triloqvist on Sat Dec 8th, 2007 at 06:59:05 PM EST
[ Parent ]
The wikipedia map is incomplete. Finland has a long list of rivers and most of the country drains into the Baltic sea anyway:


(right-click on the image to see it larger)

We have met the enemy, and he is us — Pogo

by Carrie (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 07:11:01 PM EST
[ Parent ]
Damn those cartographers! I'd still like to believe that there are cultural/geographic folk memories that have an influence on historical social development. How has the flatness of the Netherlands affected the development of particular society ? The insularity of the UK? The DNA segregation of the Glens, the Atlantic for the Portuguese, the wilderness of the Steppes etc.

Particular geographical matrices fill 'classical' European literature. Before metropolii you lived in a landscape that affected every part of your life. How long does that 'folk memory' survive down through the generations?

You can't be me, I'm taken

by Sven Triloqvist on Sat Dec 8th, 2007 at 07:26:43 PM EST
[ Parent ]
There was a time, not so long ago, when travelling between basins necessarily involved crossing a mountain ridge. Most people didn't do it, and neither did most trade, so you naturally get a horizon that doesn't extend beyond the boundaries of your home basin, for generations. Travel and trade by sea was easier so you get natural political and economic units around seas.

We have met the enemy, and he is us — Pogo
by Carrie (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 07:33:20 PM EST
[ Parent ]
One might almost talk about the influence of gravity upon trade. Something sadly lacking today, I feel.

You can't be me, I'm taken
by Sven Triloqvist on Sat Dec 8th, 2007 at 07:40:58 PM EST
[ Parent ]
by Sargon on Tue Dec 11th, 2007 at 07:01:27 AM EST
[ Parent ]
It's not based on any new ideas.

We have met the enemy, and he is us — Pogo
by Carrie (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 07:11:34 PM EST
[ Parent ]
It could be happening...

The EU is maybe too preoccupied with internal strife and regulatory issues to notice:  

Nordic model for the Balkans?

Could the Nordic model be applied to the Balkans? Serbian diplomat and researcher Marina Jovisevic, who was stationed Copenhagen 2003-2007, thinks it could.

Jovisevic's doctoral thesis for the University of Belgrade studies the Nordic model for co-operation from both a historical and a modern perspective, focusing on collaboration on social affairs, business, culture and the environment.

"Regional co-operation and positive relations with our neighbours are top priorities in the foreign policy of all the Balkan countries," she stresses.

Jovisevic is also mindful of the fact that the Nordic countries have a bloody past too, and that despite centuries of war they have managed to establish a meaningful and effective partnership. It is true that the Balkans are less homogenous, e.g. in terms of a religion, and it is not long since the countries were waging war on each other. Politically sensitive issues, in particular the question of Kosovo's status, also continue to put a strain on relations.

"On the other hand, I'm convinced that the Nordic model is the only one for the Balkans," the researcher says.

Jovisevic hopes that her thesis will provide a useful run-down of the Nordic model, which she describes as the best one available for regional and European co-operation. Her aim is that the research will serve as the foundation and as a source of inspiration for politicians, civil servants and experts involved in regional co-operation in the Balkans.

by Solveig (link2ageataol.com) on Sat Dec 8th, 2007 at 07:58:34 PM EST
[ Parent ]
What is the Nordic model. My quick search yields nothing.
by Upstate NY on Mon Dec 10th, 2007 at 03:21:27 PM EST
[ Parent ]
It refers to the cross border co-operation the Nordic countries have through the Nordic Council (formed in 1952) and the Nordic Council of Ministers (formed in 1972).

They now also work closely with the Baltic States.

You can find information in English here: http://norden.org/start/start.asp?lang=6

(Sorry about the link, I don't know how to make it 'invisible'!)

by Solveig (link2ageataol.com) on Mon Dec 10th, 2007 at 04:32:02 PM EST
[ Parent ]
You do it like this:

You can find information <a href="http://norden.org/start/start.asp?lang=6">in English here</a>.

Which becomes:

You can find information in English here.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 10th, 2007 at 04:58:45 PM EST
[ Parent ]
...you can find information in English here.

It worked...

Thank you!

by Solveig (link2ageataol.com) on Mon Dec 10th, 2007 at 05:10:10 PM EST
[ Parent ]
I'm not sure it fits to this diary, but for any further ones, will you follow the suggestion to insert a box explaining the term as analogy to the Dutch Disease, with link where you first said so?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Dec 9th, 2007 at 01:43:52 PM EST
[ Parent ]
We are close to corporate dictatorship, one may say.
by das monde on Sun Dec 9th, 2007 at 08:07:01 PM EST
[ Parent ]
The Anglo-American political and military alliance may gradually fade away. The British leaders who grew up in the Second World War/Cold War eras will gradually pass from the scene. Those who grew up with George W. Bush as the role model of a US President may be less willing to defer to an America which is weaker as well as more alien, than the country previously seemed.

I presume that in the rest of Europe a similar process of gradual disengagement will take place.

I also doubt that large numbers of American military bases, outside the United States, can be maintained much longer. I can really see no advantage to the United Kingdom in continuing to be Airstrip One for the United States, for decades after the disappearance of any credible threat that needed to be countered. It appears essential for the Americans to call the forces home, to avoid a debilitating drain on their economy.

Just because we are used to permanent American bases, we forget how unusual it was historically for one power to retain peacetime bases in the territory of another.

I really think the UK needs a clearsighted leader who realises that elite fantasies of, as Harold Macmillan put it being "Greeks to the American Romans" or in Douglas Herd's phrase "punching above our weight", are complete nonsense. As to Tony Blair's insane dream, which appeared to be a willingness to spend unlimited amounts of blood and treasure in completely unnecessary wars which provided the United Kingdom with no benefit whatever, I only hope that future Prime Ministers draw the lesson that resources are not unlimited and that one country is unable to redress all the ills in the world.

by Gary J on Sat Dec 8th, 2007 at 05:29:37 PM EST
A paper in the monde diplomatique mentions that there is another class than the capital owners and the workers ; that is, the technostructure people that actually work at high levels in state and private bureaucracies. They had been in alliance with the left wing after WWII and have been coopted by the financial/capitalist sectors.

They are the people in whom the neoliberal narrative has to be enforced ; they happen to be the main market of the Financial Times and Wall Street Journal...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Sat Dec 8th, 2007 at 05:34:20 PM EST
With a strange conclusion:

Avec toute leur puissance militaire, économique et culturelle, les Etats-Unis, centre mondial systémique, impérialiste, s'emploient à s'imposer comme l'acteur dominant de cette « étaticité » de classe globale en voie de formation.

Dans une large mesure, ils y parviennent. A l'opposition des deux mondes, propre à la guerre froide, ou à celle d'une « triade » - Etats-Unis et Canada, Union européenne et Japon -, s'est substituée une hiérarchie hégémonique impérialiste unipolaire, un pôle de concentration des capitaux, commandant leur réexportation au reste de la planète.

The ray of hope that I see is that the US is not "exporting" capital, but importing it. That's the profound weakness of the predatory version of capitalism we're seeing now. They are exporting methods, the Narrative, but reality may prevail - and the "competents" are more sensitive to reality than others...

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

by Jerome a Paris (etg@eurotrib.com) on Sat Dec 8th, 2007 at 05:58:43 PM EST
[ Parent ]
Is London, that other center, supplying such a different narrative to the US?

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Sun Dec 9th, 2007 at 05:09:48 AM EST
[ Parent ]
is built on importing capital and running big deficits just the same - it's similarly predatory on outsiders' economies, via finance.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Dec 9th, 2007 at 05:18:12 AM EST
[ Parent ]
Otherwise what they're saying is pretty much "Workers of the world unite, you have nothing to lose but the dollar".

There's a lot of good historical analysis, I think, but their insistence on getting everything straight with Marxist theory is, as usual, wearing and finally depressing. It leads them to the necessity for the unity of purpose of the "fundamental classes" and to, shades of Trotsky, a worldwide proletarian movement. This is supposed, when it gets going, to persuade the "organisational" group to climb on board instead of working with the capitalists. Well I've no doubt it would. But if this is the only hope for the left, it's slim and very long-term. At the moment, it's the capitalists' ownership of the means of speaking to the masses that is an absolute barrier to the kind of purpose, unity, dynamic, that the authors want to see. And I don't see that changing without action on the part of some at least of the "organisational" group.

This group has always bedevilled Marxist analysis. I have heard a good many shouting matches (back in the heady post-'68 days, of course) about whether the intellectuals, the cadres, the managers, the functionaries, were to be considered as proletarians, maybe as kind of "honorary" proletarians, as objective allies of the capitalists, or as by their nature enemies of the working class. Marxist revolutionary theory fitted them in as the "avant-garde", but we saw what became of that. The authors of this article consider them as a separate class which will work with capital or labour without essentially belonging with either. The point being to create conditions in which the balance of power or at least its currently ruling dynamic will pull the "organisers" over to the proletarian side.

So yet more great all-encompassing schemes involving underlying historical purpose/finality (of the bourgeoisie and the proletariet, but the authors don't say those words because they're modern Marxists). Perhaps there will be growing workers' movements in those parts of the world that capital has exported production to, but I don't see any change in the developed world unless part of the "organisational" group changes the conditions of public discourse. But I would say that, wouldn't I?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Dec 9th, 2007 at 12:16:03 PM EST
[ Parent ]
Brilliant diary.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Dec 9th, 2007 at 11:00:40 AM EST
As a physics student coming to the end of my undergraduate MSc, I'm looking to go into sustainable development. What really strikes me when looking at much of the economic problems with globalisation, the credit crunch, the environment, peak oil... etc is that a new economic model is needed. Whereas until now the Friedman 'Free Trade' model worked, now so many of the big players cross borders of countries to get the most profit, which completely nullifies the point of free trade, which is to benefit both countries the companies are based in.

We need a new economic model with more emphasis on sustainability of business, of personal happiness over profit, of small footprint and steady-state over consuming and perpetual growth. The thing that needs to change for the world to change is economic theory, as much of the decisionmakers use economics to decide what they do. Change economic theory and you change the world. That's why I'm looking into going into economics when I graduate. The trick is finding a job that promotes sustainable economics rather than the 'take advantage of anything' laissez faire economics many firms run on.

by darrkespur on Mon Dec 10th, 2007 at 07:31:32 AM EST
hi darrkspur, welcome to ET.

i tried to get to your shogun story through your info, but came up with a 404.

gotta betta link?

good comment, btw.

best of luck with your aspirations, you sound like you've recc'd out your plans carefully and effectively!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Dec 11th, 2007 at 03:54:15 AM EST
[ Parent ]
thanks melo, much appreciated. The first of my shogun stories is no longer online, sadly, I'll have to change that. A sequel is released in the anthology 'The Awakening' in January.

I know where I want to be - it's how to start getting there that's the problem. Do I go into an economic analysis job and risk not being sustainable or go to a sustainable job and risk not being close enough to the economic engine? We'll see...

by darrkespur on Tue Dec 11th, 2007 at 06:46:50 AM EST
[ Parent ]
I know where I want to be - it's how to start getting there that's the problem. Do I go into an economic analysis job and risk not being sustainable or go to a sustainable job and risk not being close enough to the economic engine? We'll see...

well, you put it in a nutshell right there!

whatever you do, i have a hunch good writing will be part of it...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Dec 11th, 2007 at 10:40:13 AM EST
[ Parent ]

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