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Post by tuftabis on Jan 15, 2010 16:52:10 GMT -7
I think the differance between Central- and Western-Europe has to do with the labour ethics, fiscal responsability of administrations, dedication to continued reform, new energy, old skills (in a new jacket), Patriotism, a market belief or not and disciplined financial ministries and stimulating economical affairs. The lack of urge in Western-Europe is the decadence of being used to 60 years of prosperity, democracy, wealth and freedom. The Poles, Czechs, Slovaks and Slovenes of Central-Europe you mention have an urge to improve their societies, and have the benefit of modernised economies and some old service sectors and state industries that can be privatized or replaced by new industries. You are right that Western-European countries often have the disadvantage of the short term thinking headfunds that plunder healthy industries, financial institutions and larger companies. This speculation and " flash capital" as we call it in Dutch. Devastating extremely short term tactical speculative larger transactions that take place in a few hours or days, which can destabalize firms or financial markets. Often there are parasitical hedgefunds that buy companies in a temporary crisis, strip it from it's healthy parts demolish it and sell that parts to the highest bidder. Quite a lot of companies have been destroyed in Western Europe with this sort of unethical piracy speculation. Pieter Very well said. "Flash capital" is a great saying you have. However the problem is even beyond 'flash capital'. It includes stabile, serious, 'slow capital' so to say, as even those wanting to invest for good are influenced by the (unjust and generalizing) titles 'crisis in EE" This is now however quickly changing, and at last diffferentiation comes. But the best way to avoid these problems is having enough of own capital ready to 'import back' while hard times arrive. This is what we are now working on...
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Post by tuftabis on Jan 19, 2010 7:33:27 GMT -7
Pieter, you are pesimistic about the future of Poland's economy, but why not enjoy with us for a while the moments of joy? ;D
Poland's Economy Is No Joke by Peter Schiff, Euro Pacific Capital | January 15, 2010
Watching the world's leaders stumble their way through the economic crisis, it often feels as if political success and economic understanding are mutually exclusive. Even the Chinese, who over the past generation have engineered a dramatic turnaround from their Maoist economic nightmare, show a remarkable willingness to pursue a monetary policy (a currency peg to the U.S. dollar) that yields no benefit to their citizens. Amid this morass of economic quackery, it is refreshing to see a clear ray of sanity emanating from one country: Poland.
Last summer, I was invited to speak at the Economic Forum in Krynica, a resort town in Southern Poland. I was amazed at the level of economic activity and civic spirit that was on display throughout the country. I also was fairly surprised that my economic views, which are routinely ridiculed at home, have much wider support among the Polish economic officials who presented at the conference.
This common sense understanding was showcased in an opinion piece published this week in the Financial Times by Polish Finance Minister Jacek Rostowski. Contrary to the public flogging of the free market currently underway in Washington, under the auspices of the Financial Crisis Inquiry Commission, Rostowski explains how governments caused the Crash of 2008 by removing the necessary element of fear from the markets. He states that this was symptomatic of the "deep Keynesian project," in which governments over the last half century have looked to smooth the economic cycle through periodic floods of monetary expansion and government spending. I couldn't have said it better myself.
A product of the Solidarity movement that opposed the Polish Communist Party in the 1980's, Mr. Rostowski, like many of his colleagues in the current Polish Administration, is intimately familiar with the hazards of central economic planning. He has seen this movie before, and he knows how it ends.
Instead, Poland has enacted economic policies that are informed by a belief in Austrian School (read: free market) economics. After the downfall of the Communists in 1989, Rostowski was part of a group that called for "shock therapy": the rapid privatization of state-owned enterprises and the dismantling of price and currency controls.
In 2007, the center-libertarian Civic Platform party was put in power, with Rostowski as Finance Minister. Along with Prime Minister Donald Tusk, he has continued the process of transforming Poland into a laissez-faire paradise. Not accidentally, Poland is the only EU member state that showed positive GDP growth in 2009, at 1.9%. Also its public debt, at roughly 55% of GDP, compares favorably with its neighbors - and with the United States.
A top priority of their administration was reduction of the income tax. The previous system, with three-tiers of 19%, 30%, and 40%, has been reduced to two tiers: 18% and 32%. In addition, the system's minimal use of deductions and credits makes it radically simpler than the U.S. income tax. In the meantime, Civic Platform is continuing its move toward privatization. Recently, Poland held an IPO for its state-owned power utility, Polska Grupa Energetyczna. According to a news report, "The sale brought in $2.1bn, pricing at the top end of the bankers' guidance range, and becoming Europe's largest IPO of the year." The government has used these revenues to fund its budget and keep taxes in check. More importantly, it has returned capital to the marketplace to be used in the most efficient manner.
Civic Platform also understands that regulation hurts small business disproportionately by raising barriers of entry. Fortunately for Poland, a multi-year program of deregulation has been a boon for small businesses, and has given the country the most entrepreneurs of any state in Europe. This may explain the country's resilience in the face of the global economic crisis.
Poland's current growth is also fueled by an influx of foreign investment. To encourage such inflows, Rostowski has laid out a specific plan to adopt the euro as the country's currency by 2015. While I have never been crazy about the euro concept, as opposed to a gold standard, the effort indicates to foreign investors a desire to control inflation. Assuming the block is able to stick together, the European Central Bank is considered a reliable enforcer of strict monetary policy. Poland's zloty rapidly devalued after it was allowed to float, and though the rate of inflation is declining, it remains high. Eurozone membership will impose external discipline on the Polish government, even if Civic Platform loses power.
Anecdotally, I can attest that these people are hungry for free markets. My visit to Krynica was a breath of fresh air, and a startling reminder of how far America has strayed. If the Polish people can hold onto the traumatic lessons of communism, and continue undeterred down their current path, then this battleground of the 20th century may be the paragon of the 21st.
Copyright © 2010 Peter Schiff
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Post by tuftabis on Jan 19, 2010 7:47:12 GMT -7
These are the main results of recent Eurostat publications on income poverty risk.
17% of EU population at risk of poverty Eurostat data | Monday 18 January 2010
In 2008, 17% of the population in the EU27 were at risk of poverty. Since 2005, the ‘at risk of poverty’ rate in the EU27 has been nearly stable, varying between 16% and 17%,
In 2008, the highest ‘at risk of poverty’ rates were found in Latvia (26%), Romania (23%), Bulgaria (21%), Greece, Spain and Lithuania (all 20%), and the lowest in the Czech Republic (9%), the Netherlands and Slovakia (both 11%), Denmark, Hungary, Austria, Slovenia and Sweden (all 12%).
Poland is exactly in the middle of the stake with 17% of population at risk of poverty.
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Post by pieter on Jan 19, 2010 10:59:56 GMT -7
Pieter, you are pesimistic about the future of Poland's economy, but why not enjoy with us for a while the moments of joy? Tuftabis, I think you misunderstood me, and maybe I was to complicated in my Dutch-English way of expressing myself. While I am worried about the Polish state debth, you have to keep in mind that I said that in the context of the fact that many states have a state debth! A state debth is worrysome, but it does not imply that an economy is bad or that the economical future of a country is uncertain. In the contrary I am very optimist about Polands future and positive about the present state of the Polish economy and the developments that come out of that! Besides that I share your citicizm of the Polish government. Not enough investments in R&D, Donald Tusk failed to reform taxes and state finances, You wrote: However in-between the top and bottom there's a thick layer of clerks, beaurocrats, complicated tax system, incompetency etc etc stopping the flow. I voted for Donald Tusk because he promised to fix it. He didn't till now. And most of all he promised to largly increase investment into Poland's future - through increasing science and research funding. He didn't do that either. So, if you want to know my opinion Pieter, the short-term prospects are very good, even extremely good. But if the economic system is not cleared and the science and research funding is not LARGLY increased, the prospects in the long term are grey if not black. But your answer to this after a remark from my side was: Comparing to what was already done, the remaining work in economical and tax system are easily accessible with political will to do so. The elimination of this thick beaurocratic-clerk layer is more difficult, but also possible. And: To continue let me say that there's a strong political will to go on bravely with reforms, especially tax reform and decreasing the internal debt inside PO. However the now prevailing internal fraction and leadership is unfortunately more concentrated on just keeping the status quo. The logic behind it very simple - the status quo is quite good for short term, while the reforms will cause dissatisfaction of large groups of the electorate. Such dissatisfaction will diminish the possibilty that Donald Tusk becomes the president, which is his aim. As to PO's main opponent (and actually the only one which actually has the required potential) - there were strong pro-reform fraction in PiS as well, but unfortunately almost all those people have left this party. And: The main problem that worries me about Poland is that we produce politicians so dumb that they don't understand that without proper funding of science, research, new technologies in 30 years we will be a backyard of developed world. Mr.Tusk seemed to understand that, but it seems he only pretended ;D ;D As to life between Scylla and Charybdis - you may really relax, Pieter. We are used to the problem, we live with it since ages, and used to fixing it. Sometimes better, sometimes worse, but we always manage to fix it. And: Pieter, the situation is not as ideal as the government claims but certainly it is not as catastrophic as the oppositions wants the voters to believe. Overall PO government is a success - they still have a chance to fullfill the promised 'budget deficit cut reform'. The most disappointing is lack of increase in R&D funding. Both parties PO and PiS could and should go together, they are both Solidarity origin. For that the exchange of their respective leaders is needed (or Tusk becoming the president). Pieter
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Post by pieter on Jan 19, 2010 11:12:17 GMT -7
Administrations who failed to meet the practical goals of economical progression and succesful reforms (due to privatizations, cut backs on the bureaucracy and corruption) were replaced by other governments. And if that new administration failed too it was replaced also! That is the practice of democracy which works in central Europe. Poland has had many administrations in the last 20 years, left, right and centrist! Pieter Of course, you are right and all the objections we have been talking about, regarding lack of needed reforms of Polish economy are valid. Without them our success will soon vanish in the developing world. But the reforms are for the future. Now we are talking about the past, especially the past when an overly general term EE was coined Tufta, Excuse me, nut what does the overly general term EE mean? Maybe because I am Dutch I don't know this English abbreviation means? Does it means Experiance Economy? www.experience-economy.com/category/ee-categories/ee/page/2/ / en.wikipedia.org/wiki/The_Experience_EconomyPieter
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Post by tuftabis on Jan 19, 2010 12:56:51 GMT -7
Pieter, yes probably I misread something! Please don't mind it. Being un-optimistic about economy in our changing times is by no means anything special or extravagant! ;D And most of all I placed your name at the beginning, becasue I wanted to make sure you eye will catch this posting and you will read the article, since I know how much you are interested in and wish Poland good.
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Post by tuftabis on Jan 19, 2010 12:59:23 GMT -7
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Post by pieter on Jan 19, 2010 13:03:02 GMT -7
Pieter, you are pesimistic about the future of Poland's economy, but why not enjoy with us for a while the moments of joy? ;D Poland's Economy Is No Joke by Peter Schiff, Euro Pacific Capital | January 15, 2010 Watching the world's leaders stumble their way through the economic crisis, it often feels as if political success and economic understanding are mutually exclusive. Even the Chinese, who over the past generation have engineered a dramatic turnaround from their Maoist economic nightmare, show a remarkable willingness to pursue a monetary policy (a currency peg to the U.S. dollar) that yields no benefit to their citizens. Amid this morass of economic quackery, it is refreshing to see a clear ray of sanity emanating from one country: Poland.
Last summer, I was invited to speak at the Economic Forum in Krynica, a resort town in Southern Poland. I was amazed at the level of economic activity and civic spirit that was on display throughout the country. I also was fairly surprised that my economic views, which are routinely ridiculed at home, have much wider support among the Polish economic officials who presented at the conference.
This common sense understanding was showcased in an opinion piece published this week in the Financial Times by Polish Finance Minister Jacek Rostowski. Contrary to the public flogging of the free market currently underway in Washington, under the auspices of the Financial Crisis Inquiry Commission, Rostowski explains how governments caused the Crash of 2008 by removing the necessary element of fear from the markets. He states that this was symptomatic of the "deep Keynesian project," in which governments over the last half century have looked to smooth the economic cycle through periodic floods of monetary expansion and government spending. I couldn't have said it better myself.
A product of the Solidarity movement that opposed the Polish Communist Party in the 1980's, Mr. Rostowski, like many of his colleagues in the current Polish Administration, is intimately familiar with the hazards of central economic planning. He has seen this movie before, and he knows how it ends.
Instead, Poland has enacted economic policies that are informed by a belief in Austrian School (read: free market) economics. After the downfall of the Communists in 1989, Rostowski was part of a group that called for "shock therapy": the rapid privatization of state-owned enterprises and the dismantling of price and currency controls.
In 2007, the center-libertarian Civic Platform party was put in power, with Rostowski as Finance Minister. Along with Prime Minister Donald Tusk, he has continued the process of transforming Poland into a laissez-faire paradise. Not accidentally, Poland is the only EU member state that showed positive GDP growth in 2009, at 1.9%. Also its public debt, at roughly 55% of GDP, compares favorably with its neighbors - and with the United States.
A top priority of their administration was reduction of the income tax. The previous system, with three-tiers of 19%, 30%, and 40%, has been reduced to two tiers: 18% and 32%. In addition, the system's minimal use of deductions and credits makes it radically simpler than the U.S. income tax. In the meantime, Civic Platform is continuing its move toward privatization. Recently, Poland held an IPO for its state-owned power utility, Polska Grupa Energetyczna. According to a news report, "The sale brought in $2.1bn, pricing at the top end of the bankers' guidance range, and becoming Europe's largest IPO of the year." The government has used these revenues to fund its budget and keep taxes in check. More importantly, it has returned capital to the marketplace to be used in the most efficient manner.
Civic Platform also understands that regulation hurts small business disproportionately by raising barriers of entry. Fortunately for Poland, a multi-year program of deregulation has been a boon for small businesses, and has given the country the most entrepreneurs of any state in Europe. This may explain the country's resilience in the face of the global economic crisis.
Poland's current growth is also fueled by an influx of foreign investment. To encourage such inflows, Rostowski has laid out a specific plan to adopt the euro as the country's currency by 2015. While I have never been crazy about the euro concept, as opposed to a gold standard, the effort indicates to foreign investors a desire to control inflation. Assuming the block is able to stick together, the European Central Bank is considered a reliable enforcer of strict monetary policy. Poland's zloty rapidly devalued after it was allowed to float, and though the rate of inflation is declining, it remains high. Eurozone membership will impose external discipline on the Polish government, even if Civic Platform loses power.
Anecdotally, I can attest that these people are hungry for free markets. My visit to Krynica was a breath of fresh air, and a startling reminder of how far America has strayed. If the Polish people can hold onto the traumatic lessons of communism, and continue undeterred down their current path, then this battleground of the 20th century may be the paragon of the 21st.
Copyright © 2010 Peter Schiff
Tuftabis, It is good to hear from an expert that from Poland comes a clear ray of sanity. Tufta I too was amazed at the level of economic activity and civic spirit that I saw in Krakow and the cities and towns that I drove by on my way from the German border to Krakow and back in 2004 and Warszawa in 2006. Now we are nearly four years later and I am sure that in these last years a lot of economical progress has been made too. With infarstructural projects which stimulate transport, trade and local economies which need public transport systems, good highways, regional investments and new industries, financial institutions and a service sector. It is supprisingly that the American views of Schiff have much wider support among the Polish economic officials in Central European Poland in Continental Europe (which has traditional a more Rhineland economy based social capitalism, which is a mix of liberal laissez faire, social democratic social security and etatism and christian democratic communitarism - en.wikipedia.org/wiki/Communitarianism - and is a continental European form of free-market economy, which destinguishes itself from the Anglo-American laissez faire freemarket shareholders economy). In that perspective Poland is closer to Great-Britain and the USA than continental Europe (Germany and France). I don't know if I agree with the Polish Finance Minister Jacek Rostowski. who thinks that governments caused the Crash of 2008 by removing the necessary element of fear from the markets, and who blames Keynesian measures ( state intervention) to be the cause of this development. Yes, Mr. Rostowski has experiance with central economic planning in communist Poland, btu there is a differance between a total planned economy, and democratic governments in a free-market economy, who take macroeconomical measures to boost the economy. I think sometimes limited state intervention (etatism; like the Dutch government who bought the ABN-AMRO bank and took a 49 % share in Fortis together witht the Belgian and Luxemburg governments. Creating in fact a Dutch branch of Fortis, who cooperates with ABN-AMRO Fortis bought before the crisis, but had to let go -sell- during the crisis).) can be benificial to innermarkets of countries with a temporay crisis. My bank ABN-AMRO bank is temporary a state bank and will be privatized again after the crisis. For Poland the economic policies that are rooted in the Austrian School (read: free market) economics is good. Total laisseze faire or more laissez faire than other countries probably works in Poland. In the Netherlands a good mix of Laissez fiare and etatism works. In the ninetees we moved further towards more Laissez fiare! After the downfall of the Communists in 1989 a shock therapy to transform a central state plan economy that was dependand on a Comecon trade system that was gone and large loans from the West towards a Laissez faire free-market economy based on Supply and demand instaid of the primitive state supply based economy with a prehistorical communist taste and Machiavellistic proletarian esthetics. Thank good private initiative, Polish pragmatism and the inventive spirit of a producing and creative people were allowed again. The center-libertarian Civic Platform administration with PSL leader R ostowski as Finance Minister was and is a blessing for Poland and Europe. I agree with Schiff that along with Prime Minister Donald Tusk, Rostowski has continued the process of transforming Poland into a laissez-faire paradise. The reduction of the income tax was a good step! Now they have to continue the reforms! More privatization is good for Poland. Foreign investments and Polish branches of froreign financial institutions, banks ( Paris Bas Fortis Polska, ABN AMRO Bank (Polska) SA and etc.), companies and industries is good, but it is also important that Polish banks, companies, firms and industries merge and work efficiently and profit based. It is important that there is a broad Polish middle class of shop owners, small businesses and entrepreneurs next to Middle-big and larger companies and healthy industries. It is important that there are big Polish companies, like the car industry, the Polish Solaris Bus & Coach - bus manufacturer and others. It is good that the Polish government has returned capital to the marketplace to be used in the most efficient manner. It is good too that Poland supports small businesses by tairing barriers of entry down. The multi-year program of deregulation is exellent for small businesses indeed. I am very glad to hear that the country has the most entrepreneurs of any state in Europe. I hope that the influx of foreign investment will continue due to good Polish governance, a positive and creative corporate culture and the disappearances of old ghosts of the past (corruption, state bureacracy and a nomenclatura mentality of a part -minority- of the population). The specific plan to adopt the euro as the country's currency by 2015 is exellent too. The crisis will be over then hopefully and Poland probaly will have the strongest or one of the strongest economies of Europe stil. Ofcourse the Poles are hungry for free markets after a Nazi dictatorship, Stalinism and the forced collectivism of the grey Polish communism after that. With Laissez faire the Poles have black, white, grey and colors instaid of only grey! Poland had a good development the past 20 years, is doing well today and has a bright future! Pieter Peter Schiff Peter David Schiff (ur. 1964 w New Haven) – amerykañski ekonomista, prezes Euro Pacific Capital, doradca ekonomiczny Rona Paula - kandydata na prezydenta Stanów Zjednoczonych w 2008, komentator ekonomiczny w stacjach telewizyjnych CNBC i Fox, przedstawiciel austriackiej szko³y ekonomii. Pogl¹dyPeter Schiff jest krytykiem obecnego systemu gospodarczego Stanów Zjednoczonych. Opowiada siê za radykaln¹ obni¿k¹ podatków i wydatków publicznych, likwidacj¹ FED i powrotem do waluty opartej na parytecie z³ota (dolar nie jest powi¹zany ze z³otem od 1971). Jest zwolennikiem ultraliberalnej austriackiej szko³y ekonomii. W wyborach prezydenckich w 2008 roku zdecydowanie popar³ republikanina Rona Paula, jednoczeœnie ostro krytykuj¹c kandydatury Baracka Obamy i Johna McCaina. Schiff znany jest z tego, i¿ przewidzia³ nadejœcie kryzysu finansowego, który rozpocz¹³ siê w Stanach Zjednoczonych w 2007. Schiff przepowiedzia³ kryzys na ponad rok przed jego pocz¹tkiem, bêd¹c wtedy w g³êbokiej opozycji do wiêkszoœci amerykañskich ekonomistów (np. Arthur Laffer) uznaj¹cych kondycjê amerykañskiej gospodarki za znakomit¹. Jako przyczyny zbli¿aj¹cego siê za³amiania, Schiff wskazywa³ niskie stopy procentowe, zbyt du¿¹ dostêpnoœæ kredytów hipotecznych oraz bardzo niski poziom oszczêdnoœci amerykañskich obywateli, przy równoczesnym rekordowym w historii stopniu zad³u¿enia. Schiff zwraca³ równie¿ uwagê na postêpuj¹cy spadek wartoœci dolara spowodowany odejœciem od standardu z³ota i zwiêkszaniem poda¿y tzw. pustego pieni¹dza, a tak¿e na zwiêkszaj¹cy siê deficyt bud¿etowy. Links: en.wikipedia.org/wiki/Peter_Schiff (English)
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Post by pieter on Jan 19, 2010 13:20:57 GMT -7
Link: pl.wikipedia.org/wiki/KomunitaryzmAnglo-Saxon economyAn Anglo-Saxon economy or Anglo-Saxon capitalism (so called because it is supposedly practiced in English-speaking countries such as the United Kingdom, the United States, Canada, New Zealand, Australia and the Republic of Ireland) is a capitalist macroeconomic model in which levels of regulation and taxes are low, and government provides relatively fewer services. Origins of the termThe term Anglo-Saxon to denote the English-speaking ( anglophone) world originated from the standard French idea of le monde anglo-Saxon. The term refers to a particular culture which strongly features capitalism and Protestantism. A link between Protestantism and capitalism was described by Max Weber in his observation of 19th century Germany, The Protestant Ethic and the Spirit of Capitalism. A common usage of " Anglo-Saxon" in the English-language media relates either to the language spoken in the area which would become England, or the people of these areas, after the arrival of Germanic tribes, primarily Angles and Saxons, in the 5th century. This usage is not linked to the use of " Anglo-Saxon" to refer to modern economic models. Disagreements over meaningProponents of the term Anglo-Saxon economy state that Anglo-Saxon economies are more " liberal" and free-market-oriented than other capitalist economies. However, those who disagree with the use of the term claim that the economies of the Anglosphere differ as much from each other as they do from continental European economies. For example, in an essay for the Centre for European Reform, Katinka Barysch writes, “ Is the gap between the Anglo-Saxon economic model and the continental one really that big? On closer inspection, there are as many similarities as there are differences. More importantly perhaps, there are signs of convergence. - Katinka Barysch, Centre for European Reform, 2005 ” Differences between Anglo-Saxon economies are illustrated by taxation and the welfare state. The UK has a significantly higher level of taxation than the US. Moreover, the UK spends far more than the US on the welfare state as a percentage of GDP and also spends more than Spain, Portugal, or the Netherlands, all of which are in mainland Europe. This spending figure is however still considerably lower than that of France or Germany. Most countries on continental Europe (such as France, Italy and Germany) possess a macroeconomic model called continental capitalism (also called). Yet some, such as Katinka Barysch, see Spain and also the newer members of the EU ( Poland) as (non-English-speaking) examples of " Anglo-Saxon" economies. The debate amongst economists as to which economic model is better, circles around perspectives involving poverty, job insecurity, social services, and inequality. Generally speaking, their advocates argue that more liberalised economies produce greater overall prosperity, while defenders of continental models counter that they produce lesser inequality and lesser poverty at the lowest margins.
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Post by pieter on Jan 19, 2010 13:32:45 GMT -7
Rhine Capitalism
The definition of Rhine Capitalism or Rhenish Capitalism originates from the French economist and (in 1991) Chairman of the Board and CEO Assurances Générales de France (AGF), Michel Albert who first used it in his book Capitalisme contre Capitalisme. He compared the so-called “neo-American model” of a capitalistic market economy, introduced by the administrations of Ronald Reagan and Margaret Thatcher with the “Rhine Capitalism”, especially its German version of the “Social market economy”. While the former is based more on the ideas of Friedrich von Hayek and Milton Friedman, the latter, according to Albert, is founded on publicly organized social security. Albert analyses the Rhinish model as the more equitable, efficient, and less violent one. However, according to Albert, complex psychological phenomena and the functioning of the press lets the American model appear more attractive and dynamic to the general public. Against this Albert wrote - 1991 already - for example: “The largest banks know, however, that they are literally 'too big to fail' and can count on a helping hand from government if the worst comes to the worst. America's political leaders would step in to prevent the crash of a major financial institution on the grounds that it could set off a lethal chain reaction culminating in widespread disaster. ... Thus, in yet another intriguing but ominous irony of history, 10 years of ultra-liberalism have resulted in a US financial system whose future may only be assured with the help of federal government handouts” (p. 61).
Albert maintains for the shaping portions of Rhine Capitalism that
the world of finance is more dominated by the banks instead of the stock exchanges, close relationships between banks and companies, a well-adjusted balance of power between share holders and managers, social partnership between employers and unions, employees of higher loyalty better educated employees thanks to the dual education system more regulated markets and – last but most importantly – shared values by most of the citizens regarding the ideas of equality and solidarity. According to Albert, both models differ little in their respective ideas about which goods are not tradable – with one major exception: religions. Areas where the models diverge significantly are the realm of negotiable goods (commodities, services) and that of mixed goods.
1. Religions in the Rhine model do not function as economic institutions as they do, in part, in the US. 2. Companies are, in the neo-American model, negotiable goods as any others, whereas in the Rhine model they are a community. 3. Wages are determined by a momentary market situation in the neo-American system, while in the Rhine model they are more constant and take into consideration qualifications, seniority and nationally agreed pay scales. 4. Housing is mostly a market commodity in the US. In Rhine economies it is mixed, costs are often subsidized. 5. Urban transportation would be partly regulated in the USA also, but is more a commodity than a mixed good. 6. The mass media is traditionally commercial in the US. While in the Rhenish system there is a tendency toward privatization, the opposite can be found in the USA. 7. Education is much more a commodity in the USA than in the Rhine model. 8. Health and legal professions: In the Rhine model a long tradition frees the members of a profession (e.g. doctors and lawyers) form the need to chase profit in order to be able to concentrate in a disinterested fashion on serving the public good. The service is a kind of an honor, and the expression for the payment in these areas (Honorar) is closely related to this underlying idea. Two researchers, Peter A. Hall and David Soskice, followed up the idea of two different kinds of capitalism with a large, empirical, international study. They came to a typology of (a) liberal and (b) coordinated market economies with different institutions and governance systems. The paradigm of a coordinated market economy is the German way of Rhine capitalism, the Social market economy, which, in the Anglo-Saxon world, is frequently called the “German model”, whereas - according to Hall/Soskice - the meaning of the expression “German model” is more referred to the social practice in Germany than to Erhards and Müller-Armacks fundamental concept.
The term Rhine Capitalism refers to the former German government capital Bonn at the river Rhine and is also related to the nearby town of Bad Godesberg where the German socialist party (SPD)accepted this kind of capitalism with the so called Godesberg Program. On the other hand, it is linked to the principles of social legislation, which can be found in all countries along the Rhine as in Scandinavia as well as in Japan.
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Post by tuftabis on Jan 20, 2010 3:12:19 GMT -7
more liberalised economies produce greater overall prosperity, while defenders of continental models counter that they produce lesser inequality and lesser poverty at the lowest margins. Exactly! And as you state elsewhere the point is to find the good balance point between the two.
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Post by pieter on Jan 22, 2010 5:34:07 GMT -7
more liberalised economies produce greater overall prosperity, while defenders of continental models counter that they produce lesser inequality and lesser poverty at the lowest margins. Exactly! And as you state elsewhere the point is to find the good balance point between the two. Tufta, This is a good analysis of the things I wrote here! Pieter
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Post by tuftabis on Jan 26, 2010 7:44:33 GMT -7
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Post by pieter on Jan 28, 2010 17:53:08 GMT -7
Tufta, What I find positive about the article in particular are these facts: 1) " Poland's relative economic strength during this economical crisis" 2) " The cultural shift the country has made since a more business-friendly generation comes of age." 3) That Poland didn't try to boost consumer demand by offering incentives to scrap cars and buy newer models, as many other European countries have done. 4) That " Over the crisis, the ruling center-right, pro-business Civic Platform party has nevertheless risen in the polls". 5) The relative strength of Poland's economy. And that Poland has avoided the disastrous 2000-2005 unemployment range of 17%-20% range and maintained it at 11.9% in December, according to preliminary Labor Ministry forecasts. 6) The generational shift in the Polish electorate towards supporting privatizations and refrain form wealth redistribution and therefor a loss of the discontent with post-communist transformation, accepting the new times, reality and reforms. 7) Law and Justice, was probably right in it's sharp criticizem of the ruling Civic Platform for its lack of policy reaction to the global crisis and rising unemployment in Poland. However fortunately without gaining traction in the polls.8) The fact that according to Piotr Maciej Kaczynski, research fellow at the Center for European Policy Studies, a Brussels-based think tank " The number of university graduates has risen sharply in Poland,". " And that it were students and university graduates who ensured victory for the center-right, pro-business Civic Platform", which is good for the Polish economy, society and therefor future!. 9) Increasing numbers of Poles have been gaining business experience, many of them overseas, forming a middle class whose ranks are growing and which is feeling more secure.10) That " a mini-baby boom during the 1980s has produced a large number of 20-somethings who grew up during the past two decades of economic transformation. Now they are becoming taxpayers and becoming more conscientious voters." " That this younger pragmatic generation understand a lot more about economics than their parents and grandparents and are starting to realize that government aid has to come from somewhere, from taxpayers' pockets," according to Rafal Antczak, vice president of Deloitte Consulting in Poland. That " for those under 40, who are reaping the benefits of the country's transition to a market economy, liberalism is the new reality". And that " they aren't hoping for the return of the welfare state." 11) It is an exellent situation and conviction that " most Polish voters think companies should be allowed to fail, according to Janusz Maksymiuk, a former Polish member of parliament for the Self Defense party." 12) " That the Poles are seeing that taking initiative is more important than waiting for government aid" (Mr. Maksymiuk). Pieter
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Post by tuftabis on Jan 29, 2010 2:17:46 GMT -7
Tufta, What I find positive about the article in particular are these facts: Hi Pieter, I too liked the article, it is insightful and true. These simple traits are not so popular among journalists' work. What I find as an additional by- advanatage is that it was written by a business journalist which is both young and new. I don't remember reading anything by MArynia Kruk. Here's she
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