One of the most worrying articles I’ve read so far on the ongoing European debt crisis. The Economistis seriously discussing the prospect of imminent bank runs in the eurozone. In fact, in one country, Latvia, this has already happened with a mid-sized bank. That’s the first time I read something about this most scary of economic malfunctions (although Paul Krugman was there first, I’m informed).
With the debt crisis spreading and deepening further to the core of the eurozone – France and Austria are defending their triple-A ratings, Belgium, the Netherlands and now Germany are having bonds issues – and politicians unable (and unwilling) to do something about it, banks are more and more exposed to great financial risks. These stem from the drying up of funds to these financial institutions, which could ultimately lead to one or more of them going down. One of the most worrying signs of this is corporate institutions withdrawing their money from banks. And that’s exactly what’s happening now in Italy, Spain, France and Belgium.
I believe articles like these are called “bearish” in the financial world. Still frightening nonetheless.
- Edit: CNBC is on it as well, referring to the same Economist article. Their message: hoping that customers don’t notice that every other source of bank funding is depleting is not a wise strategy.
ONE can almost hear the gates clanging: one after the other the sources of funding for Europe’s banks are being shut. It is a result of the highly visible run on Europe’s government bond markets, which today reached the heart of the euro zone: an auction of new German bonds failed to generate enough demand for the full amount, causing a drop in bond prices (and prompting the Bundesbank to buy 39% of the bonds offered, according to Reuters).
Now another run—more hidden, but potentially more dangerous—is taking place: on the continents’ banks. People are not yet queuing up in front of bank branches (except in Latvia’s capital Riga where savers today were trying to withdraw money from Krajbanka, a mid-sized bank, pictured). But billions of euros are flooding out of Europe’s banking system through bond and money markets.
At best, the result may be a credit crunch that leaves businesses unable to get loans and invest. At worst, some banks may fail—and trigger real bank runs in countries whose shaky public finances have left them ill equipped to prop up their financial institutions.
To make loans, banks need funding. For this, they mainly tap into three sources: long-term bonds, deposits from consumers, and short-term loans from money markets as well as other banks. Bond issues and short-term funding have been seizing up as the panic over government bonds has spread to banks (which themselves are large holders of government bonds). This blockage has been made worse by tighter capital regulations that are encouraging banks to cut lending (instead of raising capital).
Markets for bank bonds were the first to freeze. In the third quarter bonds issues by European banks only reached 15% of the amount they raised over the same period in the past two years, reckon analysts at Citi Group. It is unlikely that European banks have sold many more bonds since.
Short-term funding markets were next to dry up. Hardest hit were European banks that need dollars to finance world trade (more than one third of which is funded by European banks, according to Barclays). American money market funds, in particular, have pulled back from Europe. Loans to French banks have plunged 69% since the end of May and nearly 20% over the past month alone, according to Fitch, a ratings agency. Over the past six months, it reckons, American money market funds have pulled 42% of their money out of European banks. European money market funds, too, continue to reduce their exposure to France, Italy and Spain, according to the latest numbers from Fitch.
Interbank markets, in which banks lend to one another, are now also showing signs of severe strain. Banks based in London are paying the highest rate on three month loans since 2009 (compared with a risk-free rate). Banks are also depositing cash with the ECB for a paltry, but risk-free rate instead of making loans.
That leaves retail and commercial deposits, and even these may have begun to slip away. “We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium,” an anlayst at Citi Group wrote in a recent report. “This is a worrying development.”
With funding ever harder to come by, banks are resorting to the financial industry’s equivalent of a pawn broker: parking assets on repo markets or at the central bank to get cash. “We have no alternative to deposits and the ECB,” says a senior executive at one European bank.
So far the liquidity of the European Central Bank (ECB) has kept the system alive. Only one large European bank, Dexia, has collapsed because of a funding shortage. Yet what happens if banks run out of collateral to borrow against? Some already seem to scrape the barrel. The boss of UniCredit, an Italian bank, has reportedly asked the ECB to accept a broader range of collateral. And an increasing number of banks are said to conduct what is known as “liquidity swaps”: banks borrow an asset that the ECB accepts as collateral from an insurer or a hedge fund in return for an ineligible asset—plus, of course, a hefty fee.
The risk of all this is two-fold. For one, banks could stop supplying credit. To some extent, this is already happening. Earlier this week Austria’s central bank instructed the country’s banks to limit cross-border lending. And some European banks are not just selling foreign assets to meet capital requirements, but have withdrawn entirely from some markets, such as trade finance and aircraft leasing.
Secondly and more dangerously, as banks are pushed ever closer to their funding limits, one or more may fail—sparking a wider panic. Most bankers think that the ECB would not allow a large bank to fail. But the collapse of Dexia in October after it ran out of cash suggests that the ECB may not provide unlimited liquidity. The falling domino could also be a “shadow” bank that cannot borrow from the ECB.
Andrew Sullivan contrasts two takes on the future of the euro, the European Monetary Union, and the world financial system: one optimistic, and one very pessimistic. I’d suggest to read them both: each provides a good account of what’s currently at stake. But I don’t know which of them is more realistic. In a few weeks or months we’ll know, I guess.
- Edit: From hilmerv come two more interesting articles. One is of Paul Krugman in the NYT, making (once again) the Keynesian argument that austerity measures and budgets in Europe are worsening the crisis rather than ameliorating it. The other is from the Center for Economic and Policy Research, arguing that China will have to come to the rescue because of the refusal of policy-makers to invest rather than make budget cuts.
- Original post: First the pessimistic one, from The Economist:
TWO significant messages emerged from the weekend’s IMF meetings that are both striking in their own right and which, when set against each other, are deeply disconcerting. On the one hand, journalists seem to be unable to describe the meetings without noting the high level of fear and anxiety among the participants. (The Financial Times‘ Wolfgang Münchau closes his column today by saying, “I have never seen Europe’s policymakers as scared as I saw them in Washington last week.“) Along those lines, leaders came away from the meetings promising bold action by early November, including agreements on steps to recapitalise banks and increase the capacity of the European Financial Stability Facility. The message seems to be that officials have been scared into a recognition of the severity of the world’s problems and are now prepared to act.
Yet the day’s headlines carry another message: the euro zone is riven by conflict and unable to agree on the most basic of rescue measures. Euro-zone governments are still struggling to put in place an agreement reached in July. Some officials insist that Greece’s creditors must take much larger haircuts than those assumed in that deal, while Greek leaders continue to argue that they will not default. Observers are biting their nails over looming parliamentary votes on the plan to increase the EFSF, even as it becomes clear that a rise to €440 billion isn’t sufficient. On the one hand, it’s as clear as ever that the euro zone needs a massive, ambitious policy to avoid a catastrophic financial scenario. And on the other, it seems ever less likely that the euro zone’s leaders can agree on such a policy and muster the domestic political support to ratify and implement it. If Europe simply can’t do what it needs to do, that leaves the euro zone, and the world, facing a very dark economic reality.
This reality could scarcely come at a worse time. Europe is sliding toward recession. America is uncomfortably close to following behind. Even in the absence of a major financial shock, a renewed downturn across major economies would be very painful, given the lack of recovery in many labour markets and the stress contraction places on budgets. Were a double-dip to strike, far fewer economies would have the political will to intervene to support the economy, even among those with the fiscal room to help.
It’s just shocking to think about the dangers that loom and consider the extent to which they’re driven by governmental failures. Despite having been in a state of constant crisis for more than a year, the euro zone is far away from a real solution; the politics may be such that no solution is possible without a dramatic, Lehman-like collapse, at which point it may be too late to save the euro zone. Meanwhile, the European Central Bank blundered into policy tightening, seriously worsening the crisis out of a fear of mild and temporary inflation. Leaders elsewhere have hardly done better. America’s fiscal policymaking has steadily deteriorated, and the Congress needlessly sent confidence tumbling over the summer with a battle over the government’s debt ceiling. At the same time, Ben Bernanke seems to have forgotten everything he once knew about the crises in the 1930s and in Japan in the 1990s. America is sinking back toward recession while the global economy nears a cliff, and the Fed—by its own acknowledgment—has plenty of heavy ammunition sitting untouched on the shelf.
It is a damning performance. If the world economy does indeed face a new crisis and a new contraction in the weeks ahead, rich-world citizens will have every reason to question the institutions of global capitalism. If the liberal order begins to falter, even darker times still may lie ahead.
Gloomy indeed. Here’s the optimistic one, from the Daily Beast:
So the question is, will Europe implode? Contrary to the widespread assumption, I think not.
It isn’t just that Angela Merkel, Germany’s answer to Margaret Thatcher, has drawn what for her is an unequivocal line that Greece will not leave the European Union or the euro zone. It’s that slowly, sloppily, the governments of Europe are awakening to the realization that since they have tethered their collective economic fate to each other, the costs of unraveling are so immense as to be untenable. No government feels comfortable demanding more funds to bail out Greece or shore up banks or create a backstop for the tenuous finances of Italy. But each government understands at some animalistic level that no electorate will celebrate the consequences of doing too little. Even those supposedly dour, disapproving burghers of Düsseldorf who are tired of bailing out what they see as profligate Greeks would blanch at the market consequences of the end of the euro. Germany doesn’t just pay to maintain that union; it benefits mightily as well.
There is no way to prove that the officials of the EU will access their better angels at the last moment (however auspiciously named the German chancellor is). But this crisis is shaping up as the European version of the American debt-ceiling debate: messy, disheartening, but when pushed to stare at the alternatives, deeply clarifying.
Hence the lurch in the past days toward a more explicit, aggressive response, ranging from a more robust stabilization fund, to plans and statements from German Finance Minister Wolfgang Schaeuble to new IMF head Christine Lagarde that suggest at the least a recognition that this won’t magically resolve itself. Yes, the German minister has to speak cautiously, ahead of an important vote on bailout money on Thursday, and yes, Lagarde has been a study in rhetorical excess, but still, no one is in denial and most now recognize what is at stake.
(…)
To expect the resolution to be easy is foolish, but to assume that dissolution is the inevitable outcome after generations have fought and striven—that, too, is foolish. The formation of the union was never widely or easily digested, but neither was the carving together of the United States in the early to mid-19th century.
The risk remains that globally, because of Europe, we are on a precipice and will fall. That needs to be factored into any near-term decision about money, business, and economic outlook. But the costs of dissolution are prohibitive, for Europe and for the world. China, Brazil, India, the new creditor nations of the world, have begun the unthinkable conversation about bailing out Europe if Europe will not bail out itself: an unlikely event but indicative of how serious this is. In the end, it is those costs for Germany, for France, and for the entire euro zone that should act as a bulwark against the worst-case scenario.
The interview ranges from the meaning of the word ‘hipster’, how it evolved from the early 2000s Vice archetype to the eco-minded, liberal arts educated type of today, to how hipsters are not really a genuine counterculture. Tortorici also has sympathy for the hipster though, self-identifying to some extent with them. The hallmark of the hipster, nonetheless, is its shallowness: it’s a subculture that’s defined entirely by its aesthetics.
At the end of the interview the question is asked: ‘Is the hipster over?’ You may wanna ponder that question yourself. A very interesting piece though, which I recommend to read in its entirety.
HIPSTERS are everywhere and nowhere in the culture of the last decade. On the one hand, a quick hop on the L-Train to Williamsburg (and now Bushwick) in New York City suggests that the burgeoning population of bestubbled waifs with chunky eyewear is, if anything, expanding its hold on the contemporary imagination. On the other, this prevalence seems to have precluded any real conversation about the hipster’s meaning in our culture at large. “What Was the Hipster?: A Sociological Investigation“, the latest addition to a small-book series published by n+1, a Brooklyn-based magazine, turns an inquisitive eye to a subject that would seem to defy such discussion. After all, nobody likes hipsters, hipsters least of all.(…)
Dayna Tortorici co-edited “What Was the Hipster?”. Her essay “You Know It When You See It” tackles the subject of hipster photography and the place it carves out for women in a male-dominated subculture. She spoke toMore Intelligent Life via Google-chat about late capitalism, the death of the poser and why it’s a cop-out to refuse to understand hipsters. We’ve condensed the conversation here.
One of the running themes of the book, and of hipsterdom in general, is the way the term eludes definition. What do you see as the essence of the hipster?
Well, one of the arguments that the book tries to make in confronting this question is that the hipster is a sort of a “boogeyman” in popular culture—a blank screen one can project a lot of one’s own prejudices and anxieties onto. It seems like a cop-out—a refusal to talk about the hipster in a way that’s personal. So to answer more personally, I’d say that the essence of the hipster is his or her (but mostly his) fascination with, or curation of, subculture arcana. There are many ‘types’ of hipster that tend to get lumped together when people talk about hipsters—and one of the challenges of the book was knowing when to generalise, when to taxonomise. But one of the things they all have in common is the desire for a special kind of cultural knowledge, and a fierce protection of this knowledge once it’s obtained.
(…)
What’s striking to me about your definition is that it’s ultimately an aesthetic categorisation; it’s about self-presentation and curation. Whereas when we think of subcultures or countercultures historically, we usually tend to think of politics or even religion. Can hipsters make a genuine claim to being a counterculture?
I think this is where the “taxonomise” v “generalise” problem comes in—because while I’d say “No, hipsters can’t make a genuine claim to being a counterculture” (as Mark and several others in the book argue, hipsters are the dominant culture nowadays, despite their “interest” in aspects of subculture, past and present), there are several groups of people who I think often unfairly get lumped into the category “Hipster” who are in fact representatives of more genuine countercultures. Freegans, DIY-kids, radical queers, feminists, crust punks…all kinds of punks. And so on. I wouldn’t call such people “hipsters,” but I can think of more than a few people who would.
Do you see the hipster as inherently negative? The book, in particular, Mark Greif’s opening paper, suggests that hipsters are in some way “poisonous.” Is this giving them too much credit?
It might be. “Poisonous to whom?” one wants to ask. Of course, the other complication of talking about the hipster generally is that the distinctions between mutations get lost. I’d argue that the conservative, white-pride-inflected, Vice-magazine hipster of 1999-2003 Mark Greif talks about in his contributions is far more “poisonous” to culture than the eco-minded, bicycle-riding, liberal arts-educated hipster one thinks of today. The hipsters of today seem pretty benign. But what I think a lot of people see as truly negative about the hipster (apathy, refusal to engage in politics, participation in gentrification, mindless consumerism paraded as “uniqueness”) isn’t actually unique to the hipster. Hipsters today are often regarded (from what I can tell, anyway) more as a nuisance than a poison. They’re not doing much of anything bad—often, they’re not doing much of anything at all. But they’re people that make you feel something about yourself, or about culture, that you don’t like.
Right. Part of the frustration with hipsters seems to be that they say something very complicated about privilege, in particular about the privilege of the early “millennials” who came of age in the boom years. I mean, in most instances, aren’t we dealing with the white upper-middle-class?
I think so—or if not strictly white, mostly white. In his piece for the panel discussion Jace Clayton asks what we’re not talking about when we talk about hipsters, and the role of race and socioeconomic status in this phenomenon is undoubtedly the biggest elephant in the room. But while I think a lot of the ill-feeling toward privileged white twenty-somethings who have the luxury to try out “being an artist” in a city like New York is warranted—hipsters, especially disaffected hipsters (a redundancy?), seem to lack perspective when griping about their problems, claiming to be ‘poor’ because they have bedbugs in their renovated three-bedroom apartment in Bushwick—I also sympathise with the hipster. Being a hipster looks like it really sucks: I would hate to be living in an overcrowded city, sublimating my artistic impulses into tacky freelance graphic-design work, going to the same bars every weekend with the exact same white people who look just like me, posing for the Cobrasnake. But it’s a pattern that’s been established, so I think a lot of young people reach for that lifestyle when they don’t know what to do with themselves. Part of it, apolitical as it may be, seems to be a resignation to living in the socio-economically stratified, over-commercialised world of late-capitalist America.
(…)
Your essay deals with the role of internet instantaneity in the proliferation of hipster tastes. Do you think there would be hipsters, in the 21st-century sense, without the internet?
Truly, I don’t think there would, and I don’t think I’m alone in that. I think it’s the internet’s ability to rapidly circulate taste markers (clothes, music, movies, even poses) that facilitates the making of the hipster, insofar as the hipster is defined purely by the expression of his or her taste (how s/he looks, what obscure movies s/he knows about, etc). Significantly, you don’t have to have any ideas to be a hipster, or any ideas in common with other hipsters to recognise them as your hipster brethren. While it’s possible that this ‘subculture’ of people that was all taste and no ethos could have existed before the internet, the internet certainly facilitated the spread of the hipster by making the how-to of hipsterism available to almost everybody online.
(…)
Is the hipster moment over? The title of the book implies as much.
I think most people would acknowledge that the hipster moment isn’t over. The inflammatory, online-comment reactions to the book suggest as much: people are still preoccupied with hipsters, whether they’re sick of hearing about them or not. While certain iterations of the hipster are definitely over—you don’t see trucker hats anymore, really—new iterations are still taking shape all the time. But I’d argue that the hipster as I think of it is certainly phasing out, bleeding into mainstream taste. The figure of the hipster as an elitist, subcultural icon is becoming obsolete. But as for hipsters in general? I think that unless something radically changes in youth culture in the next few years—or in American politics, or in the economy—we’ll be seeing hipsters for a while.
Ho ho ho, merry christmas PhDs and postdocs! The Economist has a christmas present for ya, an article in which the prospects of PhDs get smashed completely. According to the Economist you are nowadays better off taking a job as a cashier at the local grocery store after you graduate than to complete a doctoral degree. During the writing process you’re doing “slave labour” and after the 3-5 years of research you’re tossed aside by the academic community. And that is if you finish the degree at all, because 40-50% becomes desillusioned and quits. Also, if you do land a job as a postdoc researcher or assistant professor, you are going to be underpaid and treated as dirt.
Some quotes:
“One thing many PhD students have in common is dissatisfaction. Some describe their work as “slave labour”. Seven-day weeks, ten-hour days, low pay and uncertain prospects are widespread. You know you are a graduate student, goes one quip, when your office is better decorated than your home and you have a favourite flavour of instant noodle. “It isn’t graduate school itself that is discouraging,” says one student, who confesses to rather enjoying the hunt for free pizza. “What’s discouraging is realising the end point has been yanked out of reach.”
Whining PhD students are nothing new, but there seem to be genuine problems with the system that produces research doctorates (the practical “professional doctorates” in fields such as law, business and medicine have a more obvious value). There is an oversupply of PhDs. Although a doctorate is designed as training for a job in academia, the number of PhD positions is unrelated to the number of job openings. Meanwhile, business leaders complain about shortages of high-level skills, suggesting PhDs are not teaching the right things. The fiercest critics compare research doctorates to Ponzi or pyramid schemes.
Proponents of the PhD argue that it is worthwhile even if it does not lead to permanent academic employment. Not every student embarks on a PhD wanting a university career and many move successfully into private-sector jobs in, for instance, industrial research. That is true; but drop-out rates suggest that many students become dispirited. In America only 57% of doctoral students will have a PhD ten years after their first date of enrolment. In the humanities, where most students pay for their own PhDs, the figure is 49%. Worse still, whereas in other subject areas students tend to jump ship in the early years, in the humanities they cling like limpets before eventually falling off. And these students started out as the academic cream of the nation. Research at one American university found that those who finish are no cleverer than those who do not. Poor supervision, bad job prospects or lack of money cause them to run out of steam.
You are even worse off if you do a PhD in The Netherlands or Germany, because you have a big chance of becoming a shoe shiner or newspaper vendor:
Even graduates who find work outside universities may not fare all that well. PhD courses are so specialised that university careers offices struggle to assist graduates looking for jobs, and supervisors tend to have little interest in students who are leaving academia. One OECD study shows that five years after receiving their degrees, more than 60% of PhDs in Slovakia and more than 45% in Belgium, the Czech Republic, Germany and Spain were still on temporary contracts. Many were postdocs. About one-third of Austria’s PhD graduates take jobs unrelated to their degrees. In Germany 13% of all PhD graduates end up in lowly occupations. In the Netherlands the proportion is 21%.
It ends on a very positive note:
Many of those who embark on a PhD are the smartest in their class and will have been the best at everything they have done. They will have amassed awards and prizes. As this year’s new crop of graduate students bounce into their research, few will be willing to accept that the system they are entering could be designed for the benefit of others, that even hard work and brilliance may well not be enough to succeed, and that they would be better off doing something else. They might use their research skills to look harder at the lot of the disposable academic. Someone should write a thesis about that.
It must be said that the author of the article has completed a PhD degree herself, ”she slogged through a largely pointless PhD in theoretical ecology”, and she’s extremely sour about it. In the comments section of the article a debate has stirred up. Many commenters say the article is way to negative and has no eye for the benefits of doing a PhD:
It seems to me our correspondent had a sour experience during his/her PhD.
I happen to have a PhD; and a great career in industry. My experience could not be more different to the correspondent’s: I have always felt privileged, and the PhD was the beginning of my beautiful journey. I have worked in areas which are exciting and beautiful. A good combination when added to a nice salary. It’s true that some people get higher salaries, but very few of them love what they do as I do. This is the beauty of a PhD: you love what you do.
Very few people in life are as lucky as PhD students. The luxury to work on something they like, expanding the boundaries of knowledge and learning a set of skills which will make a difference in their careers. My advice for to-be-PhD students is to be aware of that, and enjoy the experience. If they do not, then quit.
I got my Ph.D. a few months ago in a scientific field. I didn’t want to stay in research, but I figured with my credentials, I could easily land a job. I applied for around 40 jobs, and I received exactly one offer.
Unless a person is prepared to spend one’s life in academia, I’m afraid a Ph.D. is largely a waste of time. It does make you feel good about yourself, but that doesn’t pay the bills or put food on the table.
Well. This should elicit some interesting responses. The Economist has weighed in on what makes Dutch women tick and the Dutch feminist MO. Is it just me or did that sound like a bad idea? Well, the insights on offer are no less bizarre.
IN AMERICA, as pretty much everywhere in the world, the happy narrative of development and freedom has involved more women working in the cash economy, achieving financial independence and thus greater autonomy. It’s interesting when you find a country that seems to buck these sorts of universal narratives, and as Jessica Olien points out in Slate, the Netherlands bucks the women’s-development narrative in a pretty odd fashion: it has extremely high indicators for gender equality in every way (education, political participation, little violence against women, ultra-low rates of teen conception and abortion) except that women don’t work. Or not full-time, anyway, at anything like the rates at which women work in most OECD countries. Moreover, they don’t seem to want to. Nearly 60% of Dutch working women aged 25-54 worked part-time in 2001, compared to 15% in the United States, 25% in France and 35% in Germany; but where 25% of French women working part-time say they want to work full-time, just 4% of Dutch women do. The Dutch began identifying women’s failure to participate in the workforce more aggressively as a major social problem in the 1990s, which led to a tax reform intended to incentivise women out of the cosy “trap” of part-time work. Instead, most women used the better tax treatment as a way to work less. And Ms Olien, an American who’s spent a few months living in the Netherlands, wonders whether the Dutch haven’t got the smoother end of the stick:
When I talk to women who spend half the week doing what they want—playing sports, planting gardens, doing art projects, hanging out with their children, volunteering, and meeting their family friends—I think, yes, that sounds wonderful. I can look around at the busy midweek, midday markets and town squares and picture myself leisurely buying produce or having coffee with friends. In a book released several years ago called Dutch Women Don’t Get Depressed—a parody of French Women Don’t Get Fat—Dutch psychologist Ellen de Bruin explains that key to a Dutch woman’s happiness is her sense of personal freedom and a good work-life balance. But it’s hard to transplant that image to the United States, where our self-esteem is so closely tied to our work. I wonder what the equivalent title would be: American Women Don’t Get Satisfaction?
Women in the United States have become defined by the compromises we make. More than 75 percent of American women who are employed work full-time jobs. As our responsibilities increase at work, they do not shrink at home. We give up time with our families for our careers, and after work we give up other interests for time spent with our children and spouses—because there are only so many hours in a day. Because of part-time work, Dutch women are able to develop themselves and their relationships in ways many of us simply don’t have the time for.
There are certainly things one learns about American culture by comparing it with others, but there’s also a temptation to romanticise the differences.
Good point! What else you got?
It’s also worth noting that one thing that might disincline Dutch women to work as hard as, say, American women is the fact that Dutch salaries are much lower than American salaries. A look at the interesting University of Amsterdam website Wageindicator.org suggests that a 25-year-old female Dutch high-school graduate who works full-time as an assistant manager in retail stands to make about €16,000 a year, while her American counterpart makes $26,182; run the OECD’s purchasing power parity converter for September, and the American is making about $7,000 a year more. This doesn’t, however, explain why Dutch women don’t want to work as much as French or German women do.
I think the main thing that’s going on here is just a huge difference in the social valuation of free time. The Dutch, both men and women, place a much higher value on free time as a luxury good than Americans do. Matthew Yglesias points to how this intersects with high standards of living:
I think it would be a mistake to say that Dutch women are happy because so few of them are involved in full-time work. I would say instead that most Dutch women are happy because Dutch people enjoy an extremely high material standard of living (you should really see what passes for a slum in the Netherlands, it’s absurd) and that this reflects itself in part via women’s disinclination to toil for long hours in jobs they don’t find rewarding.
Well I think Yglesias makes decent sense. It is true that compared to America and most western democracies, you just don’t see the same kind of abject poverty or the symptoms that go with it (e.g., prevalent and open substance abuse, homeless folks begging for change, elevated crime rates, large burnt out sections of cities) in the Netherlands. To the degree you see any of the normal symptoms their scale is nowhere near what you see in the States, or Canada for that matter. The difference is striking. But I am not sure that this is sufficient to explain things fully. One might ask for example, if it is as simple as that why are part-time working rates not more similar for women and men? The author is not fully convinced either asking another reasonable question:
I think this is in large measure true, but it leaves unexplained why American women from upper-middle-class backgrounds, who are statistically speaking much richer than Dutch women, often work insanely hard to achieve success at the very kinds of management jobs that Dutch women don’t consider worth their while.
So the author offers his own, in his own words, “strange and non-falsifiable theory”:
I think a lot of Dutch women enjoy part-time work because the challenge of arranging a complicated schedule and forcing the world to deal with it is empowering. It’s part of the way they valorise their lives. In that way it’s really quite similar to the way that, as Ms Olien writes, American career women boast of everything they’ve managed to do during a particularly hectic day. There’s an element of national culture here, in that making schedules complicated, and then demanding that others keep track of and adhere to them as a matter of what the Dutch call “norms and values”, is sort of a national pastime in the Netherlands. I can’t tell you how often I’ve called up a bank, a government department or a software firm and been told that I have to deal with Ms DeWinter, who’s available on Mondays, Tuesdays and Fridays between 11am and 3:30pm but is away on sick leave until next week, when the office will be closed Monday for the Ascension holidays. Coping with these schedule demands is considered part of the social obligations of citizenship, and the ability to set the schedule is a mark of power. Somehow it all goes back to the complexities of timing ships’ passage through the locks on the canals, or perhaps something about the dikes. It’s always about the dikes.
Say what? Setting difficult schedules is part of a broader national culture where the ability to be difficult is a mark of power, explained historically by ships passing through dikes? Is this dude (the author is only identified by the initials M.S.) for real? As a Netherlands outsider, I have not got any great insights as to why Dutch women want to work part-time. My experience of living in the Netherlands for four months does lead me to believe that cultural differences on the valuation of free time relative to other things people value is part of the answer. Only part though.
But being difficult for the sake of being difficult as means of expressing power? It strikes me there are folks like that everywhere. But tied to a national culture? I know I have simplified this argument, but barely more than it already was. WTF?
Calling him “a problem, not a solution”, Charlemagne’s Economist article is primarily aimed at discussing the current hate speech vs. freedom of speech trial against Geert Wilders. Much of the background will be known to regular readers of this blog, and for those linking through, the article was written prior to the dismissal of the charges against Wilders. Nonetheless much of the article is written as discussion of Wilders towards the ultimate focus of the article: considering strategies to deal with far right candidates (far right at least on issues with regards to immigration, visible minorities and Islam).
Even more importantly, [Wilders] has become the political kingmaker. His party came third in June’s general election, winning 15% of the vote, and will now prop up a minority government of the liberal VVD with the centre-right Christian Democrats. In exchange, Mr Wilders has secured the promise of tighter immigration rules, a ban on some Islamic garb and more money for care of the elderly. Newspapers are calling this the “Wilders 1” government.
Mr Wilders’s party is only one of many anti-immigrant and anti-Islam groups that are gaining ground in northern European countries previously known for their liberal social attitudes. The Dutch coalition deal was copied from Denmark, where the Danish People’s Party has backed a minority government since 2001. In Sweden’s recent election the far-right Sweden Democrats won seats for the first time, denying Fredrik Reinfeldt, the prime minister, a centre-right majority (he is now running a minority government). These parties, all with their own special characteristics, are distinct from older far-right groups such as France’s National Front and Italy’s Northern League, and have still less to do with thuggish movements in eastern Europe. But a common theme is a dislike of foreigners, especially Muslims.
A big question is whether Germany, the European country most inoculated from right-wing extremism, may be next. There have been stirrings of late, such as the sacking from the board of the Bundesbank of Thilo Sarrazin, a former Social Democratic politician, who published a book saying Muslim migrants were making Germany “more stupid”. Enter the inevitable Mr Wilders. He was in Berlin earlier this month to launch a new party called Die Freiheit (“Freedom”), founded by René Stadtkewitz, formerly a member of the Berlin branch of the Christian Democrats. To cheers, Mr Wilders declared that Germans, too, needed to defend their identity against Islamisation.
Mr Wilders should not be underestimated. By identifying the enemy as Islam and not foreigners, and by casting his rhetoric in terms of freedom rather than race, he becomes harder to label as a reactionary, racist or neo-Nazi. Mr Wilders does not want to associate with the fascist sort. He has no truck with anti-Semitism and fervently supports Israel. He is, for want of a better term, a radical liberal: he defends women’s emancipation and gay rights. He is fighting to defend the West’s liberties; the enemy is Islam (not Muslims, he says), which seeks, violently, to destroy them.
Such views chime with some American conservatives.
And what should we do about Wilders and the like?
What should democratic parties do when lots of voters back a far-right party? At a time of recession, populism cannot just be wished away. One answer is to address legitimate grievances about the scale and nature of immigration. (In France Nicolas Sarkozy has, controversially, pinched far-right rhetoric.) Another is to use the law to curb blatant examples of hate speech.
But the temptation for many is to isolate the extremists, perhaps with an alliance of mainstream left and right. That risks intensifying voters’ sense that politicians are not listening to them, further boosting the extremists, but it may be necessary against the most odious groups. Some, like Mr Reinfeldt in Sweden, may try to ignore the far right. More stable would be a Dutch-style deal to secure their backing for a minority government; some Christian Democrats hope this will tame the wilder side of Mr Wilders. The danger is that it just gives him power without responsibility—and without forcing him to recant outrageous positions.
A better, braver strategy, in some cases, might be to bring far-right leaders into the cabinet, exposing their ideas to reality and their personalities to the public gaze. It may make for tetchy government, but it could also moderate the extremes. So roll the dice and make Mr Wilders foreign minister: for how long could he keep telling the world to ban the Koran?
I am not sure I am convinced by this approach, though I don’t want to dismiss it out of hand either. The crux is: does the exposure that comes from actually being in cabinet actually moderate someone like Wilders or does it lend him legitimacy. On one hand, I tend to think the latter. On the other, I think two points are worth considering. First, as per the article, I do think that the longer Wilders is kept on the sidelines the more strident his supporters will become. Second, had Wilders had to explain, defend, negotiate and (hopefully) amend his immigraton policies in parliament and in public as a Minister, I am hopeful it would have taken some wind out of his sails. There are no definitely no easy answers here I am afraid.
Ik lees The Economist al een tijdje niet meer, omdat ik het een biased conservatief-liberaal blaadje met pretenties vind. Ik bedoel, alsof de hoogste wijsheid te halen valt uit Adam Smith, like duh. Desalniettemin is het aardig wanneer dit tijdschrift het aanstaande rechtse kabinet-Bruin I aanvalt. Dat zien we natuurlijk graag, zeker wanneer ze dit doen op de economische merites van de kabinetsplannen – iets waar VVD’ers en in mindere mate CDA’ers altijd graag prat op gaan. Daar maakt The Economist namelijk gehakt van.
De stelling is niet te gewaagd dat wanneer je een serieus economisch beleid had willen hebben, je beter voor Paars-plus had kunnen gaan. Maar ja.
MEET the Netherlands. A small, affluent, densely populated northern European country, economically timid, with the potential for ethnic strife simmering just under its quiet surface. That is the picture painted by the agreement underlying the new Dutch centre-right minority government, consisting of the liberal VVD and the Christian Democrats. With the backbench support of the far-right Freedom Party and its leader, Geert Wilders (see Charlemagne), the new government will have a majority of just one in the 150-seat parliament.
Mr Wilders has extracted a range of policy goodies in return for his support. The new government will ban the face-covering Islamic veil, and forbid police and workers in judicial institutions from wearing the headscarf. Immigration via marriage will be curbed. State subsidies for newcomers’ language courses will be turned into loans, and a failure to pass the subsequent tests could become grounds for a refusal to grant residence permits.
The agreement is long on heavy-handed police tactics as a response to crime-ridden ethnically mixed neighbourhoods, but has nothing to say about poor infrastructure, school drop-out rates, skills shortages and low social mobility among both immigrants and natives in such areas.
More surprisingly, the government has shunned any serious attempts at structural economic reform. Mark Rutte, leader of the VVD and prime minister-in-waiting, campaigned on a pledge to revitalise the Dutch economy. But no substantial effort will be made to reform either the labour market or the inflated government-subsidised housing market. The generous pension system will remain, and the pension age will creep up by just a year, from 65 to 66, and then not until 2020. “This must be the most conservative and anti-reform economic programme we have had in the past 40 years,” says Sweder van Wijnbergen, professor of economics at the University of Amsterdam.
And despite the professed radical liberalism of both the VVD and Mr Wilders, there is a whiff of social conservatism to their vision for the country. Nobody questions issues such as euthanasia, abortion or gay marriage, considered to be private matters, but this liberal spirit will not extend to the public space—the famous coffee shops of Amsterdam will become members-only clubs closed to foreigners. The ranks of the police will grow by 3,000, a policy which will please Mr Wilders.
Under the new dispensation the Netherlands, traditionally a fairly outward-looking place, will adopt a more critical attitude towards the European Union. The government is likely to oppose Turkey’s EU membership bid, and will look sceptically on any further expansion of the club. Spending on foreign aid will be cut.
Some observers expect that the new coalition, the first minority government in modern Dutch history, will fall apart at the first hint of trouble. But the parties may hold each other in a firmer grip than some expect. They are well attuned to the concerns of Dutch voters, many of whom, outside the big cities that are frequented by tourists, are a socially conservative bunch, anxious about the economic and social changes globalisation can bring. Instead of helping them to face up to today’s challenges, the government has chosen to play upon their fears.
Over at The Economist blog Democracy in America, M.S. is in awe of the way in which Dutch political parties present very detailed electoral programs, laying out how exactly they plan to cut the deficit by cutting spending and/or raising taxes. He compares this to the American situation, in which politicians generally claim to want to cut the deficit, but don’t present electoral programs, or give details about budget numbers.
Yglesias agrees, but wonders why Dutch parties even bother, since they have to form coalitions after all.
Also, M.S. admires the way in the Central Planning Bureau (CPB) scrutinizes every party’s electoral program for the effects on purchasing power and so on.
If there’s an area where Americans should feel out-competed by foreigners, I’d say we should feel out-competed by the transparency and responsibility of Dutch democracy. American politicians generally claim they want to cut the budget deficit. When a Dutch political party says it wants lower deficits, it actually outlines an electoral programme with details about how it plans to cut spending and/or raise taxes. For example, the most economically laissez-faire Dutch party, the VVD or “Liberals”, wants to slash 34 billion euros out of the budget by 2015, and it lays out how it will do this: limiting unemployment insurance to 12 months, raising the retirement age to 67, freezing educational spending on special-needs children, and all kinds of unpopular stuff. The Labour Party wants to cut the budget by 15 billion euros, including raising the retirement age to 66 and cutting defence spending by 1.6 billion, and raise business and environmental taxes while cutting taxes in a progressive fashion on individuals, ultimately coming out with 500m euros more in revenues. The Christian Democrats want to cut spending by 21.4 billion euros and cut taxes by 2 billion euros. Most importantly, all these details I’m providing come from the Dutch Central Planning Bureau, which evaluates all the parties’ electoral programmes and assesses how much they would save compared to baseline assumptions. It would be like American parties and candidates submitting their full programmes to the CBO for an assessment before the elections, so you could decide who to vote for.
I’m not so sure about this. While I agree that it is good that a party gives a detailed program, and, in general, also that the CPB evaluates all the programs, I do think we have seen in the election campaign of the past few weeks that it has led to far too detailed, number-crunching, untransparent debates.
First of all, I think far too much weight is given to these CPB projections, especially since the electoral programs this year were made in a hurry. These are projections, after all, not objective truths. Second, I think debates about such subjects as the mortgage rent rebate, unemployment benefits and the retirement age have become far too technical for the average (or non-average) citizen to follow, obscuring their judgment. Third, I think this Dutch obsession with purchasing power and policy details leads to a move away from a debate about the big issues: how to maintain a welfare state in the age of globalization, how to deal with the integration of minorities in Dutch society, and so on. While I don’t like politicians talking vague, I do think the Dutch politial debate would benefit from somewhat grander visions on the future than the effects of slashing some tax on the purchasing power of a married fireman with a handicapped kid in 2030.
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