Umberto Eco: The Library as a Model for Culture: Preserving, Filtering, ...

Europe's dilemma

Over the last 30 years, globalization has shaped our societies for good or bad. We may be discontent about it and try to limit its adverse effects on wages and social protection. Technology has also shaped globalization; the emergence of new economic powers has conferred a new political structure. Those countries which will not have a continental dimension will become politically irrelevant. Like in a chess game, the pawns can move one step at a time, in one direction, but against them the knights, the towers, the Queen move in all directions .Imagine if Europe transforms into the United States, it would become a tower.

Europe is the richest continent of the world, technologically advanced, more populated than the United States, Russia or Brazil, but lacks political power. The paradox is that it does not seek for more powersmainly due to its internal divisions. Yet it cannot by itself provide economic stability,  resolve migration issues, bring legality and peace in our Mediterranean confines and to turn into a federal governance in order to address the problems increasingly posed by globalization. 

Those who want and fight for the United States of Europe know that there is no other way in the global economy if it wants to bring much needed stability and security to its citizens. Last June, an open   letter signed by more than 200 academics was forwarded to Heads of State and government. It indicated some of the necessary reforms to make Europe work better, in particular the completion of the eurozone governance and called for a " clear roadmap and timetable to complete the banking union and to reach the fiscal, economic and political unions by the end of the European legislature .

Citizens need a vision and a way forward to a Europe based on democracy, solidarity and subsidiarity. Nothing else can win back their trust towards the Union. The alternative is the spread of the social perception of an inevitable and irreversible decline, which fosters the rise of populism, nationalism and xenophobia. Leadership implies responsibility towards the citizens of today and tomorrow"

To be or not to be, that is the question. Hamlet chose not to be and had the end that Shakespeare has told us. We, Europeans are making the wrong choice and if we do not remake our Europe we'll have the same end.  Yet, Europe has the potential to shape its economic and political future as it did in the aftermath of WWII. 

Is Europe disintegrating?

In this end of year, economic optimism can bring some reason for hope. Most economists and international organizations urged Germany to increase its public investment to offset a dramatic contraction of demand in the rest of Europe.  This is finally going to happen: public expenditure is set to increase  - albeit modestly and too late - not just for boosting European growth but due to the massive arrival of refugees.  

Europe is facing two big crises - the eurozone and the migration crisis that are intertwined . As the president of the Commission Juncker reckoned,  without free movement of people, the single currency that the same people can spend in any part of the euro area does not make sense. The Schengen agreement has been put into question by the massive wave of refugees going from one country to another and by the terrorist threat beyond borders. This argument has also been used by populist parties to call for closing borders to the refugees.

These crises did not just occur in sequence. The long crisis of the eurozone has actually deprived governments of the will and capacity to act as well as their capital of trust and credibility which would be needed today to address the borders crisis. AS Germany plays a key role in both crises, Greece is  again seen as a scapegoat.

But, as P. De Grauwe points out,  the euro and migration crises have common features and flaws . In both cases, Europe's response has been partial. In the first case, the single currency was introduced but national budgets remained separated. During recessions, debt and deficit soar in vulnerable countries and capital flows  move toward stronger countries creating more divergence within the eurozone.   In the case of Schengen, borders were abolished but police and intelligence bodies remained separated and today there are no common coastguards  and border controls  The consequence is that with the euro, governments confronted to uncontrolled capital movements  cannot guarantee economic stability. While regarding Schengen, without a real integration of police forces, the same governments cannot guarantee security to their citizens. Furthermore, the concentration of powers on national governments rather than on the European Commission made decision processes more cumbersome and ineffective. 

Europe's founding fathers assumed that building a process of cooperation among States to resolve common challenges would inevitably lead to a closer integration in the absence of any alternative. But this is what happens today : if these common tasks remained unfulfilled , it does not mean that they will be brought to completion in a near future; it might go into  reverse and  even lead to the disintegration of Europe. 

As Ph. Legrain put it, " .EU leaders are weak, divided, and seemingly incapable of setting out a credible vision of the future benefits that European integration could provide, without which they cannot rally popular support and convince recalcitrant governments to bear their fair share of current costs. In the absence of an effective, common response, Europe’s crises fester, feed on each other, and foment unilateralism". Common solutions require at least four criteria: "a correct shared understanding of the problem, agreement on an effective way forward, willingness to pool more sovereignty, and political leaders able to drive change forward."

As these criteria are now missing, Europe has to reinvent itself . It has no fixed identity and is always remaking itself and will move over time. But the question is whether it will continue deepen its integration process on the road to a federation or alike or go backwards to the predominance of sovereign States. 

Globalization, Religion, and the Secular

Saving the World Economy: Paul Krugman and Olivier Blanchard in Conversa...

The intricate economics of terrorism

The world has suddenly changed. Our fragile societies realize that ordinary people  have to cope with the fear of terrorist attacks. In Paris, Brussels and other parts of the planet, we are at the mercy of an invisible enemy. But to combat this new global phenomenon, we have to look at the complex economics  behind terrorist networks. 

A few years ago, an Italian economist, Loretta Napoleoni developed the idea of 'rogue economics'  where she tries to explain the connexions between crime and unregulated finance. This new reality of capitalism has been expanding over years on a global scale ranging from drugs and weapons, sex slavery and other forms of human trafficking.

Terrorism is just one aspect of it : it does not just imply an efficient organization but needs substantial financing. For instance, Daesh finances its activity thanks the traffic of oil it controls in a vast territory bigger than Great Britain. 

The big change came with the excesses of globalization and big finance ; deregulation has also facilitated these uncontrolled flows in the form of money laundering. According to Napoleoni, the scale of the rogue economics is about 1,5 trillion dollars, so much bigger than (again) United Kingdom's output. The economic significance is that this money is detracted from productive investment to support growth and jobs. This happens because the States have lost control of their economies. 

The crisis will not end  if unregulated finance and growing criminal markets are not brought under control of the States or any supranational power.

Saving Capitalism- notes on Reich's book

The title of Robert Reich's new book is somewhat odd: how can we save a system which is crapped and caused pain to so many people? However, the subtitle is perhaps more important 'for the many not the few'. The book contains a number of  economic and moral arguments as it assumes that the capitalist system is not working as it used to, meaning that it was regulated in a way that it was in equilibrium where it could provide jobs to most of the active population which in turn could buy the goods and services available on the market. Reich makes a valuable point when he argues that the debate is not choosing between market and government as market without government or rules does not exist as a state of nature. This point was developed in the groundbreaking book of K. Polanyi 'The Great Transformation'. 

The whole argument is how to make the system work for the middle class, that is pursuing the right policies to give it more purchasing power, for instance increasing th minimum wage to an acceptable level to avoid 'working poor' class and extending the rights of people for health care and education. If we compare the US in terms of social progress, it lags behind many advanced countries with a more progressive welfare system and wider redistribution among social groups. In this regard, it has been quite anomalous relative to 'the 'social market economy' which has prevailed for at least five decades in Europe. 

The other point which is worth noting is the rising influence of the ruling class in politics. Is this a distortion of the political system?  The issue is how to prevent that oligarchs change the rules to their advantage. These trends are also present in some European countries. This wave of populism has endangered the basic foundations of democracy based on the 'one person, one vote' rule using scapegoats such as the invasion of immigrants taking the jobs of  national workers or the rise of supranational powers such as a European federation. 

Reich's optimism for the future derives from historical experiences such as the Great society in the sixties which actually led to a compression of income disparities and the emergence of a vast middle class. This is quite an unambitious and perhaps view of how the American society should become. The driving forces of globalization and technology (combined with demographic change) have changed the nature of capitalism into a 'Stateless' or an unregulated system where big corporations have an unprecedented power of influencing legislation and tax systems.  The very idea to restore a 'normal' state of capitalism is utopia - can we really change its inherent logic which is to maximize profit by any means? 

Keynes raised  in his concluding notes to the 'General Theory' a number of questions : 

"Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society? Are the interests which they will thwart stronger and more obvious than those which they will serve?

He never responded to these questions, showing how difficult it was to put in place an alternative to the 'laissez faire system'. His ideas went through  and inspired  policy makers at least for some decades. We also hope that Reich's ideas will be applied despite the current state of affairs, and lead to a better economic system to th mutual advantage of all.