Friday, February 1, 2008

Why Old Europe is Stunted

One of the reasons I got out of France, and Europe in general, despite the fabulous Alps where I mountaineered and walked, rustic old villages and other positive aspects - is the general hopelessness that abounded. From the executive to the factory worker, French people are depressed and pessimistic for their futures. With good reason – govmt after govmt has failed to implement any significant reforms. So the country just slides into mass unemployment, depression, violence, mass child abuse on some housing estates… and outmigration.

There’s more cultural creation in tiny French Canadian Quebec, with 6 million people, than there is in the whole of France… with it’s 60 million.
It’s sad, but not inevitable. President Sarkozy is trying to implement change, but there’s a lot of ignorance and inertia to work against.

From the website of a US female shrink – called “neo-neo-con”:

Jan 31 /08 entry:

It’s the law that French sales are limited to two times a year, January and June or July. And all stores must have them at the same time. This makes competition fair, according to French thinking (yes, the French are different from you and me).

But France is not alone. Many European countries—Belgium, Italy, Spain, and Greece—have the same sort of bans. What’s more, even during a sale they usually can’t sell below cost, or advertise in advance.

France and many other countries in Europe aren’t called nanny states for nothing. There’s an attitude that, without government control over even the smallest elements of life, human nature would be so red in tooth and claw that we’d tear each other apart, even in Bon Marche.

Comments from readers:

1. From an old Steven DenBeste article:

“…European rules which strongly impede the ability of companies to lay off workers have the result of lowering overall economic growth. There are two reasons why: it decreases the benefit of new investment, and it prevents new industries from forming…”

[That’s what you call a perverse law – a regulation that is supposed to help workers, but that creates unemployment in the medium-run, cause it dissuades people from hiring. Unfair dismissal in Aus. will have the same effect if it is brought back. - Jules]

Danny Lemieux Says:

By supporting the power of producers, I suppose they believe that they are protecting jobs (although their high joblessness rates certainly question that assumption). Personally, I think that it is more to protect their elites and aristocratic classes (the owners of companies).

Note that in the U.S., the names on the top-100 companies roster are always changing. In Europe, they pretty much stay the same (they are protected).

Ymarsakar Says:

Because businesses have learned that with such strong government controls, you must either be in government or have the government in your pocket. And that is what many of the largest corporations in Europe does. They have the government in their pockets.

For all that the Europeans tend to accuse Americans of being controlled by Big Business, it was European companies that made the gross majority of profits off UN contracts to Saddam in Oil for Food. Why? Because that is how they usually do business. Find a loophole in the government, like the UN, and then exploit it for advantage. If they try something else, like honest competition, they would be incapable of surviving in Europe’s socialist utopia.



Note also that starting your business in a garage is forbidden in germany.

Hence, Apple and Hewlett Packard would have never gotten of the ground had the founders lived in Germany ….
Is it any wonder so many thousands of young entrepreneurs and scientists, immigrate from Germany, France, Italy to the USA ?

That let them eat cake – anybody who can’t afford a proper office shouldn't be allowed to do business” .

Is typical of old Europe, and is hugely stunting of human potential. And a major cause of social and economic poverty and underachievement. It’s tragic and inhuman…. I gave up trying to start a translation business… there was just too much red tape and complicated rules.

Europe’s richest countries have the same standard of living as the USA’s poorest states: Mississippi and Alabama. (source: Timbro – A Scandinavian economic research institute).
And you see it straightaway when you visit the US… A French friend of mine said:

When I return to France, I feel like I’m entering a third world country…

And don’t tell me about the USA’s poor. I’ve seen the poverty in France and in the USA. And in France it’s far,far worse, because the poor have so little hope of ever getting out of it, due to the wonderful Euro laws, regulations and taxes.

60% (of France’s unemployed) have been unemployed for more than a year.
In the US, the figure is 6% (of the USA's unemployed).

Aid to poor countries

The Japanese fishing example in Fiji reinforces my point in “musings re environment” in my post in 2007, that poor countries are the most vulnerable to environmental degradation. In Australia, public servants are well paid (also get fired easier for corruption), so bribes for fishing are less attractive. And there’s plenty of tax money to manage conservation areas and national parks. And send in the Navy/police if poaching/ rule breaking occurs.

There is pressure by developers to build in scenic areas in Australia, but National parks are large and remain unviolated, which is not the case, even in Thailand.

Most fish poaching is done by Indonesia …. again Poverty is the prime mover.

And Australians have plenty of time and money to enjoy national parks, rather than steal species from them.

So when eg African countries /Indonesia get similar levels of :

accountability, democracy, transparency, lack of corruption, higher standard of living ( allow foreign investment, make it easy for locals to startup and run a company and keep their earnings, have rule of law, protection from violence, low taxes etc) ,

rather than :

Cronyism, corruption, tyranny, unaccountability, high taxes, impossibly complex or restrictive business regulations, bars on foreign investment, govmt nationalization of private enterprises (guaranteeing no future foreign capital will risk itself in the country), Govmt handouts to specific tribes or friends, ineffective police force.

Then their natural environment will suffer less. And their daily lives a lot less hard, more pleasant, prosperous and happy too. People won’t have too eek out a living doing back-breaking work.

Pouring aid money into these countries (most of which finds it’s way into the Swiss bank accounts of the corrupt rulers) will not help. It’s been tried for decades now. It actually makes things worse, by enriching the corrupt local regime and keeping them in power. In the case of food aid, it can make people give up conventional farming, or be used as a weapon by govmts – eg in Somalia in the 90s, when warlords confiscated UN food.

Large NGOs such as Doctors without Borders are not in favour of massive aid programs, for the reasons given above.

Making water wells, bridges and similar physical projects can be of great help.
Giving money / material aid conditional to governance changes and environmental preservation might help. But money has a way of disappearing without any tangible return in those countries. Of being spent on big offices and big cars, and of creating a caste of people who do nothing but hover around govmt officials in order to get a handout.

Mmm…. Sounds like the UN, or also, the EU fatcats in Brussels. I know some French economists have described France as a quasi “Banana Republic”, such is the cronyism and corruption in France.

The Robinson Crusoe Entrepreneur

A few weeks ago, I went to lake Weyba - local saltwater lake to kayak a bit with my inflatable kayak, and sit around. A man was sitting on the beach, looking at his young son and daughter playing. We got into conversation.

He said he had been a printing press owner in Adelaide (where I have lived), then moved to Fiji, built house there and started a shipping business which he still part-owns. Showed me the very small house he had built himself in 3 months. It was on the block of land behind us, with just a small local road in front of it. He was going to build a larger house behind it.

He said the printing business was hard work – very capital-intensive, and small margins due to lotsa competition. Would work 6-7 days a week, 10hrs or more per day… month after month . Yikes – a beach/mountain bum like me would crawl up and die under such a regime. I gotta have my weekly quota of the outdoors, unless I’m earning mega-bucks for a limited time in a mine or something.

When he lived in Fiji, he built a house with a beachfront, 50m to the coral edge and drop off, then boomies with masses of fish.

The kids grew up in this Robinson-Crusoe like existence… snorkelling and spearfishing outside the house. His 8 year-old son was taught by locals how to use a land spear to spear fish. You stand on a rock and wait for the right moment (see the film “castaway”).

His Son would come back in the evening with mangoes, papaya. Locals still “hunt and gather”.

He told me of a Fijian he knew – could earn 400$ a month on merchant marine ship, as marine engineer, but opted out, as he said:

I prefer to live off the land and play football with the kids in my village.

A few Kms from his house – was the “Cousteaux Resort” – run by the son of the famous film-maker. There was also a Backpackers hostel, with the boss earning extra money by spending 4 hours a day on the internet, solving computer problems in the USA (!)

Fishing was getting less good – it used to be real bonanza country. He reckons it’s due to factory-fishing boats from Japan – they pay a few hundred dollars to the local Fiji authorities and do what they like….

Back in Australia, his kids didn’t play any video games – His son was beginning to change the other kids in the area– they were going outside more.

Interesting guy to talk to. There’s some pretty laid back lifestyles out there, being lived by westerners on islands like Fiji, Around Thailand etc.