"Warnings of Decline in Growth within E.U." - I.H.T.

[Fondler]

http://www.iht.com/articles/2005/09/...ness/union.php

More economics than politics, but don't they always end up getting mixed up anyway?

Anyway, discuss, have a blast.

[MadKow]

Nothing is as clear as it seems. Barroso, as far as i can tell bought into the neo-classic economics mantra of "deregulation and privatization". Neo-classic economics is another name for market fundamentalism. I am not an expert by any means, but there are plenty of those pointing out the flaws in neo-classic economics (basically a non-scientific approach to economics based on artificial models and false assumptions... still you can get a nobel prize for that, go figure...). Economic growth is something that economists just cant explain or predict at this point.

You can have deregulated markets like the US and UK, maybe, as examples for successful economic growth, but then you japan and germany with opposite approaches and, at least, a comparable success. Because these cant be explained by neo-classic economics they are called miracles.

Europe is definitely divided. In several parts: East and West, North and South, Big and Small. Euro and Other currencies...
but more importantly in each country there is a division between politicians and the people.

I believe Europe should find its own model of development and economic growth, one that is satisfying to its population. This may not be possible if the guys at the top insist of following existing (and flawed) models.

[Ldvs]

I am not an expert by any means, but there are plenty of those pointing out the flaws in neo-classic economics

Exactly. While many entrepreneurs complain the employment market isn't flexible enough and salaries are over-taxed (I agree it is true in France), what I see as the major flaw in the capitalist system is called "shareholders". Mind, I'm not talking about the thousands of reasonable shareholders but rather those "risks takers" (the American pension funds, not to name them, or other dedicated companies). They have large funds and want to invest them, good. Yet, they demand unacceptable profit growth rates, which as a result, literally freeze the investment of the companies who are financed by such funds. I need not remind anyone what impact the investment of those big firms represent on a country's GDP.

Back to topic, though. I don't know for the other European countries, but in France the consumption is good yet primarily benefits the imports because we're not costs-competitive. I think we're in a dead end right now

[MadKow]

I live in Portugal, one of the poorest countries in the EU, one of the reasons (we were told) to enter the EU was to have to opportunity of a convergence on living standards, wage levels and general economic prosperity shared by Western Europe, admittedly in diferent degrees. Now we are beiing told we have to compete with the chinese. Something went seriously astray here. Europe can never be competitive with China on labour costs, because we don't want to have to work 7 days a week 12 months a year just to make a decent living. It's absurd.

Global development can only be achieved by a leveling of living standars. This may sound like a bad example, but anyone ever considered how Nazi Germany got out of a porofound economic crisis in 4 years and go ready for a war? The base of that recovery was "full emplyment". If everyone has a job, consumer confidence goes up, and so does the economy...
This is more dificult to implement today in our free countries, because of immigration, but then we should start by helping create jobs in third world countries to avoid emigration by, for example, stop subsidizing agricultural products that can be produced cheaper in the third world giving jobs to 30% of their populations instead of the 4% of agricultural population in Europe.
This is just one issue, im sure there are others.

[Ldvs]

Global development can only be achieved by a leveling of living standars.

I agree, yet until China catches up... or we "catch down" more likely, the European countries will suffer from a heavy competition.

then we should start by helping create jobs in third world countries to avoid emigration by, for example, stop subsidizing agricultural products that can be produced cheaper in the third world giving jobs to 30% of their populations instead of the 4% of agricultural population in Europe.

I will undoubtedly sound harsh but there's a bigger problem than that. All the food the African countries are given for free, it's food the local producers can't sell to their compatriots. They can't compete with that. And we know by now that agriculture is the first step towards industrialisation. One always hears that these countries are proposed unfair trade deals by bigger nations, and it's true. But doesn't it sound odd that they're exporting while the population is starving to death? Shouldn't they reach, at least, near self-sufficiency before exporting for poor gains? Thus, I think that aid are double-edged and doesn't help these people much, in the end, although it shows commiseration and good will.

[imb39]

Isn't the big problem Ldvs, that most, if not all, 3rd world countries are in so much debt that there is no option but to sel abroad what is desperately needed at home. Undoubtedly much of that money was wasted on weaponry and other forms of waste (war in Africa always seems ongoing), but many countries wer advised so badly by the World Bank. Eg many were advised to create cash crops - coffee being the most popular. The problem was that so many opted for this that the value of coffee dropped alarmingly (from their perspective).

Aid is double-edged sword but the biggest problem, overall, is the ridiculous farm subsidies paid to our farmers.

[Ldvs]

Isn't the big problem Ldvs, that most, if not all, 3rd world countries are in so much debt that there is no option but to sel abroad what is desperately needed at home.

Eventually, wouldn't more wealth be created if they concentrated their production on their own market rather than trying to export when, as you rightly pointed that out, the subsidies our farmers receive make the trade deals unfair?
Exports are a mediocre short term solution when a long term one is needed, because at this rate, in say, 50 years from now on, I bet the problem will be the same.

Undoubtedly much of that money was wasted on weaponry and other forms of waste (war in Africa always seems ongoing)

Indeed. If they stopped quarrelling and slaughtering because of divergences of religious beliefs or political opinions, they would certainly be more successful. That said, try to make them understand it...

EDIT: Very funny signature quote imb, by the way

[imb39]

"That said, try to make them understand it..."

Its a bit difficult, when we don't fully understand it ourselves...