It’s the Values, Stupid!

Posted on May 23, 2017 by Jakob Modéer

The World Values Survey, in its own words, “demonstrate that people’s beliefs play a key role in economic development, the emergence and flourishing of democratic institutions, the rise of gender quality, and the extent to which societies have effective government.”

In other words, our collective beliefs, our values and norms shape us as human beings, and as nations. The Inglehart-Welzel cultural map, showed above, presents cultural variations in the world using two specific dimensions: (1) Traditional versus secular-rational values (vertical axis in graph) and (2) Survival versus Self-expression values (horizontal axis).

While ‘traditional values’ are linked to religion, traditional family values and submission to authority, ‘secular-rational values’, are found in societies that “place less emphasis on religion, traditional family values and authority”. ‘Survival values’ are found in societies with a high concern for security (economic (poverty), physical (food, health, shelter)) and are low on trust and tolerance (low on social capital). On the opposite side of the axis, ‘self-expression values’ means high levels of tolerance, gender equality, environmental protection, high levels of social capital and demand for participation in political life. (http://www.worldvaluessurvey.org/wvs.jsp)

OK, so this graph shows that although, in the words of the UN’s Universal Declaration of Human Rights, “All human beings are born free and equal in dignity and rights”, we are different in our beliefs. And what if our beliefs, our norms and values, dictate what type of economic, social and political systems are viable and sustainable in our societies? In other words, is it possible that some values and norms are more conducive to democracy, a free market economy and a civil society, while other values and norms favor authoritarianism, oligarchical economies and societal conformity?

Let’s start with the economy, often measured by its level of competitiveness. I use the World Economic Forum’s annual Global Competitiveness Index to learn which countries have the strongest economies in the world. The GCI’s indicators include “Basic requirements”, such as institutions, infrastructure, macroeconomic environment and health and primary education, “Efficiency enhancers” – higher education and training, goods market efficiency, labor market efficiency, financial market development, technology readiness and market size, as well as “Innovation and sophistication factors”, i.e. business sophistication and innovation.

Comparing the top 15 economic performers in the world with the World Value Survey, we can conclude that almost half of the economic top performers are from ‘Protestant Europe’ (Switzerland, Netherlands, Germany, Sweden, Finland, Norway, Denmark), one third are from ‘English speaking’ group (United States, United Kingdom, New Zealand, Canada) and the remaining countries (Singapore (not in WVS survey), Japan, Hong Kong and Taiwan) are in the ‘Confucian’ group. All the non-Confucian countries score high on self-expression values, while the Protestant Europe group and the Confucian countries score high on rational values. So clearly the ‘protestant work ethic’ is an integral part of the Scandinavian character, but could it also mean that rational and self–expression values are pre-requisites for a country’s economy being competitive in our global economy? Probably.

Let’s now look at the bottom 15 countries in WEF’s Global Competitiveness Index. 13 of the 15 worst performing economies are in Sub-Saharan Africa, while one is in Latin America (Venezuela, no surprise) and one in Middle East/North Africa (Yemen). Among these 15 economies, Zambia, Zimbabwe, Yemen are included in the World Value Survey, in the ‘African-Islamic’ group, which is shaped of ‘traditional’ and ‘survival’ values, diagonally opposed to the values of the ‘Protestant Europe’ group. It appears that building a competitive economy in a global economy is more challenging within a context dominated by ‘traditional’ and ‘survival’ values.

And what about the public sector and level of functionality in state institutions, are they a reflection of existing values and norms in society? For that I turn to Transparency International’s “Corruption Perception Index 2016”, measuring to what extent “citizen face the tangible impact of corruption on a daily basis.” Transparency International Index measures to what extent citizens regard public institutions as trustworthy and to be functioning properly, and whether or not citizens are faced with bribery and extortion situations in their daily lives. In such a context, large scale corruption may flourish, often driven by a corporate-political elite, to the expense of overall societal development and human rights. To counter corruption societies need a high degree of transparency in public affairs, access to information and press freedom, upheld by an independent judicial system. The level of corruption in a society indicates how weak the judicial system is, and to some extent also how weak state institutions are, in the eyes of the citizens.

Again, as with the competitiveness index and values, comparing the top 15 least corrupt countries in the world with the World Value Survey, we can conclude that more than half of the top performers are from ‘Protestant Europe’. In fact, all eight countries in this group (Switzerland, Netherlands, Germany, Sweden, Finland, Norway, Denmark, Iceland) are among the least corrupt societies in the World. A little less than a third of the societies are from the ‘English speaking’ group (United Kingdom, New Zealand, Canada, Australia) and the remaining countries are Luxembourg and Belgium representing the “Catholic Europe” group, and Singapore. (Singapore is not in WVS survey). All the countries in the ‘Protestant Europe’ and ‘English speaking’ groups (80% of top 15 least corrupt countries) score high on self-expression values, while the Protestant Europe group also score high on rational values. Could this mean that rational and self–expression values are pre-requisites for a well-functioning state and judicial system? Most likely.

On the other side of the corruption spectra, we find the world’s 15 most corrupt countries as perceived by their own citizens, which are all located in either the “African-Islamic” or “Latin America” groups, and include countries, such as Iraq, Libya and Somalia where the state institutions are very weak, and there are even on-going civil conflicts.

However, is a strong economy and well-functioning state the same as a societal system capable of generating a sense of well-being among a majority of the population? Or in other words, are people living in societies with higher levels of rational and self–expression values, also more prosperous? For that we turn to the Legatum Prosperity Index. This index measures a variety of economic, social, health and political indicators in countries, with the aim of pinpointing ‘drivers of progress’ and nations that are capable of “turning their wealth into greater prosperity.” The Legatum Prosperity Index measures economic quality, business environment, governance, education, health, safety and security, personal freedom, social capital and natural environment, a collection of variables required to live a good and long life, in security, with freedom and rights, and in the pursuit of opportunities and happiness.

Again, and this probably does not come as a surprise to anybody, all 8 countries in the “Protestant Europe” group, are among the top 15 most prosperous countries in the World. Societies with pre-dominantly secular-rational and self–expression values are clearly also those with the highest prosperity. 30% of the countries with the highest prosperity belong to the “English speaking” group, still strong on self-expression values, but less so on secular-rational values, when compared to the countries in the “Protestant Europe” group. The remaining two slots in the top 15 ranking on prosperity are Luxembourg and Austria, representing the “Catholic Europe” group.

The 5 of the 15 countries with the worst prosperity are included in the World Value Survey’s “African-Islamic” group (Mali, Nigeria, Pakistan, Iraq and Yemen). Again, there appear to be a link between traditional and survival values, and a society’s inability to convert wealth into prosperity.

But, in the end of the day, if people are happy in their societies and with their institutions, shaped by their sets of beliefs, values and norms, what’s the issue? Well, let’s discover how happy people are across the globe, and who are the most and least happy respectively. Don’t expect any surprises here either!

For this news we turn the World Happiness Report which has been published for 15 years now.  Since 2012, the UN is increasingly considering happiness as the most “proper measure of social progress and the goal of public policy. The OECD defines subjective well-being as “Good mental states, including all of the various evaluations, positive and negative, that people make of their lives and the affective reactions of people to their experiences.

The “Protestant Europe” group in the World Value Survey lead the way once more, this time in happiness and sense of well-being. Except for Germany, all the other countries in that group (Sweden, Norway, Finland, Denmark, Iceland, Switzerland, Netherlands) are among the 15 most happy societies in the world. We remind ourselves that this group score high on secular-rationale and self-expression values. The “English speaking” group has 5 countries in the top 15 (Canada, New Zealand, Australia, US and Ireland). The remaining three happy societies are Austria, Israel and Costa Rica.

Moving to the 15 most unhappy countries in the world, we land firmly in the geographical areas of Sub-Saharan Africa, and conflict zones of Yemen, Afghanistan and Syria. While the majority of these countries are not recorded in the World Value Survey, Yemen and Rwanda are, and they are in the “African-Islamic” group with higher levels of traditional and survival values.

Does certain values and norms automatically make us happier or is it that certain values and norms create a foundation of human priorities and actions upon which social, economic and political systems can be engineered, which in turn are conducive to producing human happiness? Very likely.

In conclusion, it may be safe to say that values and norms matter. Building economic, social and political systems that generate maximum well-being for the population is not only a reflection of the populations’ collective beliefs, values and norms, but clearly values and norms are important, and to some extent dictate what type of economic, social and political systems can be built and sustained within a specific society. Of course, this is so because societies are mere reflections of the people that live there. Our individual actions and collective beliefs matter, we shape and form our own social, economic and political systems.

This also means that if and when values change in society, perhaps away from secular-rationale towards traditional and/or from self-expression towards survival, or the other way around, the social, economic and political systems will most likely change with them. And if the social, economic and political systems don’t change to accommodate the emerging new values and norms in society, there will most likely be conflicts and strife.

Multiculturalism, in all its theoretical glory, but unless new arrivals in the societies of “Protestant Europe” and the “English speaking” group are introduced to and adopt secular-rationale and self-expression values, values that are often completely alien to their native societies, the social, economic and political systems in “Protestant Europe” and the “English speaking” will be undermined, and as a consequence the systems will begin to falter, the famous social contract between state and citizens will break, and sub-systems will emerge in society to accommodate a population with predominantly traditional and survival values.

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Fear and Loathing in our Western World – The Inevitable Rise of Populism

Posted on February 25, 2017 by Jakob Modéer

 

2016 was a good year for populism in our Western World. The UK referendum on EU membership became Brexit and Trump’s election to the highest office in America left us reaching for the dictionary – populism, what? We all know that when America sneezes Europe catches a cold, so rest assure, populism will continue its winning streak throughout Europe in 2017.

In the wake of what should be “The Wake-up Call of the Decade”, mainstream media (corporate media) and equally mainstream political parties, on both sides of the Atlantic, have dropped the ball, lost their heads and closed ranks in a united front against populism. Populism is suddenly everywhere around us, and it is presented to us as the new ultimate evil of our time, (besides Putin and Russia, of course).

I google ‘populism’. It reads ‘support for the concerns of ordinary people… Populism proposes that the common people are exploited by a privileged elite… populists can be left, right and center (on the political landscape), and its goal is to unite the “little man” against the corrupt dominant elites.’ Fair enough, it sounds like something every democratically inclined politician would sign up for. Masses still mean votes, right? But oddly enough, instead of mainstream politicians trying to become more populist, the financial, media and political elites of our Western World have gone into defensive mode, and like a cornered cat it’s all nails out and scratching wild.

Thinking back, it appears that all kinds of civil movements once stood up for the rights of the ‘little man’ and ‘little woman’, be it in the name of democracy, communism, unions, environment, anti-war, gender or any other cause that pinned the masses against oppressing rulers. So, why is populism finding such good traction among the electorate in our time, in a time of democracy, relative peace and prosperity, at least in our Western World? It does not make sense.

Well, of course it does make sense. Actually, it makes perfect sense to the large majority of people in our Western World who have seen and are feeling their living standards fall, and they have been falling for the last 30 years now. Add to this the realization that the pain of falling is not equally distributed throughout society and anger will be brewing. The growing inequalities in our Western societies are well-documented, and a reality that lives on outside of the mainstream media, and is something no mainstream politician will ever recognize, let alone address. To kick the proverbial can has become mainstream policy. 2016 was the year when the neo-liberal, elitist bubble broke, and the real human costs of predatory capitalism, globalization and weak states began to trickle down to the masses.

In America, a democratic socialist senator from Vermont, Bernie Sanders, led the way, hammering away at the elite’s version of the world order, with the message that the top 0.1 % and the bottom 90% of U.S. households now own the same share of all the nation’s wealth. In any other context, a state with such oligarchical tendencies would be branded Banana Republic! Bernie, who as a presidential candidate gave Hillary Clinton a run for her money, cemented his stature as populist supreme in America, and of course, as the true populist in America, according to Obama, let’s be honest with ourselves, Bernie would have beaten Trump hands down. Michael Moore, the working class’ film-maker and the man of the rust belt (btw, part of Hillary’s famous fire-wall), was very explicit about it. (Now, close your eyes and imagine a press conference with Bernie as president)

The mainstream media’s reaction to the Bernie phenomenon and movement is equally well-recorded. Total lock-out! For example, ABC World News Tonight devoted 81 minutes to Trump on the campaign, while close to nothing, 20 seconds! to Bernie. Wikileaks made it clear beyond any doubt that Bernie, as the populist (popular) candidate, in challenging Hillary, the presumptive candidate, was equally obstructed by the Democratic National Committee, representing the democratic party elite. Again, the oligarchical elite in the US, including Wall Street, Washington DC insiders and corporate media joined forces against a populist attack from the left, throwing everything but the kitchen sink at Bernie, including efforts to brand him as a ‘communist’, the ultimate American political bogeyman.

But why this ferocity to bring Bernie down? Simple. Because Bernie, like the little boy in H.C. Andersen’s fairy tale “Emperor’s New Clothes”, called out the Emperor (American capitalist and political system) as naked (unable to deliver well-being to the majority of Americans) and consequently threatening the very core of values on which the corporate-political-media elite had built its fortune and power. And this time, in the year 2016, the American people were receptive to the fact that the American Dream was perhaps not achievable for everybody and that a dose of democratic socialism would not ruin America as we know it.

‘The average American has not had an increase in pay in 15 years, but things have cost more in the market places, he has been in recession for 15 years…”. This is not Bernie Sanders speaking, this is Asher Edelman, the corporate raider of the 1980’s and inspiration for Gordon Gekko in Oliver Stone’s movie Wall Street. For Edelman, Bernie was the better candidate for the economy, addressing the ‘shrinking consumer base and shrinking velocity of money’ through a combination of ‘fiscal stimulation and banking rules that would get the banks to generate lending again as opposed to speculation…”  Does Edelman represent a populist attack on the system from the right?

In fact, during the last 30 years, the American economy has been rigged against the average worker. Professor Robert Reich explains, in his book “Saving Capitalism: For the Many, not the Few”, how the elite transformed their financial wealth into political power through funding of political parties and politicians, and used their newly acquired political power to bust labour unions, lower their own taxes, deregulate Wall Street (during Bill Clinton’s presidency), negotiate trade deals that may have lowered the sales price of your flatscreen TV, but most likely will have destroyed your factory job. Does Reich represent another populist attack on the system, again from the left but dressed in academic clothing?

Donald Trump campaigned as a populist, always portraying himself as the political outsider, driven by a concern for the falling living standards of ordinary Americans, and eager to be the flag-bearer in the fight against the political elite in Washington. In the eyes of the majority of people in the rust belt of America, Trump was the change candidate, while Hillary represented the same old, same old, for the benefit of the very few at the top. As President, Trump turned around and filled his cabinet with bankers and other billionaire contributors to the Republican party. To what extent these representatives of the corporate elite will put middle and lower class Americans First in their policies is yet to be seen.

Meanwhile, on the other side of the Atlantic, populists, such as Beppe Grillo’s Five Star Movement in Italy, Marine Le Pen’s National Front in France, Geert Wilder’s Party for Freedom in the Netherlands, just to mention the most famous three, are on the march, boosted by Brexit and Trump. Mainstream parties, left and right, that over the years converged in the middle of the ideological spectra (Blair’s New Labour), and allied themselves with the corporate elite, mainstream media and technocrats pushing for the EU’s Federal Project, rather than with the ‘little people’, now find themselves on the back heels, and losing public support. What a surprise.

While American populism is about economics and losing out on the American dream, populism in Europe is about national identify, sovereignty and democracy, besides economic despair and income inequalities. The European political elite, shaped by and blindly committed to a Federal Europe, operate through an armada of bureaucracies and faceless officials, with limited concern for transparency and democracy, has shown itself incapable of projecting empathy to a suffering population. Yes, people in Europe, especially in Southern Europe are not happy these days, caught as they are in the vice of austerity.

Youth unemployment in Greece is 44.2%, Spain 42.9% and Italy 40.1%, compared to 6.5% in Germany! Yes, competitiveness matters in the euro currency union. There is literally nothing Greece, Spain and Italy can do to boost employment, locked as they are in a currency union with Germany, and with no access to the money printers, but swallow the neoliberal magic pill called austerity and cut back the state, shrink the national budget by cutting pensions and salaries of public administration, cut social services, fire civil servants and sell off public assets. Add to this an aging population and increasing youth emigration and the future does not look bright for Southern Europe within the euro zone.

In the years leading up to the crash of 2008, the Greek economy grew without any significant growth in productivity, population or employment. How was that magic possible? Loans, borrowed money, leading to a well-recorded massive debt. But where somebody borrows too much, others must be lending too much. And that logically brings us to the corporate banks. Yes, the Greek crisis is not only about the ‘lazy’ Greeks spending more than they could afford, it is equally about the ‘thrifty’ German and French banks lending out in an irresponsible fashion. Now why would they do that? Didn’t they know better. No, they knew best! They knew what no politician would admit and that is that the euro, set within in a flawed currency union, is linked by the hip to the Big European Federal Project. No politician in Bruxelles or EU capitals who strive for a United States of Europe (USE) would allow the euro to fail, because that would mean the end of their dreams of a European superpower, out there on the seven seas matching the US, Russia and China any day of the week. The private bankers knew, that Brussels, Berlin and Frankfurt (head office of the European Central Bank) would always rescue them, and do all it takes to preserve the euro, because together they, the banks, had become too big to bail. Nobody describes better the predicament of Greece and the euro than Mark Blyth, the author of the book “Austerity – The history of a dangerous idea”. Enjoy!

The price to pay for saving the euro, until now, was poverty and misery in the periphery EU member states (Greece, Spain, Italy), something that the political elites of Europe could easily ignore by placing the blame firmly on those extravagant Southern Europeans (read: lazy Greeks, again), their poor policies and clear lack of self-discipline. Consequently, for a thrifty and ultra-competitive Germany, with all their right policies and stealth self-discipline, the future looked exceptionally bright. This all began to change with the emerging migration crisis of 2014, then got worse with the Paris attacks, followed by a disastrous open door policy to immigration in 2015, culminating with the Berlin Christmas market attack in 2016. Suddenly, the hopeful Federalists of Europe found themselves fighting fires on five sides all at once. One, austerity was destroying the lives of millions of Europeans throughout Southern Europe, pushing the electorates towards anti-euro ‘populists’ parties, such as (Podemos in Spain, Syriza in Greece, Five Star Movement in Italy). Two, a back-lash against uncontrolled immigration from non-European countries and its perceived negative affects on the national identities in Europe, which is the basic message of the National Front in France, the Party for Freedom in the Netherlands and Sverige Demokraterna in Sweden, among other ‘populists’ parties on the right. Three, the growing unease among some national governments and movements about the EU’s federal, technocratic and un-democratic tendencies, and its relentless mission to replace nation-states, and national identities with a European identify, flag and national anthem, something that the new democracies in East Europe have personally experienced earlier in the USSR’s unsuccessful drive to create the New Soviet Man. Four, the UK, a major European power, decide to leave the EU club. Five, the new President of the USA declared that Europe should pay its fair share for the defence of its own territory. Which EU country can afford to spend more on the military these days?

Against this contextual background, in a reality deep fried in uncertainty, lack of coherent political leadership and economic stagnation, populists on both side of the Atlantic feed off two strong, yet consistently under-estimated emotional streams that run straight through our Western World today – Fear and Loathing.

For the first time, we fear that our children will live in societies that are worse off than our own. We are coming to realize that unregulated markets create a predatory capitalist system that favours oligopoly over competition and entrepreneurship, stimulate globalization that pushes worker’s salaries down or labour out of work all together, bails out Wall Street and leaves Main street to pay for it all. Add to this the economic, social and human costs of austerity and mass immigration, and fear is to be found all across the European continent.

While fear makes Europeans receptive to the populists’ message, the loathing turns them into loyal followers and finally voters for the populists parties. This is the point where the neoliberal, corporate political elites, mainstream parties and media in Europe and America could have slowed down the populist avalanche, by showing some recognition and compassion for the daily struggles and fears of the ‘little man’, but instead they dug down their heels, and ridiculed anybody and everybody who challenged the status quo, branding them as everything from racists, deplorables, nazis, communists, nationalists, and yes, of course, populists, while they themselves always claim the moral high ground. Again, the loyalty of the corporate-financial-political-media elite is foremost with itself, and not with the people. President Obama, if he really did relate to the struggles of a disappearing middle class and poor people in America, he could perhaps have chosen a more modest tourist spot than the private West Indies island of British billionaire, Sir Richard Branson. Fredrik Reinfeldt, the former Prime Minister of Sweden, who told the Swedish people to open up their hearts to uncontrolled immigration, while he resigned and took a job at Bank of America Merril Lynch, while the former head of the European commission, José Manuel Barroso took a job with Goldman Sachs. Over in America, 13 Democratic senators recently voted against a bill that would allow for the import of prescriptions drugs from Canada, significantly reducing the cost of medicine that is essential for the very survival of American citizens. It comes as no surprise that these 13 senators are big receivers of financial support from the US pharmaceutical industry.

The revolving door principle, where politicians decide on austerity for some (read: us mortals) and bail-outs for others, and then get good jobs with the ‘others’, and when the politicians blatantly vote to accommodate the corporations’ profits, not the well-being of human beings (citizens), well yes, it’s anecdotal evidence, but it’s somehow easy to imagine that these anecdotes are part of a pattern of elitist behaviors that maybe, just maybe, explains why people now loath the political elite in our Western World. Ask any taxi driver, he or she will give you three more anecdotes, on the spot. There is something reoccurring in Ebba Grön’s punk rock hit from the late 70s “Staten och kapitalet”. (Get a Swede to translate it for you!)

The system is broken when people fear and loath. The populists recognize that there is pain in people, while the elite is incapable of even recognizing that there is any pain at all, let alone addressing it, because that would mean accepting that there is a flaw in the system, accepting that the same neo-liberal, trickle-down economics system that lifted them to the top and kept them there for the last thirty years is not delivering the goods anymore. The elite just cannot do that, and that’s why, as long as the democratic principle of One citizen-One vote is still around, the populists will keep on winning until the mainstream parties get off their high and moral horses, and start addressing the every day fears and pains of every day people, even if this will require a complete re-think of neo-liberalism, austerity, the euro, a federal Europe, globalization and mass immigration.

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“Social and cultural constraints to private sector development in Kosovo and how to include the constraints in development management”

Posted on January 10, 2016 by Jakob Modéer

Social and cultural constraints in private sector development in Kosovo

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Our Western World – on the fast track from democracy to Banana Republic

Posted on May 24, 2015 by Jakob Modéer

When discussing the global economy we rather do it from a political perspective. Forget economic theory. The decisions that were made in 2008 to save the world from economic destruction were politically motivated. It was a very small, global power elite consisting of politicians, bankers and multinational corporations CEOs who made the decisions on what and who to save from creative destruction. Retrospectively, it is clear that the aim of these decisions was and remains to defend the positions of the powerful. The decisions were taken at our and the following generations’ expense. We, the overwhelming majority who do not belong to the world’s super small group of super rich, will foot the bill. When the going got tough in 2008, the global power elite chose to save themselves, their wealth and the Frankenstein version of capitalism that they have created since 1971.

It is no longer what happens in the economy that matters most, but what happens in politics. Ever since the United States gave up the gold standard, the world order as we know it, in which free enterprise and middle class were society’s cornerstones creating financial security, trust in the system and hope for the future has now been turned into a casino economy, a plutocracy and a world so unfair that the 28 richest persons are allowed to hold as much wealth as 50% of the world population combined. The Western world is transforming itself into a Banana Republic, characterized by a fragile and failing democracy, growing inequality, unemployment, poverty and popular apathy.

Today, when we analyse the development of the West, we see striking similarities with how we analysed the Third World in the 1970s and 1980s. Back then Robert Chambers discussed the need of an alternative approach to third world development, a movement based on people’s ability to manage their own change processes. Chamber’s ‘people participatory approach‘ was seen as an alternative in the international aid industry to the neoliberal policies that was forced upon third world countries. Today, the people of Greece are experiencing the same ordeal. The global power elite (with the US, the EU, the Federal Reserve, the ECB, the IMF, the private banks and the multinationals in the forefront) is advocating for Greece the same lethal mix of austerity policies and simultaneous repayment of huge loans that they demanded of Latin America countries in the 1980s. What failed in the south yesterday will fail in north tomorrow!

The political decisions taken by the power elite in 2008 had no democratic mandate. Rather the decisions had the purpose to fuel the speculation economy once more and hand the speculators another chance to increase their personal wealth. Deflation, and falling asset prices, is the enemy of the stock exchange speculators. Consequently, more fiat money had to be printed and spent. For us consumers, on the other hand, lower prices on goods and services are always a good thing. So why this war on deflation?

As long as the politically powerful grant monopoly money to private banks at zero interest rates and banks choose to speculate on the stock market rather than give loans to companies in the real economy we can never reduce unemployment in the Western world. Look at Greece, look at Spain! Youth unemployment in Spain stood at 50.1% in March 2015! Only by increasing wages and the total number of wage earners in the Western world, can we stimulate consumption and defeat unemployment. It is clear that this can only happen at the expense of profits and the speculative economy. It is first and foremost about regulating the speculators and punishing greed. It is the moral and ethical question of our time. Or as Chambers writes: The Biggest Challenge of the 21st Century is ‘to find better ways to enable those who are powerful to gain more satisfaction from exercising less power.’ Chambers describes the behaviour of dictators and autocrats in Africa, but he could as well be describing the owners of big banks, big business and the political elite in the Western world today.

What does young people in Spain have to look forward to? Do we need more evidence of the systemic failure that we in the Western world are struggling with today? Hardly. The problem is that our political elite chose not to see. They simply do not care, because their affiliation is no longer with the citizens but with the themselves as members of the plutocracy. This is the result of years of democratic erosion. Democracy, and the right of every citizen to vote in free elections is the plutocracy’s final enemy. Plutocrats have already taken over and control the media. Civil society, another moderator of authoritarian rule in a well-functioning democracy, is indirectly controlled by the political elite and/or the super-rich. To create the perfect Banana Republic for the super-rich in the West, the only missing link is the destruction or belittlement of democracy. And is it not precisely in this terrible situation that we find American democracy today, as it buckles under the multi-million dollar pressure of lobbyists a la the Koch brothers? Is the increasingly centralised and anti-democratic EU next in turn for the plutocrats?

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The art of making and managing weak states

Posted on April 21, 2015 by Jakob Modéer

One of communism’s major fault lines can be summarized in one sentence: “The state cheats us that they pay us, and we cheat the state that we work”. Communism, as applied in old Soviet Union and Eastern Europe, produced very high levels of employment, yet productivity was low. In fact, state employment was nothing but a gigantic go-somewhere-during-the-day (job) creation program. There was much sitting around, people doing very little or nothing all day.

At the same time, shops were scarce of goods. Salaries were low and paid out in largely worthless local currencies. People had little money in their pockets to buy anything anyway. To survive within this dis-functional economic system, the individual worker was on constant lookout for opportunities to make a material gain. Workers at the brick factory would smuggle out 1-2 bricks per day, while the hospital nurse would fill her purse with painkillers. Goods and services were then exchanged through an informal barter system.

As a result of this broken relationship between the state and its citizens work was not associated with any real expectations of real work being produced. Laziness became a norm. Rather, the workplace became an opportunity and a situation to take advantage of materially. As a result, opportunism, as a survival and wealth accumulation strategy, became the norm. Stealing resources from the state became a socially acceptable habit.

Now, we all know that old habits die hard. Unfortunately, this includes also bad habits. In the Balkans today, the state administration (most state owned factories have been privatized or gone bankrupt, or both) is still viewed as a job creation program by and for the government. Positions in ministries, agencies and public administration are served out to family, relatives and political followers, no matter their qualifications. It’s the ancient patron-client relationship that is still alive and kicking in modern Europe.

However, it gets worse. The occasional petty theft by a communist factory worker has nowadays been transformed into a well-oiled machinery of white-collar crime. We are talking about systemized fraudulent behavior and corruption. Or as a civil servant somewhere Western Balkans bravely explained to me, “sure, our salaries are low, but our profits are high!” What on Earth did he mean by that?

Within the context of the patron-client relationship, the role of the client is to serve his/her patron. The political and economic elites (the patrons) infiltrate state institutions by placing their ‘clients’ in key roles and functions. The loyalty of the ‘client’ is officially with the state, in line with democratic principles, but unofficially his/her loyalty is still firmly with the patron. This way, the patron-client relationship, as a cultural phenomenon, is a direct threat to democracy and the functioning of the state.

The patron-client relationship works as a giant leech on the state, economy and society, sucking it dry of resources, professionalism and ethics. In their mission to serve the patrons, the ‘clients’ go to work manipulating public procurement processes, sidestepping rules and regulations, handing out permits despite non-compliance and in general steering public policy away from the collective to the few and powerful. Public officials are falling over each other for the opportunity to travel abroad on-the-job, to participate in meetings, conferences and best practice study tours, in order to collect per diems. Some civil servants and elected officials enjoy top-ups of their salaries paid by sources outside of the state budget, while others are placed as paid managers of Non-Government Organisations (NGOs).

Everything goes is the motto. Conflicts of interest are again the norm, not the exception and far away from something socially unacceptable. The patron-client relationship makes a parody out of democracy. Key democratic principles, such as the division of powers and checks and balances are eroded. “The oft-mentioned mission of NGOs is to foster appropriate and effective policy to benefit of the poor and least powerful. They seek to support or influence governments to uphold a social contract.” (Edward and Burns, quoted in “Managing Development” by Robison, Hewitt and Harris, Open University, 2000) With the NGOs firmly in the hands of the political elite (the patrons), there can be no viable, constructive political dialogue. The same is true for the media. When media ownership gets politicized, there can be no investigative journalism. Freedom of speech vanishes, and any fruitful political discourse with it. With the judiciary equally firmly controlled by the executive power structures and/or the highest bidder, there can be no real justice. Allowing some people to get away with systematically breaking the law creates a societal norm that crime pays. This will inevitably influence the career choices of the next generation, away from professions that benefit the majority of the population.

In such a scenario, the state remains under-funded, under-qualified, mismanaged by staff with distorted loyalty and vulnerable to abuse. The state is weak and failing in its most basic obligations. The social contract with the citizens is broken. Also democracy suffers as a result of the patron-client relationship’s dominance in society. In such a situation, the patron, as a person, is more important than policy. It’s the individual person who decides if you will get that job or not. It’s not a deliberated collective decision based on competence and experience. It’s a decision made by a person whose main objective is the accumulation of more money, not the construction of viable state structures capable of creating wellbeing for the population.

The clients’ job performance is measured by his/her ability to deliver favors and opportunities to the patron, and not, as it should be, linked to performance indicators in the job description. As a ‘client’ there is no need for critical thinking, no room for innovation, only compliance to the will of the patron. Good governance and public policy are effectively replaced by greed, as the main driver of societal change. No wonder positive change has come to so few people in the Balkans since 1989.

Within the democratic process, this discovery of how the system really works means that people vote for persons than policy issues. People vote for the person/party whom they believe will offer the most space for opportunism. Ideology and policies do not really matter when the driving force in politics is greed and the accumulation of personal wealth on the account of the public good.

Moving away from the patron-client relationship, towards a more responsible and transparent implementation of political power by governments and public administrations, would obviously constitute a step in the right direction. As such, we may conclude that eliminating the patron-client relationship, as a behavioral norm, would be systemically desirable. Society as a whole would benefit. However, if the last 25 years of socio-economic development in the Balkans is anything to go by, it appears that completely erasing the patron-client relationship is not culturally feasible.

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Now showing in Romania, next year in a Courthouse near you…hopefully!

Posted on April 14, 2015 by Jakob Modéer

Since 1989 and the fall of communism, corruption has been a significant hurdle to overcome for South East European states in their drive to establish well functioning societies. With time, the fight against organized crime and corruption became part of these countries drive for EU membership. Looking back, it has been a feeble fight, if it was ever a fight at all.

Fortune-seeking politicians, enjoying their short time in the sunshine of executive power, mixed seamlessly with crooked administrators, business oligarchs and thick-necked men in tight black t-shirts. Together they turned democracy and the democratic process into a prostitution ring.

The business motto of this public-private partnership of was/is: “Everything and Everybody for sale”.

The privatization wave of the 1990’s meant a rapid and shady re-distribution of wealth and assets from the collective to the very few and well connected. It was a rigged system benefiting only the insiders and the forceful. Under new management, productive assets were sold off in pieces. Factories closed all across the Balkans leaving hundreds of thousands of citizens without regular income. With their windfall of easy money, new elite settled in London or South Africa, or they invested in further cementing their political power networks at home. Few were those who invested their own money to develop productive, export-oriented industries capable of competing internationally and employing thousands of compatriots. In fact, the hope for new and more employment were linked to an influx of foreign investors, rather than the re-vitalization of existing locally owned productive assets and resources.

In the wake of mass lay-offs, and the weakening of state’s social functions, the unlucky majority of the population was left out in the cold, to make ends meet the best they could. Millions of people left for Western Europe. Others emigrated to far away places like Australia and the USA. Resourceful human capital was lost. Societies in South East Europe suffered further as people became too busy with their daily survival to engage actively in the political process. With a weak civil society, political power was further strengthened and centralized to the executive, and the small political elite that systematically took turns in leading the flock.

In this playground of the rich and powerful, the judiciary quickly fell under the control of the executive and/or forces outside of the framework of a democratic society. Bad guys walked free and grew rich on the back of the mass population and next generation. It was (is) a cynical partnership between public servants and private businessmen driven by greed and short-term economic interests. Their joint business mission was (is) quite simply to steal state assets. Their methods involve controlling yet continuously weakening the state. A weak state was (is) a pre-requisite for this partnership to function and flourish unchallenged.

It’s never a good sign for democracy when the media is in the hands of oligarchs who finance the political game.

With civil society smashed into infancy, only a free media could defend the light of liberty in the face of the fraudulent public private partnership, which has ruled South East Europe for the last 25 years. Unfortunately, investigate journalism is a scarce resource in the Balkans. Together with a large dose of self-censorship, the local media has created a wall around the political elite within which they play their games with the public good. As a result, the public is starved of a productive political discourse. Romania is ranked 52nd out of 180 countries in the 2015 World Press Freedom Index, making it the best ranking country in the Balkans. Bulgaria, Balkan’s other EU member state, is ranked 106th.

In the Balkans, creativity has no limit when it comes to graft and fraudulent practices. No wonder the cafés are full. This is the neutral territory where public and private interests meet, discuss and make their deals. Citizens carry fully loaded plastic bags into public buildings (chocolate, whiskey, perfumes) and leave empty handed. Deals are made on all levels in society. Get the kid into the ‘right’ kindergarten? You pay. Get out of that speeding ticket? You pay. You want your child to play on local football team? You pay the coach. Win that public procurement tender? You pay.

It’s never a good sign for democracy when political parties sell parliament seats (immunity included) to the highest bidder.

Enter Mrs Laura Codruta Kovesi, the Chief Prosecutor of the Romanian Anticorruption Body (DNA). Under her leadership a small group of prosecutors have taken on corruption – the curse of the Balkans – head on, Eliot Ness style and on a massive scale. The scoreboard speaks for itself. In 2014 alone, DNA forced the return of over €300 million to the state! Which state in the Balkans would not welcome that kind of boost to the national budget? Over the last 8 years over 5000 graft related cases have been brought to court with a conviction rate of 90%! In 2014 alone almost 1200 convictions were achieved by DNA, including 24 mayors, five parliamentarians, two former ministers and even one former Prime Minister! This is incredible stuff anywhere in the World, and totally unbelievable in the Balkan context.

The story of Mrs Kovesi and DNA should be all over the front news in other Balkan countries. But it is not. Coincidence? Hardly. A person with the integrity and professionalism of Kovesi is yet to emerge in other  South East European countries. Kovesi’s fight is about so much more than corruption. It is a fight against the systematic destruction of democratic institutions and the trust people have lost in democracy as a political system best equipped to care for the majority of the population. This has been a deliberate process of destruction, on-going since 1989, and one in which key democratic cornerstones, such as an independent judiciary and responsible government have been systematically undermined and weakened.

Corruption, the compromise with your personal and societal ideals, is the destroyer of civil values and norms. As more people chose the tainted road to riches, more people spend time justifying criminal acts. Stealing public funds become a new societal norm. As an act, corruption becomes acceptable behavior. Suddenly, in a perverse twist of morality and civility, to misuse your public position for the benefit of yourself, relatives and friends became expected. In turn, this means that if you don’t misuse your authority, your relatives will be disappointed and others will think you are crazy! Why take that risk. You act, and you get your hands dirty. (For more on corruption’s negative effect on people and society, see earlier article: https://jakobmodeer.com/2010/10/24/corruption-–-destroyer-of-values/)

It is perhaps symbolic that on the same day that Mr Ioan Niculae, the richest man in Romania, was sentenced to 2,5 years in prison for his involvement in illegal financing of the 2009 presidential campaign, in neighboring Bulgaria, the Government announced its latest move to fight organized crime and corruption…wait for it… a new Strategy and a new Agency to go with it! It reminded all Bulgarians about the anecdote about the stray dogs:

The stray dogs hear a rumor that the villagers are planning to deal with them. To find out more, the strays send one dog over to listen in on the humans as they gather at the city hall. Returning to the flock, the dog calls on the other stray dogs not to worry – the humans have decided to establish a committee.

In the Balkans, the role of a committee is far too often, deliberately or not, to ensure that nothing really happens. Rather, the committee’s role is to create an illusion among the general public that the state is on the case. It’s about momentarily taking the heat off a sensitive issue and kicking the proverbial problem long and hard into the future.

Few countries in the Balkans today are, if any of them, mature enough to move beyond committees and like Romania face up to the evil of corruption before it’s too late.

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Greece, economism and systemic theory

Posted on March 30, 2015 by Jakob Modéer

Not a day goes by without Greece making the headlines in the world media. A country that was previously best known for giving the world democracy, zorba and island vacations, is now synonymous with credit bubbles, financial collapse, debt mountains, bail-outs, political turmoil, social unrest, crashing GDP, austerity and unemployment, resulting in poverty and human misery.

Within our European family of nation-states, and in our search for easily digested explanations, we are told that the Greek mess is a result of Greek people and institutions being excessively lazy, unwilling to pay taxes, incapable of collecting taxes, prone to corruption and nepotism. To what extent this description of life in Greece is true or not is of course debatable, and is highly context and culture sensitive.

Rather than allowing for a more self-critical analysis of the current situation in Greece and the causes of the current euro-zone crisis, we allow old national stereotypes to re-emerge, shape our thoughts and influence policy. While stereotyping Greeks as lazy and irresponsible over-spenders and Germans as stingy and cold-hearted control freaks make juicy materials for soap operas, it distracts our intellectual discourse and limits the opportunity to learn.

We live in an age of economism. As per definition, the economy and financial institutions dominate the public discourse. As social creatures, humans are reduced into economic dimensions, and evaluated using numerical terms. Ethics and moral no longer play a role in societal progress. Decisions are made based purely on economic criteria, assumptions and theories. And among economic theories, ‘trickle-down’ economics rule supreme.

The basic idea of trickle-down economics, or supply-side economics as it is commonly called today, is that lowering taxes on the rich and corporations will automatically improve the economy and inevitably benefit the poorer segments of society. Unfortunately, during the last 30 years, as this wonderful theory of economic development was put into practice, it showed itself to be based on some seriously flawed assumptions. Most explicitly, the notion that private corporations would automatically convert profits into ever higher salaries and invest in new productive assets, rather than cashing out the profits for themselves and outsourcing production to places where labour costs are lower.

For the proponents of supply-side economics, governments around the world made the correct political decision to save the banks and other financial institutions in response to the global financial crisis in 2008. Using tax payers’ money (and later printed new money) to bail-out the banks was necessary to keep the flow of credit to the productive enterprises, it was universally argued. In a society dominated by economism, this decision, to effectively put money before humans, was surprisingly easy to make.

However, our current economic system appears fundamentally flawed. The trickle that exist in the world economy today is not moving downwards to the benefit of the mass population, rather the money is flowing upwards, making the riches 1% even richer.

While the mountains of debt are growing for nation-states, central banks and individuals, the stock markets are booming to the benefit of bankers, large corporations and speculators. While humans are struggling with the realities of low economic growth and unemployment, the plutonomy of the world is enjoying the benefits of increasing global inequalities and political power.

John Kenneth Galbraith, the economist, explained trickle-down economics by noting its similarities with the ‘horse and sparrow theory’ of 19th Century America. ‘If you feed the horse enough oats, some will pass through to the road for the sparrows.’ (Galbraith, “Recession Economics”, New York Review of Books, 1982) In 2015, comedian Bill Maher (trust a comedian to put the finger on our lifetime’s fundamental issues) described the failed idea of supply side economics by telling the tale of an owner of three dogs giving a sausage to one dog thinking it will share the sausage with the other two dogs. It just won’t happen, the same way banks, Wall Street and big corporations have shown themselves increasingly unwilling to share their profits with workers (salaries), the state (taxes) and society as a whole (investments).

How different the world would have looked today if politicians had put people before money in 2008.

How different the economy would have looked if the politicians had not fallen for the ‘too-large-to-fail’ trick.

The bail-outs of the banks and large corporations were political decisions, not economical or business decisions. If we really believed in the power of Adam Smith’s invisible hand and laissez faire economics, we would have let the poorly managed banks and corporations fail. Of course, there were alternatives to these endless bail-outs of market losers.

The Swedish government nationalized some failing banks during its banking crisis of 1990 and regulated the banking sector. As a result, the Swedish banking sector managed the crisis of 2008 relatively well. On the other hand, Sweden did not bail-out SAAB, the then GM owned automobile manufacturer, as it was heading for bankruptcy post-2008. Today, SAAB is Chinese owned and growing again, without any Swedish tax-payers money being wasted on a poorly managed privately-owned company. Sweden still ranks top 10 most competitive economy in the world (World Economic Forum), not bad for a supposedly ‘socialist’, cradle-to-grave welfare state.

The basic function of every state and society is to guarantee the well-being of its citizens. The economic system is just one among many systems (political, social, cultural, psychological, etc.) that influence our lives and together create our sense of well-being. The simple but flawed idea of supply-side economics is that if only the economy grows there will be universal wellbeing!

Rather than over-simplifying our lives into numerical terms and allowing our destiny to be dictated by likeminded central bankers, politicians, big business and media representatives who see economics more as a natural science than a social science, we must admit that the pursuit of individual and collective well-being is a complex task, full of uncertainty. This is the essence of systemic thinking.

According to systemic theory, any complex situation, as for example a state, society, corporation and organization is characterized by numerous problems and challenges that interact with each other. System thinker R.L. Ackoff described such situations as ‘messes’. “Messes are systems of problems, the sum of the optimal solutions to each component problem taken separately is not an optimal solution to the mess. The behavior of a mess depends more on how the solutions to its parts interact than on how they act independently of each other”. (Ackoff, The Future of operational research is past, Journal of Operational Research Society, 1979)

To a systems thinker it comes as no surprise that bail-outs of banks and austerity programs, which are deemed optimal solutions to the Greek economic and financial problem has not resulted in an optimal solution to the Greek mess.

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Com’on Europe – is this the best we can do?

Posted on March 26, 2015 by Jakob Modéer

On March 18, the European Central Bank inaugurated its new office building in Frankfurt, Germany. The total construction cost of this skyscraper of glass and steel was a whooping €1.1 billion. In comparison, the new Chancellery building in Berlin, completed in 2001, cost a mere €230 million to build. No wonder 20.000 Europeans gathered in the streets of Frankfurt to protest against the construction of this latest temple of the aspiring EU Empire.

To spend such a huge amount of money on a construction, which in practice fills no other function than a space for technocrats to sit, write, meet and eat lunch, raises several questions about our collective grasp of reality in Europe year 2015. Most importantly, (at least for me) when such non-productive investments (or expenditures rather) are approved and executed during a time when Europe is experiencing the worst economic and social crisis since the Great Depression, it puts into question the functionality and future of democracy itself in the EU.

In 2014, the Government of Norway voted no to support Oslo’s bid for the 2022 Winter Olympics. The estimated cost for hosting the Olympic event was approximately €5 billion. A small amount of money for a country with a budget surplus of €40 billion in 2013 and another €800 billion tucked away in a special fund for the day when the oil runs out. Yet, despite their individual and collective richness, a large majority of Oslo’s citizens could think of something better to do for €5 billion (education, environment, health, social, etc.), and the government responded to the opinion polls and redrew its support. That is democracy, transparency and responsible government in action!

Allowing for the construction of a public building that cost €1.1 billion hints of disrespect for democracy, public opinion and public money. Nobody in Europe was asked to reflect, comment, and let alone vote in a referendum to support such excessive expenditures on a project which would generate close to zero positive impact on the local, regional and EU economy. The question about what else we could do for the money was never raised. If the ECB management and staff had settled for a more modest building along the lines of the German Chancellery, €800 million could have been put to good use elsewhere.

I will mention only one simple example to put these large sums of money into a more human perspective. Once upon a time there was a project to reduce unemployment titled “JOBS”. It was funded by the Bulgarian government and had a budget of €22 million. During its 10 years of operation the project created or sustained over 37.700 full-time jobs, according to official Ministry of Labour statistics, and trained 60.900 persons in new work related skills. If given a choice between one shiny ECB building or 40 JOBS projects, there can be no question how the unemployed masses of Greece, Spain, Italy and any other European countries for that matter would vote. But the peoples of Europe are never asked this type of questions, in that simple way.

And that is why I cannot feel pride looking at the architecturally fancy ECB building. On the other hand, I feel great pride when I, and thousands of my fellow citizens, use the 16 kilometers long bridge-tunnel linking Denmark with Sweden. This is a €2 billion infrastructure investment project that has led to a fundamental economic and social transformation of the entire region, increasing integration and improving the well-being for hundreds of thousands of people living, commuting and working in Southern Sweden and Denmark.

No, looking at the new ECB building makes me sad. Its excess does not symbolize economic progress, our collective strength as Europeans or social stability, something we so badly need today. Rather, the ECB building’s dark reflective glass symbolizes the faceless, cold greed of modern capitalism, the deliberate distortion of a market system that was ones free but is now rigged by and to the advantage of central bankers, politicians, stock market speculators and big business.

Only a person and a system incapable of caring about other peoples’ wellbeing can celebrate such money wasting.

Com’on fellow Europeans, we are better than that!

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Where is our sense of solidarity, equality and justice now?

Posted on March 22, 2015 by Jakob Modéer

The dream of a federal Europe is crumbling. Most contemporary politicians in Europe, EU technocrats and main street media link the crumbling European dream entirely to the poorly performing economy. Undeniably, when an economy shrinks it affects people’s lives through unemployment. According to the EU statistical office, Europe has lost 3,5 million industrial jobs since the global financial crisis of 2008.

In the face of the deepest financial and economic crisis since the Great Depression the response of most national government and international institutions have been reform and austerity, mixed with endless stimulus programmes, zero interest rates and bail-outs. As a direct outcome, consumption is down, the overall tax base is shrinking and debt levels among citizens, corporations and governments are growing even higher. Despite billions of newly pressed money injected by central banks around the world into the financial system, the famous ‘trickle-down’ effect appears not to be reaching further than the stock market.

However, in these tough times, the tough have not got going. Contrary to the song, our approach to the crisis has been selfish, shortsighted and universally uninspiring. Rather than facing up to the truth that our financial system, bent on speculation, deceit, even fraud, has brought misery and poverty to millions of Europeans, our politicians, technocrats and financial elite have given the anecdotal can another massive kick into the future.

Rather than making people’s well-being the policy priority, our plutonomy leadership sided with the banks and financial institutions in 2008 and ever since, the very same institutions that through their recklessness caused the crisis. Our political elite showed solidarity, but not with the majority of the population but with the financial and corporate elite, with the plutonomies of the World. Consecutive bailouts and stimulus packages were designed and launched with the financial and corporate elite in mind. Not much thought was given to the dire situation of the middle-class, let alone the working classes, who have seen their income fall for over 30 years.

As a result of these political decisions and priorities, income and wealth inequalities continue to grow throughout Europe and the US. Quantitative easing boosted the Wall Street speculators and Trans-National Corporations, rather than job creating SMEs, entrepreneurs and employees. Economic growth remains sluggish. But this is the story of cold economic data and graphs.

The other story is about human beings. As such it is a far more important story. Or at least it should be. Since 2008, millions of Europeans have seen their incomes and purchasing power fall sharply, while others have lost their jobs and seen their benefits reduced. Poverty has returned to Europe on a massive scale. According to inequalitywatch.eu, 16.4% of all Europeans now live in poverty. In Greece alone, this means that over 2 million people live below the threshold of relative poverty (60% of the average household income). In the footsteps of poverty we find falling health (mental and physical), crumbling education and social services, and a general sense of hopelessness. Another generation of young people is left idle and deemed lost.

The European dream-building project clearly works only when the wind is in our back. In a slowing economy and growing national debts, nationalism flourishes rather than solidarity, equality and justice within Europe. Why is that? Well, I think many people feel disappointed and let down by the political national and Bruxelles based elite that when the going got tough they sided with the super rich, in which of course they included themselves. The same leaders ignored the plea of the poor and vulnerable in society, and since we still live in some kind of democracy, this deceit is now coming back to bite them, and hard.

Without solidarity, equality and justice among European countries and people there can be no European citizen, and no federal Europe. We must learn to speak openly and truthfully about why Europe and the World crashed in 2008. This means there is no more black and white, but all shades of gray, in which Greece as reckless borrowers are as guilty as the reckless German lenders for Greece’s financial situation today. We must learn to forgive and move on. If we can all start to assume some guilt for our common European mess, we may be more open to listen to others’ potential solutions.

As it stands, the main threat to a federal Europe comes from our inability to deliver solidarity, equality and justice at a time of great financial, economic, political and foremost social and human crisis. And maybe that’s a good thing. Maybe this crisis has shown us that we are not ready for a federal Europe, but again, let’s then be honest about it. Let national democracy run its cause, even if this means letting Syriza try to satisfy the will of the Greek people. To talk about federalism without adequate public support (democracy is still the favored political system of the EU, right?) is to advocate running before we can even walk.

Europe today is in need of a popular movement of humanism, which puts today’s economic fundamentalism in perspective and allows for other areas in society (health, education, housing, employment, etc) that contribute to our individual and collective well-being some air. And if this means addressing national inequalities through the tax system, well so be it. It has been done before. Rather than the current endless borrowing and money printing, the super rich of this world should be asked to, as Roosevelt once did, finance a comprehensive drive for solidarity, equality and justice in Europe. In the end, it would be in its own best interest, for sure.

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“Leaving Kosovo – When all the ‘good people’ have left, then what?”

Posted on February 8, 2015 by Jakob Modéer

The last week was full of media reports on the massive exodus of people from Kosovo. The Telegraph, a British newspaper, reported that up to 20.000 are leaving the Balkan country of 1.8 million every month. The Associated Press reported that since September 2014, a total of 25.000 Kosovars have crossed illegally into Hungary and the EU. According to the media the drive to leave Kosovo is caused by unemployment, corruption and political instability. The Usual Suspects in order words.

Yes, the fact that people are leaving Kosovo cannot come as a surprise to anybody. People have been leaving for quite some time. Highly educated Kosovars are closing shop and moving out finding useful employment in their professions in far away countries like Sweden and Canada. Others are making full use of their double citizenships and moving ‘home’. Others are waiting in line for Schengen visas. Others, as we have seen in recent months, are walking through wintery woods into the EU, illegally crossing the border into Hungary.

The hope of a better future in Kosovo appears to be fading for a large portion of the Kosovo population, and when everything else fails, people are now voting with their feet. Who can blame them?

Kosovo, in the winter months of 2015 seems to be suffering from a societal multiple sclerosis caused by widespread corruption, democratic deficit, no real private sector and donor agency fatigue.

Corruption is not only about the unlawful distribution of public money to a small but powerful elite. More importantly it is the selfish practices of people that destroys the system from within through dishonesty and favoritism. This process of gutting out and distorting the essential components of a functioning societal system capable of delivering well-being to people (transparency, dignity, commitment, hard work) is made even worse in Kosovo’s case where the destruction is taking place at the same time as the system is supposedly being built anew.

Corruption is everywhere in people’s daily lives in Kosovo, as it is in most other Balkan countries. But this is not the cultural oil that makes the machines of society run smoothly, rather corruption is a million little wooden sticks pushed into ordinary citizens’ wheels of aspirations for a better life. For example, corruption is about bending the rules for entering university education creating an excessive pool of hopeful university graduates, and pushing them into markets that do not exist. Or as the cynical joke goes: “Why the coffee in Pristina is the best in the world? Because it’s made by Master’s degree graduates!”.

So, why the chronically high unemployment rates in Kosovo? Well, it’s rather quite simple. The quick fix solution, when state institutions and administration (the public sector) employ more people is not financially sustainable. There is simply not enough money in the public budget to further expand the public administration, let alone increase their salaries. As in the rest of the world, Kosovo must instead rely on the private sector, on its own entrepreneurs and companies, to generate the jobs. Unfortunately, the private sector in Kosovo today is very small (According to Kosovo Tax Administration there are only 46,000 active companies, out of which 95% have less than 10 employees), fragile and incapable of generating the necessary number of jobs to make even the smallest dent in the unemployment data. Why not?

Again it is quite simple. In order to employ more people Kosovo companies must first sell more products/services and generate more income. In other words, we need growing companies to reduce unemployment. Most Kosovo companies are trading companies (mom and pap shops) operating on a saturated, small local market, and as a result they don’t sell very much. They survive at best. So in line with other small countries around the world, for companies to grow they must pursue international markets. That’s the simple market logic, and there is no way around it. Sell more, expand production to satisfy growing demand, and employ more people. However, export is not an option for trading companies but for the manufacturing industries, which at the moment make up a mere 10% of all companies in Kosovo. Also, export means higher volumes. In many cases, Kosovo manufacturers are simply too small to be of interest to international buyers.

At the moment, Kosovo companies are not producing goods and services that the Kosovo population is willing to pay for, let alone customers on international markets. Kosovo made products cannot compete with international products on price, quality, design, packaging, quantities, terms of payment – you name it. If they could, the shelves at Viva Fresh, Albi, Meridian, ETC, and other supermarkets would be full of Kosovo made products, not imported goods, and Kosovo would not suffer a 2 billion plus annual trade deficit. Crystal clear and for everybody to see every time we go shopping!

So how to change course and defeat unemployment in Kosovo? Easy! Think jobs first and only! Think in which international supply chains a large number of jobs can be generated relatively quickly. One example – Think apparel (the sewing of clothing)! Currently it is estimated that the textile industry in Kosovo employs a mere 3.000 persons. This is not in line with other countries in the region. The apparel sector in Macedonia employs more than 50.000 persons, while in Albania and Bulgaria as many as 100.000 people are employed in the textile sector. Can you think of any other sector with that kind of real employment potential? I can not.

Yet, the donor agencies in Kosovo continue to beat around the bush. Rounds upon rounds of institution-building and capacity-building projects have been implemented, yet there appear to be no real traction for change and no real socio-economic improvements. People can sense this lack of progress, and that’s another reason they are leaving. The old development models and methods are simply not delivering the expected development impact in Kosovo. Donor funded projects are winning the battles, according to their own reporting at least, yet Kosovo appears to be losing the war against unemployment and poverty. Unemployment remains very high, over 30% and even higher among youth and people living in rural areas. The number of people living in poverty and even extreme poverty is not declining. After 15 years of almost unlimited financial and technical support to Kosovo and its infant institutions, donor fatigue appears to be kicking in. At the same time, the competition on the international donor funded development market is intensifying, pulling the geopolitical priorities of the EU and the USA towards Ukraine, the Eastern Neighbourhood and the Middle East/North Africa, and away from the Balkans.

Finally, and perhaps as a consequence of the three other factors contributing to the exodus of Kosovo citizens, Kosovo is now experiencing a period of political instability, characterized by a polarization of society, extreme inequality, a sense of uncertainty and public demonstrations. People are clearly losing hope. The inability of the political elite to deliver on their election promises of more jobs and a better life in Kosovo, will only confirm the citizens’ decision to leave the country as the only viable option. And when all the good people are gone, what kind of society will they leave behind?

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