Tuesday, January 29, 2008

Europe’s Philosophy of Failure: Economic Freedom for French & German Citizens Squandered

Europe’s Philosophy of Failure


By Stefan Theil

January/February 2008

Foreign Policy Magazine

In France and Germany, students are being forced to undergo a dangerous indoctrination. Taught that economic principles such as capitalism, free markets, and entrepreneurship are savage, unhealthy, and immoral, these children are raised on a diet of prejudice and bias. Rooting it out may determine whether Europe’s economies prosper or continue to be left behind.

Millions of children are being raised on prejudice and disinformation. Educated in schools that teach a skewed ideology, they are exposed to a dogma that runs counter to core beliefs shared by many other Western countries. They study from textbooks filled with a doctrine of dissent, which they learn to recite as they prepare to attend many of the better universities in the world. Extracting these children from the jaws of bias could mean the difference between world prosperity and menacing global rifts. And doing so will not be easy. But not because these children are found in the madrasas of Pakistan or the state-controlled schools of Saudi Arabia. They are not. Rather, they live in two of the world’s great democracies—France and Germany.

What a country teaches its young people reflects its bedrock national beliefs. Schools hand down a society’s historical narrative to the next generation. There has been a great deal of debate over the ways in which this historical ideology is passed on—over Japanese textbooks that downplay the Nanjing Massacre, Palestinian textbooks that feature maps without Israel, and new Russian guidelines that require teachers to portray Stalinism more favorably. Yet there has been almost no analysis of how countries teach economics, even though the subject is equally crucial in shaping the collective identity that drives foreign and domestic policies.

Just as schools teach a historical narrative, they also pass on “truths” about capitalism, the welfare state, and other economic principles that a society considers self-evident. In both France and Germany, for instance, schools have helped ingrain a serious aversion to capitalism. In one 2005 poll, just 36 percent of French citizens said they supported the free-enterprise system, the only one of 22 countries polled that showed minority support for this cornerstone of global commerce. In Germany, meanwhile, support for socialist ideals is running at all-time highs—47 percent in 2007 versus 36 percent in 1991.

It’s tempting to dismiss these attitudes as being little more than punch lines to cocktail party jokes. But their impact is sadly and seriously self-destructive. In Germany, unemployment is finally falling after years at Depression-era levels, thanks in no small part to welfare reforms that in 2005 pressured Germans on the public dole to take up jobs. Yet there is near consensus among Germans that, despite this happy outcome, tinkering with the welfare state went far beyond what is permissible. Chancellor Angela Merkel, once heralded as Germany’s own Margaret Thatcher, has all but abandoned her plans to continue free-market reforms. She has instead imposed a new “rich people tax,” has tightened labor-market rules, and has promised renewed efforts to “regulate” globalization. Meanwhile, two in three Germans say they support at least some of the voodoo-economic, roll-back-the-reforms platform of a noisy new antiglobalization political party called Die Linke (The Left), founded by former East German communists and Western left-wing populists.

Many of these popular attitudes can be traced to state-mandated curricula in schools. It is there that economic lessons are taught that diverge substantially from the market-based principles on which the Western model is based. The phenomenon may hardly be unique to Europe, but in few places is it more obvious than in France and Germany. A biased view of economics feeds into many of the world’s most vexing problems, from the growth of populism to the global rise of anti-American, anti-capitalist attitudes.

economics à la carte

“Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer,” asserts the three-volume Histoire du XXe siècle, a set of texts memorized by countless French high school students as they prepare for entrance exams to Sciences Po and other prestigious French universities. The past 20 years have “doubled wealth, doubled unemployment, poverty, and exclusion, whose ill effects constitute the background for a profound social malaise,” the text continues. Because the 21st century begins with “an awareness of the limits to growth and the risks posed to humanity [by economic growth],” any future prosperity “depends on the regulation of capitalism on a planetary scale.” Capitalism itself is described at various points in the text as “brutal,” “savage,” “neoliberal,” and “American.” This agitprop was published in 2005, not in 1972.


When French students are not getting this kind of wildly biased commentary on the destruction wreaked by capitalism, they are learning that economic progress is also the root cause of social ills. For example, a one-year high school course on the inner workings of an economy developed by the French Education Ministry called Sciences Economiques et Sociales, spends two thirds of its time discussing the sociopolitical fallout of economic activity. Chapter and section headings include “Social Cleavages and Inequality,” “Social Mobilization and Conflict,” “Poverty and Exclusion,” and “Globalization and Regulation.” The ministry mandates that students learn “worldwide regulation as a response” to globalization. Only one third of the course is about companies and markets, and even those bits include extensive sections on unions, government economic policy, the limits of markets, and the dangers of growth. The overall message is that economic activity has countless undesirable effects from which citizens must be protected.

No wonder, then, that the French default attitude is to be suspicious of market forces and private entrepreneurship, not to mention any policies that would strengthen them. Start-ups, Histoire du XXe siècle tells its students, are “audacious enterprises” with “ill-defined prospects.” Then it links entrepreneurs with the tech bubble, the Nasdaq crash, and mass layoffs across the economy. (Think “creative destruction” without the “creative.”) In one widely used text, a section on technology and innovation does not mention a single entrepreneur or company. Instead, students read a lengthy treatise on whether technological progress destroys jobs. In another textbook, students actually meet a French entrepreneur who invented a new tool to open oysters. But the quirky anecdote is followed by a long-winded debate over the degree to which the modern workplace is organized along the lines imagined by Frederick Taylor, the father of modern scientific management theory. And just in case they missed it in history class, students are reminded that “cultural globalization” leads to violence and armed resistance, ultimately necessitating a new system of global governance.

This is a world apart from what American high school students learn. In the United States, where fewer than half of high school students take an economics course, most classes are based on straightforward, classical economics. In Texas, the state-prescribed curriculum requires that the positive contribution of entrepreneurs to the local economy be taught. The state of New York, meanwhile, has coordinated its curriculum with entrepreneurship-promoting youth groups such as Junior Achievement, as well as with economists at the Federal Reserve. Do American schools encourage students to follow in the footsteps of Bill Gates or become ardent fans of globalization? Not really. But they certainly aren’t filling students with negative preconceptions and suspicions about businesses and the people who run them. Nor do they obsess about the negative side effects and dangers of economic activity the way French textbooks do. French students, on the other hand, do not learn economics so much as a very specific, highly biased discourse about economics. When they graduate, they may not know much about supply and demand, or about the workings of a corporation. Instead, they will likely know inside-out the evils of “la McDonaldisation du monde” and the benefits of a “Tobin tax” on the movement of global capital. This kind of anticapitalist, antiglobalization discourse isn’t just the product of a few aging 1968ers writing for Le Monde Diplomatique; it is required learning in today’s French schools.

Germans teach their young people a similar economic narrative, with a slightly different emphasis. The focus is on instilling the corporatist and collectivist traditions of the German system. Although each of Germany’s 16 states sets its own education requirements, nearly all teach through the lens of workplace conflict between employer and employee, the central battle being over wages and work rules. If there’s one unifying characteristic of German textbooks, it’s the tremendous emphasis on group interests, the traditional social-democratic division of the universe into capital and labor, employer and employee, boss and worker. Textbooks teach the minutiae of employer-employee relations, workplace conflict, collective bargaining, unions, strikes, and worker protection. Even a cursory look at the country’s textbooks shows that many are written from the perspective of a future employee with a union contract. Bosses and company owners show up in caricatures and illustrations as idle, cigar-smoking plutocrats, sometimes linked to child labor, Internet fraud, cell-phone addiction, alcoholism, and, of course, undeserved layoffs. The successful, modern entrepreneur is virtually nowhere to be found.


German students will be well-versed in many subjects upon graduation; one topic they will know particularly well is their rights as welfare recipients. One 10th-grade social studies text titled FAKT has a chapter on “What to do against unemployment.” Instead of describing how companies might create jobs, the section explains how those without jobs can organize into self-help groups and join weekly anti-reform protests “in the tradition of the East German Monday demonstrations” (which in 1989 helped topple the communist dictatorship). The not-so-subtle subtext? Jobs are a right to be demanded from the government. The same chapter also details various welfare programs, explains how employers use the threat of layoffs as a tactic to cut pay, and concludes with a long excerpt from the platform of the German Union Federation, including the 30-hour work week, retirement at age 60, and redistribution of the work pie by splitting full-time into part-time jobs. No market alternative is taught. When fakt presents the reasons for unemployment, it blames computers and robots. In fact, this is a recurring theme in German textbooks—the Internet will turn workers into “anonymous code” and kill off interpersonal communication.


Equally popular in Germany today are student workbooks on globalization. One such workbook includes sections headed “The Revival of Manchester Capitalism,” “The Brazilianization of Europe,” and “The Return of the Dark Ages.” India and China are successful, the book explains, because they have large, state-owned sectors and practice protectionism, while the societies with the freest markets lie in impoverished sub-Saharan Africa. Like many French and German books, this text suggests students learn more by contacting the antiglobalization group Attac, best known for organizing messy protests at the annual G-8 summits.

One might expect Europeans to view the world through a slightly left-of-center, social-democratic lens. The surprise is the intensity and depth of the anti-market bias being taught in Europe’s schools. Students learn that private companies destroy jobs while government policy creates them. Employers exploit while the state protects. Free markets offer chaos while government regulation brings order. Globalization is destructive, if not catastrophic. Business is a zero-sum game, the source of a litany of modern social problems. Some enterprising teachers and parents may try to teach an alternative view, and some books are less ideological than others. But given the biases inherent in the curricula, this background is unavoidable. It is the context within which most students develop intellectually. And it’s a belief system that must eventually appear to be the truth.

can old europe do new tricks?

This bias has tremendous implications that reach far beyond the domestic political debate in these two countries. These beliefs inform students’ choices in life. Taught that the free market is a dangerous wilderness, twice as many Germans as Americans tell pollsters that you should not start a business if you think it might fail. According to the European Union’s internal polling, just two in five Germans and French would like to be their own boss, compared to three in five Americans. Whereas 8 percent of Americans say they are currently involved in starting a business, that’s true of only 2 percent of Germans and 1 percent of the French. Another 28 percent of Americans are considering starting a business, compared to just 11 percent of the French and 18 percent of Germans. The loss to Europe’s two largest economies in terms of jobs, innovation, and economic dynamism is severe.


Attitudes and mind-sets, it is increasingly being shown, are closely related to a country’s economic performance. Edmund Phelps, a Columbia University economist and Nobel laureate, contends that attitudes toward markets, work, and risk-taking are significantly more powerful in explaining the variation in countries’ actual economic performance than the traditional factors upon which economists focus, including social spending, tax rates, and labor-market regulation. The connection between capitalism and culture, once famously described by Max Weber, also helps explain continental Europe’s poor record in entrepreneurship and innovation. A study by the Massachusetts-based Monitor Group, the Entrepreneurship Benchmarking Index, looks at nine countries and finds a powerful correlation between attitudes about economics and actual corporate performance. The researchers find that attitudes explain 40 percent of the variation in start-up and company growth rates—by far the strongest correlation of any of the 31 indicators they tested. If countries such as France and Germany hope to boost entrepreneurship, innovation, and economic dynamism—as their leaders claim they do—the most effective way to make that happen may be to use education to boost the cultural legitimacy of going into business.

The deep anti-market bias that French and Germans continue to teach challenges the conventional wisdom that it’s just a matter of time, thanks to the pressures of globalization, before much of the world agrees upon a supposedly “Western” model of free-market capitalism. Politicians in democracies cannot long fight the preferences of the majority of their constituents. So this bias will likely continue to circumscribe both European elections and policy outcomes. A likely alternative scenario may be that the changes wrought by globalization will awaken deeply held resentment against capitalism and, in many countries from Europe to Latin America, provide a fertile ground for populists and demagogues, a trend that is already manifesting itself in the sudden rise of many leftist movements today.

Minimal reforms to the welfare state cost former German Chancellor Gerhard Schröder his job in 2005. They have also paralyzed modern German politics. Former communists and disaffected Social Democrats, together with left-wing Greens, have flocked to Germany’s new leftist party, whose politics is a distasteful mix of anticapitalist demagoguery and right-wing xenophobia. Its platform, polls show, is finding support even among mainstream Germans. A left-leaning majority, within both the parliament and the public at large, makes the world’s third-largest economy vulnerable to destructive policies driven by anticapitalist resentment and fear of globalization. Similar situations are easily conceivable elsewhere and have already helped bring populists to power in Latin America. Then there is France, where President Nicolas Sarkozy promised to “rupture” with the failed economic policies of the past. He has taken on the country’s public servants and their famously lavish benefits, but many of his policies appear to be driven by what he calls “economic patriotism,” which smacks of old-fashioned industrial protectionism. That’s exactly what French schoolchildren have long learned is the way the world should work.

Both the French and German cases show the limits of trying to run against the grain of deeply held economic ideology. Yet, training the next generation of citizens to be prejudiced against being enterprising and productive is equally foolhardy. Fortunately, such widespread attitudes and the political outcomes they foster aren’t only determined by tradition and history. They are, to a great extent, the product of education. If countries like France and Germany hope to get their nations on a new economic track, they might start paying more attention to what their kids are learning in the classroom.

Sunday, January 27, 2008

Winning the Day in Latin America and Defeating Chavez’s Dream: How the US-Peru FTA is combating Bolivarianism and Regional Socialism


Winning the Day in Latin America and Defeating Chavez’s Dream: How the US-Peru FTA is combating Bolivarianism and Regional Socialism

By: Osman Aziz

December 19, 2007

Recent developments in Latin America, chiefly the passing of the US-Peru FTA on December 7 and the nationwide referendum on Chavez's socialist dream harbors significant undertones for a region that is emerging on the global stage.

In a way, two competing ideologies are meeting face to face in a heated battle to see who emerges as victor. Chavez's defeat in Caracas points to the mollification of a backlash in Latin America, namely one against the meddling of foreign elements of western influence. So the question boils down to this: why is capitalism and free trade, as opposed to the socialist doctrines of Chavez, Morales, and Cuba, winning the day in Latin America?

Populist leaders such as Chavez and Morales have long relied on a political platform that vindicates the US and its supposed interests in exploiting Latin America. This popularity has been undercut, at least specifically in Venezuela, by rampant inflation that has placed the value of food and bare necessities far higher that the average Venezuelan can afford. Although the situation in Venezuela has been mitigated by the presence of massive oil revenues flowing into the nationalized oil company PVDSA, Chavez's utter hatred for the private sector has contributed to faulty social programs and an underestimation of market forces.

"In Venezuela's case this has been exacerbated by Mr. Chavez's ideological hostility to the private sector, which has involved selective nationalization and intermittent threats to private property. While many private companies (and banks) have done well out of the boom, they have been loth to make long term investments. Imports have risen fourfold over the past four years, while GDP has expanded by only half over the same period." [1]

Although Venezuelans have prospered marginally from Chavez's social programs and his redistribution of oil funds, the very fact that a sustainable paradigm of free trade and the protection of private property are being fundamentally undercut by Chavez's regime has contributed to a sense of fear in Venezuela over long term investments. Since no guarantee or promise exists that any form of investment by private capital will actually yield returns (due to the tenuous nature of the protection of private interests in Venezuela), many Venezuelans have resigned themselves to poor economic and investment prospects for the foreseeable future.

However, this trend hasn't been the norm in other parts of Latin America as is evidenced by the Heritage's foundation "Index of Economic Freedom". The annual report, which documents different factors that contribute to the overall nature of economic freedom found that the Americas has maintained a sustainable level of economic freedom that has contributed to the rise of per capita GDP over the last decade or so. However, the report also found that protectionist policies being adopted by numerous regimes in the region threaten the integrity of such sustainability by subjecting it to unfair practices that deter foreign investment.

"The recent rise of populists like Evo Morales and Hugo Chávez threatens to widen the freedom gap in the Americas even more. The Americas has been the second-highest region in terms of freedom since 1999, when it was the world leader. That was before Argentina's economic implosion and the protectionist policy responses that followed, notably the weakened average trade score." [2]

The question that now faces a region such as Latin America is what definitive direction it seeks to pursue in the next few years. The passing of the US-Peru FTA recently may be an indicator that the socialist backlash that seemed to be taking hold in South America is losing its grip. Additionally, an indication of growth, coupled with a political atmosphere that may be conducive to free trade is potentially turning the tide. The nature of the US-Peru FTA and what it seeks to bring to the table is a complex matter. Some argue, such as Congressman Sandy Levin of the House Ways and Means Committee, that the agreements do not go far enough in enforcing labor law rights in Peru. Specifically, he argues that provisions under the FTA do not address the underlying ineptitudes of the current condition in Peru.

" I favor a U.S.- Peru FTA, but this Agreement is bad for U.S. standing in the Latin American region. In negotiating trade agreements, the U.S. should not once again be locking in the status quo, but given constructive opportunities, helping to leverage change. The use of the standard, "enforce your own laws" in relationship to workers and their rights, when change is vitally needed, puts us on the wrong side of people who know the current law is not working to their benefit." [3]

Although Levin raises legitimate concerns with regards to the nature of labor rights in Peru and elsewhere in Latin America, his lack of consideration for the fact that such an FTA would open up Peru for considerations in complying with international labor standards, a consideration that would have been pounced upon by leaders such as Morales and Chavez as "neo-imperialist," is frankly questionable.

Conflicts within the Ways and Means Committee over the nature of an ITUC report on the status of labor rights in Peru was a major point of contention. According to a release by the WAMC on the issue of labor rights, it was related that the ITUC report in question actually provided for "legally binding amendments" which restricts Peru from reneging on its labor rights provisions. If the Peruvian government was to be found not in compliance with such binding amendments, the US government would have the mandate to challenge the Peruvian government in the same tradition of a commercial treaty violation. [4] Regardless, the widespread acceptance that the US Peru FTA garnered in the Peru legislature itself is evidence unto itself of the willingness of the government of Peru to comply by the universal force of free trade and trade liberalization.

The overall effect that the US-Peru FTA will have in quelling the increasing tide of socialism across the landscape of Latin America is, at best, minimal. However, unlike most efforts being made to combat this trend, the FTA's being negotiated with the Latin American region are profoundly symbolic for the area as a whole.

With such virulent anti-American rhetoric such as that originating from Chavez, Latin America deserves the chance to partake in the global market by making its resources, both physically and intellectually, open to the greater global financial dynamic. It's high time that such populist movements as that of Bolivianarianism be shelved by the promises of sustainability that are inherently bound in the spirit and practice of Free Trade Agreements and international trade.

* Osman Aziz works as an undergraduate intern at the ITSSD

[1] The Economist. The wind goes out of the revolution. December 8th, 2007
[2] 2007 Index of Economic Freedom. Economic Freedom in Five Regions. (2007)
[3] Sandy Levin on the US-Peru FTA

Latin Economic Freedom Declines


Latin Economic Freedom Declines

Latin Business Chronicle - Special Reports


January 15, 2008

Economic freedom in Latin America is declining, according to a new survey by the Heritage Foundation and Dow Jones.

"The lack—and in some cases, erosion—of economic freedom in the Americas reflects reversals of free-market policies and a failure by some governments to persevere in pursuing economic freedom," say the editors of the 2008 Index of Economic Freedom, which was released today.

11 of 20 Latin American nations surveyed saw a decline in their scores compared to the 2007 index, according to a Latin Business Chronicle analysis of the data.


Brazil, Latin America's largest economy, saw its overall score fall by 0.8, while Mexico - the region's second-largest economy - boosted its score by 1.2. Heritage classifies both economies as "Moderately Free."

Chile is still ranked as the freest economy in Latin America, followed by El Salvador and Uruguay. Meanwhile, Cuba is ranked as the most repressed economy, followed by Venezuela and Haiti.

Corruption, inflation and weak property rights are the major trouble areas for regional economies, they say. "The recent rise of populists like Evo Morales and Hugo Chávez threatens to widen the freedom gap in the Americas even more," the report says.


Measured by trade groups, CAFTA is the freest and ALBA the most repressed, a Latin Business Chronicle analysis shows. CAFTA's average score was 62.72 points. Mercosur had the second-best result, with an average score of 61.13 points. The Andean Community followed, with 58.22 points. ALBA had 48.78 points. However, within ALBA there are big differences, with Nicaragua's score of 62.7 points considerably higher than that of Cuba, 29.7 points.

Among nations that saw declining economic freedom were Chile, Colombia and Costa Rica - typically seen as investor-friendly nations - and Bolivia, Cuba, Ecuador and Nicaragua - which are run by investor-hostile governments.

And - despite increased moves curtailing private enterprise - Venezuela actually boosted its score compared to last year. Other nations that improved their score include Uruguay, Peru, Paraguay and Haiti.

"The typical ...Central/South American nation stands out positively in terms of limited government taxation and expenditures, as well as strong labor freedoms. The other five freedoms are also slightly stronger in the Americas than they are elsewhere, with lighter trade, investment, financial, and regulatory burdens," the report says.


The Dominican Republic improved its score, but continues to be ranked among the worst countries in Latin America despite having a government widely seen as pro-business. The low score is mainly due to weak property rights and widespread corruption, but also still-high inflation.

"The court system is inefficient, and red tape is common," the report says. "The government can expropriate property arbitrarily. Most confiscated property has been used for infrastructure or commercial development. Although the government has slowly improved its patent and trademark laws, the enforcement of intellectual property rights remains poor."

And corruption is perceived as significant, it points out. "Official corruption is pervasive," it says. "Despite recent reforms, Dominican and foreign business leaders complain that judicial and administrative corruption affects the settlement of business disputes."

The Dominican Republic received a low score in the monetary freedom category thanks to inflation still being too high (averaging 10.7 percent between 2004 and 2006) and price controls to electricity and fuel, subsidies of some agricultural products and electricity generation. "An additional 10 percentage points is deducted from the Dominican Republic’s monetary freedom score to account for policies that distort domestic prices," the report says.

© Copyright Latin Business Chronicle

Friday, January 25, 2008

The Real Key to Development

The Real Key to Development



January 15, 2008; Page A13

Are the world's impoverished masses destined to live lives of permanent misery unless rich countries transfer wealth for spending on education and infrastructure?

You might think so if your gurus on development economics earn their bread and butter "lending" at the World Bank. Education and infrastructure "investment" are two of the Bank's favorite development themes.

Yet the evidence is piling up that neither government nor multilateral spending on education and infrastructure are key to development. To move out of poverty, countries instead need fast growth; and to get that they need to unleash the animal spirits of entrepreneurs.

Empirical support for this view is presented again this year in The Heritage Foundation/ The Wall Street Journal Index of Economic Freedom, released today. In its 14th edition, the annual survey grades countries on a combination of factors including property rights protection, tax rates, government intervention in the economy, monetary, fiscal and trade policy, and business freedom.

The nearby table shows the 2008 rankings but doesn't tell the whole story. The Index also reports that the freest 20% of the world's economies have twice the per capita income of those in the second quintile and five times that of the least-free 20%. In other words, freedom and prosperity are highly correlated.

The 2008 Index finds that while global economic liberty did not expand this year, it also did not contract. The average freedom score for the 157 countries ranked is nearly the same as last year, which was the second highest since the Index's inception.

This is somewhat of an achievement considering the rising protectionist and anti-immigration sentiment in the U.S., the uncertainty created by spiking global energy prices, Al Gore's highly effective fear mongering about global warming, and the continuing threat of the Islamic jihad.

Former British colonies in Asia took three of the top five places this year. But half of the top 20 freest economies in the world are in Europe. Of the five regions surveyed, Europe is the most free, continuing to advance this year with tax cuts and other business-friendly reforms. The only other region to score above the world average this year is the Americas, which is helped by strong performers like the U.S., Canada, Chile and El Salvador. At the other end of the scale Argentina, Bolivia, Haiti, Venezuela and Cuba dragged down the regional average.

Although overall global economic liberty did not expand, there were a few stars. Egypt was the most improved economy in the world, implementing major changes to its tax policies and business regulation environment and jumping to number 85 from 127th place last year. Mauritius was the second-best performer, moving into the top 20 from No. 34 last year. Trade liberalization and improved fiscal policies, including a flat tax, made Mongolia the third-best performer, and put it in the category of "moderately free" economies.

Three essays in the 2008 Index help illustrate why economic liberty matters to human progress. In "Economic Fluidity: A Crucial Dimension of Economic Freedom," Carl Schramm, president of the Kaufmann Foundation, explains that growth-driving innovation results not only from sound macroeconomic policy, but also from dynamism at the micro level.

Most important is the interaction between "institutional, organizational and individual elements of an economy," which gives rise to "the entrepreneurial energy and the speed of economic evolution." Such "fluidity," he writes, "facilitates the exchange and networking of knowledge across boundaries. This fosters both innovation and its propagation through entrepreneurship."

Mr. Schramm's essay illuminates why successful economies cannot be centrally planned. Fluidity, he writes, resembles "the idea of the 'the edge of chaos,' the estuary region where rigid order and random chaos meet and generate high levels of adaptation, complexity and creativity." It is "ideas on the margins, challenging the status quo, that lift the trajectory of an economy's performance." Try that in Cuba.

In "Narrowing the Economic Gap in the 21st Century," Stephen Parente, associate professor of economics at the University of Illinois at Urbana-Champaign, debunks several World Bank myths by showing that it is not the resources -- land, workforce and capital -- of an economy that play the most important role in explaining higher income countries. Instead it is "the efficiency at which a society uses its resources to produce goods and services."

Mr. Parente cites the microeconomic research of McKinsey Global Institute, which estimates that modern industry in India could take a huge bite out of its productivity gap with U.S. competitors by simply upgrading production techniques. India doesn't need another multilateral education project. It needs to tap into knowledge already available in successful economies -- the information and technology is out there. The trouble is that it is unavailable in many countries like India, because government barriers and constraints to limit competition make access difficult or impossible.

French journalist Guy Sorman's "Globalization is Making the World a Better Place" is a treatise on "one of the most powerful and positive forces ever to have arisen in the history of mankind." It fosters economic development, moves countries from tyranny to democracy, sends information and knowledge to the most remote corners of the globe, reinforces the rule of law, and enriches culture. International commerce in post-World War II Europe, he reminds us, wasn't invented by diplomats, but by entrepreneurs who wanted to end centuries of strife on their continent and build a peaceful union based on commerce.

Today's entrepreneurs, across the globe, have similar aspirations and abilities. If only the politicians would let them be free.

Ms. O'Grady is a member of the Journal's editorial board. She is co-editor, with Edwin J. Feulner and Kim R. Holmes, of the 2008 Index of Economic Freedom (410 pages, $24.95), available at 1-800-975-8625.

Saturday, January 19, 2008

Europe in the vice


The structure of the European Union is such that power will ebb inexorably away from national governments and flow to Brussels. European Union laws supersede national laws and can be enacted to some degree free of control by national legislatures. This bodes ill for Europe.

Any hope that there are strong constituencies within the European Union willing to safeguard democratic control of government cannot but be dashed when there is such evident contempt for voters in European political circles as evidenced by the manner in which they are attempting to implement the defunct E.U. Constitution.

First, the structure of the E.U. that facilitates centralization:

[L]aws in the EU are made by the Council of Ministers, i.e. the committee of 27 ministers for whichever subject is being voted on, EU integration means that governments receive wide-ranging law-making powers.

This is, of course, incompatible with the principle of the separation of powers. According to that principle, the executive power (the government) should be separate from, and accountable to, the legislature (the national parliament) and of course the judiciary. Dictatorship is precisely the form of government in which the executive is not so constrained, and this is also the case in the EU.

Because the EU represents a dramatic and constant transfer of legislative power from national legislatures to national executives (sitting in the Council of Ministers), it can also be dubbed “a permanent coup d’état”. . . . The fact that the Council of Ministers, the EU’s legislature, meets and votes in secret only makes the fundamentally anti-democratic character of the European construction even clearer.[1]

The structure of the European Union thus favors a dangerous transfer of power to a Council of Ministers meeting and voting in secret.

The conduct of the E.U.'s proponents, as opposed to its structure, shows similar contempt for democratic governance. Witness the underhanded way in which the previously rejected-by-voters E.U. constitution is being foisted back on the people of Britain and Europe by merely breaking apart the same constitution and attaching those parts to existing treaties. This is being done by a process of amendment, which amendments deliberately use impenetrable hypertechnical language and require the interested observer to plough back through the extant treaties to understand how a disembodied amending provision relates back.

Then there's always the aboveboard contempt for European voters. From Valery Giscard d'Estaing, former president of France:

The rejection of the constitution [by the voters in referendums] was a mistake which will have to be corrected [by more sagacious people].[2]


"Public opinion will be led to adopt, without knowing it, the proposals that we dare not present to them directly [...] All the earlier proposals will be in the new text, but will be hidden and disguised in some way.[3]

This drift toward a powerful and unconstrained executive in the European Union is deathly serious. It is the opposite approach taken by our founding document, which should be as useful a guide to Europeans as it is -- or might be -- to us.

Alas, European political leaders now flirt with centralization of power in a manner demonstrating that the preeminent political lesson of the twentieth century was not learned. They thus risk laying the foundation for an oppressive superstate. How far this process will go before Europe slides back into black fascism or red fascism is no small question.

Tragically, at the same time, these political leaders remain blind to – or cowed by -- the totalitarian menace growing in their midst, but which has its roots not in the twentieth but in the seventh century.

Europe is now effectively caught between the arms of a vice.

[1] "Why Europe’s National Politicians Sign Away National Sovereignty." By John Laughland, The Brussels Journal, 12/19/07 (emphasis added).
[2] "The Betrayal of Freedom in Europe: Back in the EUSSR." The Brussels Journal, 12/19/07.
[3] Id. (Emphasis added.)

posted by Col. B. Bunny at 12/19/2007

Why Europe’s National Politicians Sign Away National Sovereignty

Brussels Journal

By John Laughland

Created 2007-12-19 15:15


I have often compared the European Union to a cartel – a cartel of governments, engaged in a permanent conspiracy against their own electorates and parliaments. This analysis seems to have been dramatically confirmed by the Lisbon Treaty, signed last week, which replaces the defunct “constitution” rejected in referenda in France and the Netherlands in 2005.

Although a lot of anti-EU rhetoric rightly concentrates on the overweening power of the unelected European Commission – which indeed generates far too many laws and has an institutional self-interest in augmenting its own power – what many Eurosceptics overlook is that European integration also, and crucially, favours the power of national governments over that of their respective national parliaments. Because laws in the EU are made by the Council of Ministers, i.e. the committee of 27 ministers for whichever subject is being voted on, EU integration means that governments receive wide-ranging law-making powers.

This is, of course, incompatible with the principle of the separation of powers. According to that principle, the executive power (the government) should be separate from, and accountable to, the legislature (the national parliament) and of course the judiciary. Dictatorship is precisely the form of government in which the executive is not so constrained, and this is also the case in the EU.

Because the EU represents a dramatic and constant transfer of legislative power from national legislatures to national executives (sitting in the Council of Ministers), it can also be dubbed “a permanent coup d’état” (to use the phrase François Mitterrand used in 1965 to attack the powers of the Fifth Republic, long before he was happy to wield them himself). The fact that the Council of Ministers, the EU’s legislature, meets and votes in secret only makes the fundamentally anti-democratic character of the European construction even clearer.

It is for this simple reason that all establishment politicians, whether of Left or Right, are in favour of the EU. It increases their power and their room for manoeuvre. How much easier it is to pass laws in a quiet and secret meeting with your twenty-seven colleagues, than it is to do so in front of a fractious parliament where there is usually an in-built opposition which will attack whatever you do! How much more comfortable to engage in a bit of mild horse-trading with like-minded politicians from other countries, than to have to argue your case in the glare of public criticism! How much better to be able to vote an unpopular law and then blame “Europe” for it instead!

For many decades, this conspiracy worked wonderfully, mainly because Europe adopted and stuck to the so-called “Monnet method”. Named after the European Community’s brilliant if vain founder, Jean Monnet, the Monnet method consists in sapping power away from national parliaments on the quiet. This is achieved by pretending that the powers thus alienated are non-political – technical things like coal and steel, the common market, the single currency. This impression that the powers transferred are merely technical is reinforced by the fact that the transfers are usually effected by means of impenetrable treaties written in a language no one can understand.

There have been only two occasions when this principle has been abandoned, and on both occasions it had led to failure. The first was after the signature of the Maastricht treaty in December 1991. That treaty was conceived as a geopolitical quid pro quo for German unification: France agreed to the reunification of Germany on the basis that it would subsume its deutsche mark hegemony into that of the euro. In other words, it was a big political project which was presented to the electorate as such and as a great leap forward for European unification in general. It was rejected by Danish voters in June 1992. France responded by declaring that she too would hold a referendum, which in turn was very nearly rejected in September of that year. The Danes were forced to vote again in 1993, and so Europe’s pet project, the euro, passed by only a whisker.

The second time that Europe announced a big political project was when it drew up the constitution. However little interest people took in the details of treaty law, the word “constitution” was politically resonant. It focussed attention on the federal vocation of the EU, hitherto hidden from view by the Monnet method. People understood that it meant the permanent alienation of power from their nation-states, but it also allowed people to project their other worries clearly onto the EU, especially about excessive deregulation, competition from cheap labour countries in Eastern Europe, and of course the prospect of a new wave of immigration from Turkey if ever that country is admitted as an EU member.

Voters in France and the Netherlands, two founder members of the EU, therefore rejected the proposed constitution.

As a result of that rejection, Europe’s leaders have now decided to put behind them their foolish flirtation with democracy and return instead to the tried and tested method of doing things behind closed doors.

Rather than announcing a big political project in a language which most people can understand, the new Lisbon Treaty goes back to the old method of formulating only amendments to previous treaties. You simply cannot understand the text unless you go back through the previous treaties to see what articles are amended, which few people have the time or the inclination to do. Whereas the constitution at least had the merit of clarity, the new treaty displays all the old EU vices of opacity and legalese. This is quite deliberate. Europe’s leaders know that such a difficult text will never attract the same hostility as the old constitution because it is simply too difficult to understand.

How do we know that this is deliberate? We know because the author of the defunct constitution, the former French president, Valéry Giscard d’Estaing, has told us so. In an article in Le Monde in October, Giscard wrote that the new treaty had been composed “by jurists” who had taken the content of the old constitution and simply re-formulated it in terms of amendments to existing treaties.

“They started with the text of the constitution,” he wrote, “took its elements apart one by one, and made them correspond by means of amendments to the two existing treaties, Rome (1957) and Maastricht (1992) […] What is the purpose of this subtle manoeuvre? First and above all to escape from the constraint of having to hold a referendum by dispersing the articles and by renouncing the constitutional vocabulary.”

As I say, the EU is a cartel of governments and a conspiracy by them against their electorates. It is an affront to democracy and should be dissolved.

Belien: Back in the 'EUSSR'

The following excerpt was taken from an article prepared by former George Mason University educator Eleanor Duckwall. It appears on “Eleanor Duckwall’s Spotlight” blog, which analyzes current events and exposes anti-Americanism of all forms.



December 19, 2007

From an agreement on the coal and steel industries in 1951 to a totalitarian state, all within my lifetime:

Last Thursday, the heads of government of the 27 member states of the European Union convened in the Portuguese capital Lisbon to sign the EU Reform Treaty. That "Treaty of Lisbon" is almost identical to the European Constitutional Treaty, the so-called EU Constitution, which was rejected two years ago in referendums in major EU member states.

The EU rules stipulate that treaties only become effective when they have been ratified in all 27 member states. The "no" votes in the 2005 referendums killed the constitution, which would have transformed the EU from a supranational organization of 27 sovereign member states into a genuine single European federal state with 27 provinces. It was clear from the outset, however, that the peoples of the various European states were not willing to renounce their national sovereignty for a "United States of Europe."

Nevertheless, the European leaders are determined, no matter what their electorates say, to transform the EU into a USE. As Jean-Claude Juncker, the prime minister of Luxembourg, said prior to the referendums: "If the vote is yes, we will say: We go ahead. If it is no, we will say: We continue." Or as the former president of France, Valery Giscard d'Estaing, the chairman of the so-called convention, which drew up the constitution, said: "The rejection of the constitution [by the voters in referendums] was a mistake which will have to be corrected."

In order to correct the voters' mistake the reform treaty was drafted. This treaty is a copy of the constitution, with the articles in a somewhat different order, with many additions to deliberately complicate the text and without references to a national flag or anthem. As Mr. Giscard explained in June to the Paris leftist paper Le Monde: "Public opinion will be led to adopt, without knowing it, the proposals that we dare not present to them directly... All the earlier proposals will be in the new text, but will be hidden and disguised in some way."

Or as Guiliano Amato, the foreign minister of Italy and the former vice chairman of the convention, said about the document that the European leaders signed last week: "They decided that the document should be unreadable. If it is unreadable, it is not constitutional, that was the sort of perception."

The EU leaders agreed that none of the member states (apart from Ireland, which is obliged to do so under its own constitution) will hold a referendum about the new treaty. Instead, the national parliaments will ratify the treaty. "There is a cleavage between people and governments," admitted French President Nicolas Sarkozy. "A referendum now would bring Europe into danger. There will be no treaty if we had a referendum in France."

Once the Lisbon Treaty is ratified in all member states, the legal nature of the EU will change into that of a state. The national constitutions and the national parliaments will be subordinate to the EU, which will be enabled to unilaterally increase its own powers.

Europe's politicians are very eager to sell out their national sovereignty to the EU because the Brussels-based EU governing bodies are either unelected (the commission) or unaccountable (the council). Moreover, the European Parliament is not a real parliament. It cannot reject the so-called EU directives, which the national parliaments are obliged to incorporate into their national legislation. Even today, up to 70 percent of the legislation in the various 27 EU member states emanates from Brussels.

Former Soviet dissident Vladimir Bukovsky has coined the term "EUSSR" to refer to the EU. He claims Europe is on its way to developing into a totalitarian state. In the early 1990s Mr. Bukovsky was given permission to research the secret documents of the Soviet leadership. To his amazement he found a transcript there of a conversation held during a visit in January 1989 of Mr. Giscard to then-Soviet leader Mikhail Gorbachev. In this conversation the former declared to the latter that "within 15 years Europe is going to be a federal state." The USE project was delayed a bit by the 2005 referendums, but European politicians have managed to get it back on track in Lisbon. "Today's situation is really grim. Major political parties have been completely taken in by the new EU project. None of them really opposes it. They have become very corrupt. Who is going to defend our freedoms?" Mr. Bukovsky asks...

Europe Lobs Another One Over to the 110th Congressional Majority: Will Big Brother Restrict Travel To "Save the Planet?"


By David Vance, 25 November 2007

Not so fast...have you exceeded your "personal carbon allowance?"

As Americans take to the roads and the airports returning home from their holiday, over in Great Britain, a new proposal on global warming could limit that freedom. Will the British become "the experimental rats in the carbon-mania laboratory?" asks David Vance. And if the experiment succeeds in the UK, could the US be next?

Global warming provides a perfect alibi for those who seek to curtail our essential liberties. Restricting the ability of citizens to travel is clearly an unpopular strategy for any politician to advance but if if comes from the left and done in the name of "Saving the Planet" then it is likely to win sympathetic media treatment and so become a real political possibility.

It is against this background that the British Government is introducing a "Climate Change Bill" which would make the United Kingdom the only country in the world with legally binding targets for reducing greenhouse gas emissions. The implications are that the five-yearly goals outlined in the Bill would cost the UK up to $24 billion a year for the next 42 years and ensure that future governments are held legally responsible for what the current administration has embarked upon.

The Bill does not say how carbon dioxide emissions will be cut but simply commits the Government to a 60 per cent reduction by 2050. This colossal economic cost of trying to hit this target is glibly dismissed by the likes of UK Environment Secretary Hilary (a male Hilary, not female) Benn as an absolute necessity if Britain is to show the sort of "environmental leadership."

In fact he celebrates this prospect as it sets Britain "firmly on the path to the low-carbon economy". He believes that "We need to provide the framework that will give a clear idea of how we're going to tackle climate change. We also need to show that we're taking decisive action within our borders and not asking other countries, in particular poorer countries, to do what we're not willing to do ourselves."

In other words, the British government is quite prepared to wreck its own economy in the quest to appear environmentally progressive, even though economists warn that a sustained switch to a low-carbon economy may well trigger an economic crisis and substantial job losses.

This means nothing to those wrapped in the garment of the green gospel. When dealing with environmental fundamentalists, fiscal reason has little relevance.

The UK Government is not just interested in using global warming to raise new green taxes and to further hike fuel costs, but it is also contemplating allocating "personal carbon allowances." The way these work is that you will be granted a fixed amount of carbon to use each year. Each time you travel in a plane, buy petrol, go shopping or eat out would be recorded on a plastic card. The more frugal could sell spare carbon allowances to those who want to "indulge" themselves. But if you were to run out of your carbon allowance, you could be barred from flying or driving.

The government will thus be able to prevent its citizens from traveling both inside and outside the United Kingdom under the guise of managing carbon allowances.

For the first time in history we face the real prospect of having the fundamental right to travel prohibited by government. It is also said that reports are being currently prepared for the British government as to how and when carbon rationing might be implemented.

In this way the pursuance of the global warming agenda by scheming politicians can actually represent the greatest imaginable threat to the liberty of the people of the United Kingdom.

Overseeing all of this is Gordon Brown, the man who has succeeded Tony Blair as UK Prime Minister without the awkwardness of an election.

To get a sense of where Brown's loyalties lie, a few months ago when in the US visiting President Bush at Camp David, he made it a priority to see Nancy Pelosi and Harry Reid on Capitol before directly going to the United Nations and inviting Bill Clinton to drop by. Brown is clearly hoping for a Clinton to be returned to the White House.

This begs the question as to what a future President Clinton might think about the fascinating experiment being conducted on the people of the United Kingdom by her good friend Gordon Brown.

We British are the experimental rats in the carbon-mania laboratory. If Prime Minister Brown can get away with stopping us traveling by car and plane - and doing it in the name of cutting carbon emissions - isn't it possible that the people if the US might also face the future prospect of also being issued with "personal" carbon allowances by a munificent President Clinton? Is it imaginable that someday US citizens could be prohibited from traveling how and when they choose - and all in the name of saving the Earth?

Friday, January 18, 2008

European Governments Educate Young Against Free Markets & American Capitalism in Favor of European Welfare State Dream

Europe's school books demonise enterprise

By Stefan Theil


Published: January 8 2008 02:00


-There has been much debate over the ways in which historical ideology is passed on to the next generation - over Japanese textbooks that downplay the Nanjing massacre, Palestinian textbooks that feature maps without Israel and new Russian guidelines that require teachers to acclaim Stalinism. Yet there has been almost no analysis of how countries teach economics.

In France and Germany, schools have helped ingrain a serious aversion to the market economy. In a 2005 poll, just 36 per cent of French citizens said they supported the free enterprise system. In Germany, support for socialist ideals is running at all-time highs: 47 per cent in 2007 versus 36 per cent in 1991. In both countries, attempts at economic reform have been routinely blocked by a consensus against policies considered "pro-market". Might some of this be traced to the ideas instilled at school? In a project for the German Marshall Fund, I analysed French, German and US high-school curricula and textbooks for their coverage of the economy, the welfare state, entrepreneurship and globalisation.

"Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer," asserts Histoire du XXe siècle , a text memorised by French high-school students as they prepare for entrance exams to prestigious universities. Start-ups, the book tells students, are "audacious enterprises" with "ill-defined prospects". Then it links entrepreneurs with the technology bubble, the Nasdaq crash and massive redundancies across the economy. Think "creative destruction" without the "creative".

In another widely used text, a section on innovation does not mention any entrepreneur or company. Instead, students read a treatise on whether technological progress destroys jobs. Another briefly mentions an entrepreneur - a Frenchman who invented a new tool to open oysters - only to follow with an abstract discussion of whether the modern workplace is organised along post-Fordist or neo-Taylorist lines. In several texts, students are taught that globalisation leads to violence and armed resistance, requiring a new system of world governance. "Capitalism" is described as "brutal", "savage" and "American". French students do not learn economics so much as a highly biased discourse about economics.

German textbooks emphasise corporatist and collectivist traditions and the minutiae of employer-employee relations - a zero-sum world where one loses what the other gains. People who run companies are caricatured as idle, cigar-smoking plutocrats. They are linked to child labour, internet fraud, mobile phone addiction, alcoholism and redundancies. Germany's rich entrepreneurial history is all but ignored.

A typical social studies text titled FAKT has a chapter on "What to do against unemployment". Instead of describing how companies create jobs, it explains how the jobless can join self-help groups and anti-reform protests "in the tradition of the East German Monday demonstrations" (which in 1989 helped topple the communist dictatorship). The text concludes with a long excerpt from the platform of the German Union Federation, including the 30-hour working week, retirement at 60 and redistribution of work by splitting full-time into part-time jobs. No market alternative is taught. FAKT blames unemployment on computers and robots - a recurring theme in the German books.

Describing globalisation, another text has sections headed "Revival of Manchester Capitalism", "Brazilianisation of Europe" and "Return of the Dark Ages". India and China are successful, the book explains, because they practise state ownership and protectionism, while the freest markets are in impoverished sub-Saharan Africa. Like many French and German books, it suggests students learn more by contacting the anti-globalisation group Attac.

It is no surprise that the continent's schools teach through a left-of-centre lens. The surprise is the intensity of the anti-market bias. Students learn that companies destroy jobs, while government policy creates them. Globalisation is destructive, if not catastrophic. Business is a zero-sum game. If this is the belief system within which most students develop intellectually, is it any wonder French and German reformers are so easily shouted down?

The writer is Newsweek's European economics editor. Reproduced with permission from Foreign Policy #164 (January/February 2008) www.foreignpolicy.com. Copyright 2008, Carnegie Endowment for International Peace

Wednesday, January 16, 2008

Playing Politics With Trade Policy is a Dangerous Game for the 110th Congressional Majority

Trade's fleeting high tide

Washington Times January 16, 2008


By J.T. Young - As the 110th Congress comes back to Washington, it may not have free trade agreements on its agenda. This may seem surprising since Congress overwhelmingly approved America's free trade agreement with Peru less than two months ago. Yet it is likely that trade legislation will recede even more rapidly this year than it rose last year.

The makeup of Congress' Peru vote clearly show the issue's undercurrents and political obstacles below the surface. The largest pro-trade vote in years may well be the only one in this Congress. Despite 285 votes in favor — 88 percent of Republicans and the highest Democratic total since the 2004 vote on the Morocco FTA (free trade agreement) — the House remains trade's congressional chokepoint. In the last Congress, the House passed CAFTA (Central American Free Trade Agreement) in 2005 by just 217-215.

Legislation granting Vietnam permanent normal trade relations failed in November 2006 (under a special procedure, it needed two-thirds support and received just 228 of 435 votes). Comparatively, the Peru FTA was a landslide, but submerged beneath the swell of support remained the shoals threatening trade legislation.

Despite solid leadership support, only a minority of the majority Democrats supported it — 109 in favor and 116 against (8 not voting).Even more important, 30 of 43 freshman Democrats opposed it. This point is particularly important because the Democrats' majority rests on these first-term members and freshman are historically the most vulnerable incumbents.

White House politics is just as threatening as tight House politics. The current partisan presidential split on trade resembles the last Congress'. The top tier Republican candidates for most of last year — Rudolph Giuliani, John McCain, Fred Thompson and Mitt Romney — all support a conventional pro-trade agenda. Recent national polls show them with roughly 65 percent of Republican support.

The top tier Democrats — Hillary Clinton, Barack Obama and John Edwards — oppose a conventional trade agenda. Together they poll more than 80 percent of Democratic supporters.

Why would Democrat leaders want to invite another FTA to the House floor under these circumstances? Internally, these votes split their caucus and are particularly opposed by their most vulnerable members. Externally these are agreements that Republican candidates support, while their own candidates and likely nominee oppose them. This would hardly be an auspicious start to a relationship with their hoped-for Democratic president.

The results of such votes hold no better prospects. If successful, they give President Bush political victories and a legacy, neither of which the Democrats desire. If the votes fail, Congress looks dysfunctional and appears anti-trade and anti-international, at a time when Democrats want to appear to have better policies for international engagement. These arguments could lead some to theorize that the administration could gain an advantage by forcing these votes on the Democratic leadership.

While TPA procedure certainly presents the opportunity to force a vote with its 90-day legislative clock and simple up or down votes in both bodies, the White House has ample reason for hesitancy. FTAs constitutionally must originate in the House (if they adjust tariffs). This prevents the Senate from voting first and building political momentum with a strong level of support. More importantly, if an FTA fails in the House, it is lost forever. With Trade Promotion Authority expired, there is no chance to renegotiate an agreement, even if time remained for this administration.

In contrast, the pending FTAs forever retain their "fast-track" status even if — as in the case of NAFTA (North American Free Trade Agreement) negotiated under President George H.W. Bush (the elder) and passed under Bill Clinton — these were held over for another administration to pursue. Forcing a vote would be a very high-risk game of chicken for the White House with the very real prospect of an irreplaceable loss. Both parties have their reasons for not bringing up any more trade agreements in this Congress.

Why would the Democratic leadership seek them when they are divisive within their caucus and distance them from their top presidential candidates?

Why would the administration that wants both FTAs and a legacy be willing to risk both on an ever-increasing long-shot? And these hurdles only heighten as 2008 progresses. Perhaps the best possibility would be for a lame-duck attempt, when both the Congress and the president are past the November election.

Tough votes are then sometimes seen as "free" votes where members can vote without such a focus on the political consequences. Yet even this hardly assures passage. As the defeat of the comparatively innocuous legislation granting Vietnam permanent normal trade relations proved last year, there are few easy trade votes these days — even in the last days of a Congress.

Ironically, with this year's landmark May agreement on environment and labor standards, the administration and Democratic leadership came further than at any time in recent memory of reaching a bipartisan approach to move trade legislation. That agreement bore fruit in the large show of support for the Peru agreement.

Despite these best efforts and best results, the trade tide appears to have crested and begun receding simultaneously. It is unclear when it will come in again, but very likely it won't be in this Congress. J.T. Young served in the Treasury Department and the Office of Management and Budget 2001-2004 and as a congressional staff member 1987-2000.

Sarkozy Bans US Biotech Corn Based on Europe's Trade Protectionism Doctrine of Hazard (Not Risk-based) Precautionary Principle

Europe Trapped in the Vice of Downward Economic Growth and Limited Technological Innovation: Lashes Out at More Competitive Nations' Products and Technologies, Thus Exacerbating Trade Tensions


U.S. Threatens Sanctions on EU Modified-Crop Bans In France, Elsewhere Increase Tensions



January 15, 2008 BRUSSELS --

The U.S. said it will retaliate with trade sanctions unless European Union countries reverse illegal bans on planting genetically modified crops, threatening escalation in the long-running trans-Atlantic dispute over engineered foods.

Yesterday's announcement came just two days after French President Nicolas Sarkozy said he would join a handful of other EU countries in banning permanently the only genetically modified crop the EU has licensed for cultivation -- Monsanto Co.'s MON810, a corn used for animal feed.

The U.S. threat of retaliation is the result of an early U.S. complaint against EU member Austria, which missed a World Trade Organization deadline to lift its ban on the corn Friday. Mr. Sarkozy's decision, however, has bigger implications.

France is the second-biggest user of MON810 in Europe and the EU's agriculture powerhouse. Its decision to ban the corn would be a significant defeat for U.S. biotech companies, already struggling to get a piece of the EU's $7 billion seed market. [TRADE PROTECTIONISM]**

"We are taking steps necessary under World Trade Organization rules to preserve our right in the WTO to suspend trade concessions," said Gretchen Hamel, a spokeswoman for the U.S. trade office. "It is hard to overstate our disappointment with this new biotech ban announced by the government of France."

The U.S. won a suit two years ago at the WTO over Austria's refusal to allow cultivation of MON810. Under WTO rules, a country can prohibit a product only for safety reasons, but the EU's own food-safety watchdog has said MON810 isn't dangerous to human health. Austrian officials say they have no plans to lift their ban on the corn. [SCIENTIFIC EVIDENCE RUNS COUNTER TO THESE CLAIMS]**

Under WTO rules, the U.S. retaliation could take the form of punitive trade tariffs on popular goods from Austria, such as the soft drink Red Bull, which is produced by Red Bull GmbH. Now that France has joined the ban, the U.S. could extend its trade sanctions to French wines or other sensitive goods. The U.S. also could ask the EU to lower some of its tariffs on U.S. goods in specific markets, as compensation.

"There are no grounds whatsoever" for France to ban MON810, said Jonathan Ramsay, a lobbyist for Monsanto in Brussels. Monsanto will explore "all legal remedies," he added.
Environmentalists, however, welcomed the French move. "It's the first time one of the big EU countries is making the right choice," says Marco Contiero, policy director for Greenpeace in Brussels. [GREENPEACE & OTHER ENVIRONMENTAL EXTREMIST GROUPS HAVE PROMOTED THIS ACRIMONY AS PART OF THEIR EFFORTS TO SECURE EU CONTROL OVER 'GLOBAL REGULATORY GOVERNANCE']***

EU farmers have been growing more and more MON810 corn since it was approved for use in 1998. Last year, the bloc grew 110,000 hectares of the corn, up from 62,000 in 2006.

Under EU law, countries can opt out of an EU regulation if they can show it goes against a core national interest. As evidence, French officials cite a report released last week by a commission Mr. Sarkozy formed to review the safety of Monsanto's corn. The report says pollen from MON810 is too easily transmittable to neighboring crops and can infect nearby butterflies and worms.

Many French farmers say they need the corn to cut their pesticide bills. MON810 generates a protein that kills the European corn borer, which destroys corn crops. The EU's executive body, the European Commission, said it will challenge the French ban.



January 15, 2008

Europe May Ban Imports of Some Biofuel Crops


PARIS — In a sign of growing concern about the impact of supposedly “green” policies, European Union officials will propose a ban on imports of certain biofuels, according to a draft law to be unveiled next week.

If approved by European governments, the law would prohibit the importation of fuels derived from crops grown on certain kinds of land — including forests, wetlands or grasslands — into the 27-nation bloc.

The draft law would also require that biofuels used in Europe deliver “a minimum level of greenhouse gas savings.” That level is still under discussion.

Currently, most of the crops for biofuels used in Europe consist of rapeseed (commonly known as canola in the United States) grown in parts of Europe, according to Matt Drinkwater, a biofuels analyst at New Energy Finance in London. Europe also imports some palm oil from Southeast Asia, soy from Latin America, ethanol from Brazil, and produces some ethanol domestically using wheat and sugar beets, he said.

The ban would primarily affect palm oil and possibly the Latin American imports.

Amid rising prices for gasoline and diesel and worries about climate change, countries around the world have started using more fuels produced from crops or agricultural wastes.

The amount of ethanol used in the United States represents about 5 percent of total gasoline consumption, according to Matt Hartwig, a spokesman for the Renewable Fuels Association in Washington. Ethanol produced from sugar cane is widely used in Brazil. In Europe and to a lesser extent in the United States, vegetable oils have been converted into a type of diesel by a simple chemical procedure.

But a flurry of studies has discredited some of the claims made by biofuel producers that the fuels help reduce greenhouse gases by reducing fossil fuel use and growing carbon-dioxide-consuming plants. Growing the crops and turning them into fuel can result in considerable environmental harm.

Not only is native vegetation, including tropical rain forests, being chopped down in places to plant the crops, but fossil fuels, like diesel for tractors, are often used to farm the crops. They also demand nitrogen fertilizer made largely with natural gas and consume huge amounts of water.

Already, the draining and deforesting of peatlands in Southeast Asia — mainly to make way for palm plantations — accounts for up to 8 percent of global annual carbon dioxide emissions, said Adrian Bebb of Friends of the Earth, an environmental group.

In Indonesia, he said, more than 18 million hectares of forest, or 44 million acres, have already been cleared for palm oil developments. Environmental groups say the developments are endangering wildlife like the orangutan and the Sumatran tiger, and putting pressure on indigenous peoples who depend on the forests.

Western scientists are increasingly pointing out the need to distinguish between types of biofuels. On Monday, for instance, the Royal Society, a national science academy in Britain, said requirements to use a certain percentage of biofuels were not sufficient. Instead, the society said, there should be specific goals for emissions reductions.

“Indiscriminately increasing the amount of biofuels we are using may not automatically lead to the best reductions in emissions,” said John Pickett, head of biological chemistry at Rothamsted Research, a research center in Britain, who helped write the report for the Royal Society. “The greenhouse gas savings of each depends on how crops are grown and converted and how the fuel is used.”

Last week, scientists at the Smithsonian Tropical Research Institute in Washington also warned that biofuel production can result in environmental destruction, pollution and damage to human health.

“Different biofuels vary enormously in how eco-friendly they are,” said William Laurance, a staff scientist at the institute. “We need to be smart and promote the right biofuels.”

Experts say certain types of fuels, particularly those made from agricultural wastes, still hold potential to improve the environment, but they add that governments will have to set and enforce standards for how the fuels are produced. With its new proposal, Europe appears to be moving ahead of the rest of the world in that task.

The draft law probably would have the greatest impact on palm oil growers in countries like Malaysia and Indonesia, according to Mr. Drinkwater. [DISGUISED TRADE PROTECTIONISM -- SEE ITSSD STUDY AT BRITISH LIBRARY DIRECT at: http://direct.bl.uk/bld/PlaceOrder.do?UIN=215946290&ETOC=RN&from=searchengine .

“Some developments in Southeast Asia will almost certainly be blocked by these provisions,” he said, adding that the rules would make it much harder to plant on recently deforested land or to export fuels whose production process cause significant amounts of greenhouse gases to be released.

But farmers growing corn for ethanol could also be affected, because the European rules contain provisions on preserving grasslands, said Mr. Drinkwater.

The text, which could change before European commissioners meet on Jan. 23 to adopt a final version, also emphasizes that areas like rain forests and lands with high levels of biodiversity should not be converted to growing biofuels.

The European Union does not want to completely abandon biofuels because they could still contribute to reducing Europe’s dependence on fossil fuels.

In part, that is because biofuels — a blanket term covering fuels grown from crops to manufacture substitutes for diesel and gasoline — are seen as Europe’s main weapon in lowering emissions from transportation. And transportation has the fastest growing levels of greenhouse gases among all sectors of Europe’s economy.

On Monday, in answer to a reporter’s question, an organization representing major growers of crops for biofuels in Malaysia said the E.U. should be cautious before imposing new rules. It said that farmers in the region were adopting more sustainable practices, and warned that restrictions on imports could cause trade tensions.

“The Malaysian government is very concerned about the E.U. scheme for sustainability of biofuels,” said Zainuddin Hassan, the manager in Europe for the Malaysian Palm Oil Council in Brussels. The measures “should not be a trade barrier to the palm oil industry and it should comply with the W.T.O. rules as well,” he said, referring to the World Trade Organization.

Verifying that only environmentally sound biofuels are being imported into Europe would be left to individual countries. But the draft law calls for penalties for violating the rules, like exclusion from tax breaks, to be enforced across the region.

The draft law also says that biofuels should be tracked from origin to use “so that biofuels fulfilling the sustainability criteria can be identified and rewarded with a premium in the market.”

The measures are part of a plan for Europe to implement a binding target of making 10 percent of the transport fuels consumed by 2020 from renewable sources — most of which are expected to be biofuels.

Ferran Tarradellas Espuny, spokesman for Europe’s energy commissioner, Andris Piebalgs, said that European countries that used more than 10 percent of biofuels in their transport fuel mix could use their progress to help them to reach other European environmental targets. Those include a goal of a 20-percent share of renewable sources in overall energy consumption by 2020. [NUANCED REFERENCE TO KYOTO PROTOCOL & UN LAW OF THE SEA CONVENTION (UNCLOS)]*******

Europe already has a suggested target of making biofuels 5.75 percent of fuels used for transport by 2010. But that target is not going to met, according to the draft law. Biofuels were just 1 percent of transport fuel in 2005 and, if present trends continue, would account for 4.2 percent by 2010.

Brussels' and Gordon Brown's Contempt for the European People


Roger Helmer's electronic newsletter from Brussels

Please feel free to distribute this newsletter, or to quote from it. It is primarily written for Conservative Party members and activists in the East Midlands, but may also be of interest to others concerned about developments in the EU. If you receive the newsletter second-hand and want to go onto the e-mail list (or if you want to be deleted), please e-mail me on roger.helmer@europarl.europa.eu


The Hooligans' Demonstration

An after-word on the "Referendum" demonstration in the Strasbourg Hemicycle on Dec 12th. The Daily Mail described it as a "Hooligans' Demonstration". Labour and Lib-Dem members said we should not have interrupted the proceedings of the house.

But we have a parliament which persistently votes in favour of EU integration and against the wishes of European citizens (who want a Referendum). That's because the MEPs consist (largely) of Euro-visionaries who will allow nothing to stand in their way. The institutions talk of "A Europe of values based on democracy", but when the people demand a democratic vote, their views are dismissed with contempt. We have EU institutions determined to drive the project forward in the teeth of public opposition. And we have member-state governments -- most notably our own -- elected on a promise of a Referendum, but now determined to deny one.

In these circumstances, I believe our demonstration was justified. We had the Presidents of the EU's three key institutions in the Hemicycle -- parliament, Council and Commission. And for five minutes we forced them to listen to the voice of the people. They hated it.

Big-mouthed, red-faced, grumpy old men

On Dec 19th I responded to a piece on Commissioner Wallstrom's blog in the following terms:
1. As one of the big-mouthed, red-faced, grumpy old men castigated by the Commissioner, may I say that I would never be so discourteous as to pass pejorative comments on Mrs Wallstrom’s appearance — she is a very handsome woman. However I am shocked by the towering contempt which she and her fellow Commissioners show for public opinion. They speak of “A Europe of values based on democracy”, but they then dismiss the overwhelming view of the French and Dutch voters on the Constitution in 2005. I am shocked by the deceit and cynicism with which they bring back essentially the same text, and pretend that it is different. I am shocked by the seven member-state governments that were elected on a promise of a referendum, but are now breaking their word.

I regretted the need to disrupt the proceedings of the House, but how else are we to represent the views of the people when the institutions refuse to listen? The fact is that for five minutes the Presidents of the Commission, the parliament and the council were forced to listen to the demands of the people. And they hated it.

Goebbels rides again

Another fine example of the EU's propagandists riding roughshod over reality. Orwell's Ministry of Truth strikes again.

The parliament's audio­visual services naturally produced video coverage of the signing ceremony, but they found that on their soundtrack, the strains of the European National Anthem were overlaid by our "Referendum" chanting. So they wiped the soundtrack and replaced it with a straight recording of the Anthem. And of course their cameras had avoided our banners as far as they could. Thus is the voice of the people air-brushed out of history.

For amateur, uncensored footage, filmed by a lady who was man-handled out of the room, see http://uk.youtube.com/watch?v=vCBIst10H-k

The Charter of Fundamental Rights

Although we were demonstrating for a Referendum, the occasion bringing together the top brass was a formal signing of the EU's Charter of Fundamental Rights. That's the one that Keith Vaz said had "no more legal force than the Beano". The one that comes in with the Lisbon Treaty/ Constitution. The one where Gordon Brown has some rickety red lines, which will fall at the first challenge in the ECJ.

Predictably, Bill Turncoat Dunn was moved to make one of his rare excursions into regional press, singing the praises of the EU's new Charter. But let's not forget that it was EU "Rights" that enabled convicts to demand pornography in jail, and which prevent Britain from sending home terrorist suspects.

We in Britain have a Common Law tradition stretching back centuries. Our rights are not given us by the state, or by Charters and Conventions. They are ours because we are born with them.

The effect of this Charter will be more judicial activism. It will mean that the law is decided by unaccountable judges, not by politicians (whom at least we can sack at the next election). It contains a host of "Rights" that in many cases are self-contradictory. It will be a field-day for lawyers, but a bad day for the freedoms of English men and women.

The Treaty is shorter than the Constitution. Isn't it?

President Sarkozy of France promised the people a "Mini-Treaty". So of course the Treaty is shorter than the Constitution. It's only 287 pages, against the Constitution's 349.

But check the word-count. The Treaty has 76,250 words, whereas the Constitution has only 67,850. So the Treaty is actually 8,400 words -- 12.4% -- longer than the Constitution! How did they get the page-count down? Easy. Closer line spacing. The closer you look at the Treaty, the more you discover cynicism, and deceit, and contempt for democracy and for the people.