WHY NOT GET REAL SMART, AND DO AS IF OTHER PEOPLE HAD BRAINS TOO?
Abstract: The USA is encumbered with myths, which have serious impact on the economy and the sociology, not just of America, but of the entire planet. We destroy three of them. And we point out a more general truth: if the People of the USA want to progress, they ought to push their government to observe that the three dozen countries in Europe, and especially the biggest richest, and most democratic, have plenty of excellent ideas, and found ways to implement them.
Otherwise it will be more of the same, and the USA will keep falling out of the competition of ideas, with ever more deleterious effects, for all concerned, who happened to be the entire planet.
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Myth 1: GREED IS GOOD, IT’S ALL AMERICAN:
Greed is good for what? For the economy? For life? For the economy, look at the 24,000 billion dollars potentially spent on the greedier of bankers (in the USA alone; Europe potentially doubles that). Straightforward nationalizations (followed by reselling ASAP), with prosecutions of the abusers, would have been way cheaper, morally clean and economically much more efficient (without considering the potential for a repeat, only worse next time, known as “moral hazard”). Instead, the abusers, not to say the thieves and conspirators, were given, or were backed up, by enough trillions so that they can abuse again, ASAP.
Not only is replenishing these abusers and thieves, these particular banksters (as Roosevelt put it), making fun of the law, and economics, but these greedy individuals keep on propagating and implementing their vision of human activity, which is that greed is the ultimate good. Making trains, cars, planes, computers or clean energy, growing food, providing care, health are not the ultimate good, but greed is, and it is rewarded by ultimate power on everybody.
Now for your health care, although the sums are relatively puny, make sure that you will have to pay every single dime. Besides, listen to Mr. Emanuel (yes, the brother of the chief of staff of the “liberal” president), and prepare for rationing.
For life, it turns out that too much greed is not just terrible, but lethal. Life expectancy had doubled in fifty years, because of the introduction of new drugs, nearly all of them isolated, or derived, from natural products. Now the introduction of new drugs from natural products, and thus the improvement of life expectancy, has slowed down dramatically. Why so? Greed. It is not I who just says so, but even Science Magazine.
Basically the leaders of pharmaceutical companies, instead of ordering research on new drugs, have been cashing their money to enjoy material luxury. Instead of doing research, yes. (The data behind this opinion is made explicit in Science, Vol 325, p 161, 10 July 2009.) This is a violation of fiduciary duty; patents, which are monopolies, are granted by governments to reward research, with the implicit message of trying to do more. Instead, an entire generation of greedsters is bringing research to a halt.
The doctrine of greed as virtue was invented by Bernard de Mandeville (who emigrated to England before Adam Smith was born). Mandeville embraced “Laissez Faire“, a French economic theory that had been fighting dirigisme there for already a century (see below). Yes, “Laissez Faire” was much talked about in France, 400 years ago, after the good king Henri IV (assassinated in 1610) had implemented successfully the politics of the “Poule Au Pot”, which was its exact opposite. According to Henri IV, every French family was supposed to be rich enough to cook a hen in a pot, once a week, and the French government made sure that it would be so. That king is loved to this day: “Le Bon Roi Henri IV”.
But, festering more than a century later, as the subtitle of Mandeville’s book shows: “Private Vices, Public Benefits, Mandeville, not content with just fighting “dirigisme”, went much further. Mandeville went where even the marquis de Sade would not dare thread later. Mandeville wrote that the disappearance of vice would lead to impoverishment, because such ‘vices’, particularly those associated with acquisitiveness and jealousy, were conducive to human activity. The allegation that many virtues were destructive of the good at which they aimed was not well received: in 1723 a grand jury of Middlesex, England, condemned the book as a nuisance.
Mandeville’s enthusiasm for vice reappears in Adam Smith’s celebration of the “invisible hand”. Why is it so “invisible”, that hand? Does that hand have something to hide? Is it the hand of the pickpocket? The invisible hand of the Gold Man who Sacks your job to China?
Greed is like water: enough is necessary for life, but too much, and you drown.
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Myth 2: AMERICANS ARE RUGGED, SELF EMPLOYED INDIVIDUALISTS, EUROPEANS ARE DEPENDENT, COMMUNIST SHEEP:
An Interesting paper from Center for Economics and Policy Research concludes that: “Despite our national self-image as a nation of small businesses and entrepreneurs, the United States small-business sector is proportionately not as large an employer as the small-business sectors in the rest of the world’s rich economies. One interpretation of these data is that self-employment and small-business employment may be a less important indicator of entrepreneurship than we have long thought. Another reading of the data, however, is that the United States has something to learn from the experience of other advanced economies, which appear to have had much better luck promoting and sustaining small-business employment.”
The CEPR then went through all sorts of statistics, and, on every single one, European countries, in particular supposedly socialist welfare France, handily crushed the USA in the percentage employed in smaller companies. (See notes.)
Paul Krugman (“Big business America“) suggests that: “A couple of possible explanations. One is our lack of national health insurance; I personally know a number of people who gave up jobs at small firms in order to get health coverage.
Another possibility, more favorable to the United States, is that in some European countries (Italy comes to mind) firms stay small to escape onerous regulations.
Either way, though, one more American myth bites the dust. We’re not independent free spirits; on the contrary, we’re more likely than Europeans to be cubicle rats working for big employers.”
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There is another reason which Paul Krugman did not insist upon, although he alludes to it, and which may be the most important reason, and it is truly horrible for American blind pride. Europeans are free spirits, and they bite, when ordered otherwise (so nobody tries).
In France, and that is well known, people do not hesitate to use violence to defend their jobs. The way they look at it, they have been attacked first. French bosses have to be really careful. Wealthy people adopt a low profile.
More generally, Europe has democracies, and people think on their own, because the power of money in elections is much less than in the USA. European politicians could never associate themselves to money the way “liberal” Obama can in the USA: it would be the kiss of death, even for a right wing extremist. Moreover, financial campaign reform was done long ago in Europe: politicians have equal time on TV, and partisanship is ardent. Europeans have escaped post partisan bliss, as they had in the Middle Ages, when all that talked was money.
So the result is independently minded people, who vote. And they tend to vote for themselves. France has been the theater of a battle between big business and small shop owners for decades, and the war is fought, shop by shop. (The French distributor Carrefour is second only to Wall Mart in worldwide revenue… although it allows unions; France arguably invented “grande distribution”; Carrefour has many French competitors. This to say that really big business is very French. The oldest French super capitalistic companies, such as the chemical giant Saint Gobain, are about 400 years old.)
An example of this conflict between large and small has festered 20 miles from Marseilles, at Bouc Bel Air. There is found a park of giant outlets which were allowed to open on Sunday, twenty years ago or so. That dominical mall was a first in France (outside of tourist areas). Small shop owners in the big city of Marseilles have tried whatever they could to get the park closed on Sundays. Not just voting and threatening, and demonstrating, but also suing. The French federal government has long agonized about it.
The idea, of course, was that if people shop in the big stores on Sunday, it is that much less business for small shop owners, the rest of the week. Small shop owners cannot compete, because they have few, or no employees, and they need to rest, and Sunday business would be maximum, if allowed, far from city centers (when people have time to go there: it is very slow to get in and out of Marseilles).
The issue is so explosive that only now, more than two and a half year in his presidency, Sarkozy has passed a timid plan for dominical work. The big business shopping center not far from Marseilles will stay, and there will be a few more throughout France.
European politics is a lot about jobs, jobs, jobs. Governments often surrender short term economic efficiency to employment. Of course, in the very long term, it may well be better economically.
Chains of pharmacies are forbidden in France. The “Order of Pharmacists”, a democratic institution, oversees the sale of any pharmacy (not only it can block it, but it selects the buyer among qualified candidates, themselves with a PhD in pharmacy). Nobody is allowed to own more than three pharmacies, PhD or not. the idea is to protect small business owners. And so on.
European workers are increasingly given paid time to learn new skills, especially when their small companies are in trouble.
It is laughable to listen to Americans with tremulous voices evoking small businesses in the USA… Instead, “Supply Side Economics” has been mainly a theory that the USA’s most valuable products would be a million millionaires or so. The rich became America’s main product.
So here is another busted American myth: not only do Americans think like Mr. Big told them to, but they are actually servants of Mr. Big. Want independence of mind and employ? Well, go to Europe.
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Myth 3: FRENCH IDEAS ARE UNWORTHY, UNAMERICAN, INDUSTRIAL POLICY IS WORTHLESS:
In the last year, the government of the USA spent more than 65 billion dollars trying to save the American auto industry, which was led by corrupt plutocrats (that is exactly why it failed). Instead of going French, making a crafty industrial policy, the government just threw money at the problem (before calling FIAT in).
However, there was a better way: 10 crack down on the plutocrats who brought the auto industry down, 2) cash for clunkers. As the cash for clunkers program clicked in, it became fairly obvious that it could have saved GM (at least).
Cash for clunkers is an old FRENCH idea. It was used several times in France over the last decade, with great success. It’s used presently in France, with lots of variants (primes for very low CO2 emission cars, for cars more than 10 years old, etc…). The present French clunker program is supposed to expire at the end of 2009.
Cash for clunkers was long derided as typical French “Colbertism”, or “dirigisme” (Colbert was a famous French finance and industry minister of the 17th century; some of the capitalist firms he helped then are still around today, and profitable, such as the giant Saint Gobain). The idea of dirigisme may be a bit too brainy for post the post-Reagan USA.
Dirigisme motto is to:
TRUST THE VISIBLE BRAIN, INSTEAD OF THE “INVISIBLE HAND”.
Simply, the dirigiste government plans carefully what sectors of the economy ought to be encouraged. By the way, the government of the USA already does this. Simply it has not been boasting about it, because it has been giving too many subsidies for the greed of the plutocrats. A typical example: the 13 billion dollars gift from the public to its sadistic executioners at Goldman Sacks. For those who object to the adjective “sadistic”, let me remind them that it was one of the main points of the Marquis de Sade’s work: the powerful are not just wantonly abusive, they need abuse, for them it’s a drug, and they are hooked.
Reagan, an actor, said Americans do not need particularly good jobs, that all jobs were the same, valet of plutocrat, or engineer, and the USA did not need brains, just greed: that is why the USA lost most of its manufacturing jobs, to the great inner satisfaction of many a foreign land, as the “invisible hand” moved the economy of the USA overseas: manufacturing jobs went from 18 millions down to 12 millions from 1998 to 2008.
The German governments long despised the cash for clunkers idea, viewing it as a typical French crutch for inferior technology, and other Europeans tried to block it as unfair business practice. This year, though, Germany is led by a physicist (Merkel). With its car industry dying for good, Germany adopted “cash for clunkers” with flamboyance, splurging with enormous payments on every single vehicle. It was a resounding success: the German car industry is reviving.
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CULTURE IS ALL ABOUT OTHER PEOPLE’S IDEAS:
This brings us to a more general point: why does not the government of the USA just study what is being done in Europe, on the other side of the pond, especially by the big countries? Actually, why wait for the mentally challenged, and somewhat insufferable American government, and why do not normal people hit the Internet a bit more, as if they were Iranians searching for the truth?
In Europe the big countries themselves spend a huge amount of effort trying to duplicate successful strategies of smaller countries. (France, Britain and Germany are handicapped by defense spending, and other expenses small gnats do not have, including paying for their development, back-biter Ireland being a prime example of an ungrateful mongrel living extravagantly on big countries’ taxes.)
There is no shame in using others’ solutions. There is shame in thinking that the USA has it all figured out, though. The USA could gather enormous inspiration, by just studying French society and government in detail (France, for a number of reasons, including the long republican and revolutionary traditions in common, without forgetting the French origin of England, in the realm of social organization, is the closest, more easily imitable model for the USA.)
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Patrice Ayme
http://patriceayme.com/
http://tyranosopher.blogspot.com
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Note from the CEPR’s “An International Comparison of Small Business Employment”:
“We use the most recently available, internationally comparable data from the Organization for Economic Cooperation and Development (OECD) to measure the share of employment in small businesses in 22 rich democracies. The OECD data demonstrate that:
• The United States has the second lowest share of self-employed workers (7.2 percent) – only Luxembourg has a lower share (6.1 percent). France (9.0 percent), Sweden (10.6 percent),
Germany (12.0 percent) the United Kingdom (13.8 percent), Italy (26.4 percent) and 14 other rich countries all have higher proportions of self-employment.
• The United States has among the lowest shares of employment in small businesses in manufacturing. Only 11.1 percent of the U.S. manufacturing workforce is in enterprises with fewer than 20 employees. Eighteen other rich countries have a higher share of
manufacturing employment in enterprises of this size, including Germany (13.0 percent), Sweden (14.4 percent), France (18.0 percent), the United Kingdom (18.1 percent), and Italy (30.9 percent). Only Ireland (9.6 percent) and Luxembourg (8.5 percent) have a lower share of manufacturing employment in enterprises with fewer than 20 employees. (Raising the cutoff for a small business to fewer than 500 employees does not significantly alter the relative position of the United States.)
• U.S. small businesses have a much lower share of employment than the comparison economies do in the two high-tech fields for which the OECD publishes data: computer related services and research and development.
• The United States has the second lowest share of computer-related service employment in firms with fewer than 100 employees (32.0 percent). Only Spain had a lower share (27.0
percent), while 13 countries with available data had a higher proportion of employment in this sector in small businesses including France (44.7 percent), Germany (48.7 percent), Sweden (49.4 percent), the United Kingdom (67.5 percent), and Italy (73.2 percent).
• Similarly, the United States has the third lowest share of research and development related employment in firms with fewer than 100 employees (25.3 percent). Only the United Kingdom (22.5 percent) and the Netherlands (20.3 percent) had a lower share, while 9 countries with available data had a higher proportion of employment in this sector in small businesses including France (33.1 percent), Sweden (34.4 percent), Germany (35.0 percent), and Italy (74.8 percent).”
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