Monday, April 25, 2005

The Economics of Political Correctionism in Europe

Browsing through a cookery book over the weekend I came across some comment on Marinetti, the founder of the Italian Futurists, and author of La Cucina Futurista. Aside from his diatribe against the consumption of pasta - which he regarded as a food that induced scepticism, sloth and pessimism - Marinetti was also in the vanguard of a form of political correctionism that sought to counter the influence of foreign expressions that he regarded as anti-Italian. A bar should be called a quisibreve (here one drinks), a sandwich a traidue (between-two), a cocktail a polibibita (multi-drink), a maitre d’hotel was to be addressed as a guidopalato (palate guide), an aphrodisiac drink a guerra in letto (war in the bed) and, a sleeping draught as a pace in letto (peace in the bed).

Marinetti may have been joking, but as a browse through the blog Political Correctness Watch can attest there are those that take it all far too seriously. Just the other day at Rouge Classicism an article from the Hindustan Times was posted which looks questioningly at the changing of B.C. and A.D. to BCE and CE (see
That BC / AD thing). Finally, at Café Hayek there is a post that looks at the more insidious nature of some forms of political correctionsim. (see Captain Planet).

That brings me to a similar form of equally insidious “correctionism” that is highlighted today in the Financial Times; it appears that “anti-capitalist” political correctionism is starting to worry business in Germany -

Growing criticism of German business leaders by senior figures in Chancellor Gerhard Schröder's Social Democratic party yesterday triggered a threat to resign by one of the heads of the Invest in Germany organisation. Jürgen Weber, supervisory board chairman of Lufthansa, the national airline, said the anti-capitalist debate gripping the ruling SPD was already forcing a rethink by foreign investors. "If it turns out that this criticism of capitalism has a fundamental nature, then we don't need an Invest in Germany organisation any more," he warned Mr Schröder in an interview in the Welt am Sonntag newspaper.

Franz Müntefering, SPD chairman and Schröder loyalist, warned in a speech this month that "profit-maximising strategies inspired by international competition" posed "a danger to our democracy" .....

In parliament late last week, Mr Müntefering stepped up his attack against "anti-social" business leaders who cut jobs while increasing profits.....

Hans Eichel, finance minister, appeared to join the debate last week when he intervened in the row between Deutsche Börse, the Frankfurt-based stock exchange, and the Children's Investment Trust, the London-based hedge fund that is the Börse's biggest shareholder. "There are reasons to think about regulations that do not favour people making quick money and moving on," Mr Eichel said. From ‘Anti-capitalist’ political debate alarms German businesses
Small wonder the German economy is all doom and gloom these days! Is Hans Eichel an adherent of Marxist economics as as well as being a former Classics scholar!??

As I have frequently noted on this weblog economies such as France and Germany must reform, or they will simply find business will vote with its feet and move out. This is a view also put forward in an editorial at the Financial Times today that notes:
Saddled with bigger social costs than their Asian competitors and a higher exchange rate than their US rivals, it has never been harder for European companies to be world-beaters. Yet they need to strive for this if Europe is ever to achieve its twin goals of economic growth and social justice.

But an unfortunate paradox is emerging. Not so long after European Union leaders agreed last year to put a broadly pro-market set of commissioners in charge of the EU executive, some of these national leaders are now turning hostile to business and to Brussels in order to curry favour with their electorates. This is all too easy a temptation on a continent where the culture of enterprise has never been as popular as in the US or even Asia.

…………. Behind much of this popular and political railing against business lies widespread ignorance of the fact that no European country has captive companies. The latter can - and will - walk, if they feel badly treated at home. To avoid this, the politicians must do three things. First, be aware many European companies need to complete rebuilding their balance sheets before they can be expected to step up investing or hiring. Second, refrain from wrapping companies in more red tape and regulation. And third, governments should get on with the structural reform agenda that they long ago set themselves. The intimidation of European Business
"Intimdation" that is a very good word for it - those like Chirac, Schroeder and Zapatero, who appear to be obstructing and diluting structural reform, are effectively bullying the fragile buds of growth that exist in Europe. Furthermore, as we learn today where China is concerned, protectionism is making a comeback - how long before economic and political instability also makes their comeback - Europe's polticians are indeed failing in their duty.