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A single market - an appraisal

The initial question about the EU Economy was about the benefits to be expected once no longer a small national market prevailed, but instead a huge internal market which could offer a different scale of economies. The plan to unify first of all the 'coal and steel' sector, and thereby avoid over production, followed an economic thinking prevailing after the Second World War. The proposal by Schumann was meant to make it impossible for France and Germany to go to war again. They would share resources and without the other's agreement they could not make use of them. That was the beginning of the European community.

Unfortunately over time, and especially under the leadership of Helmut Kohl often praised for being pro Europe, the term European Community was transformed into European Union. This conversative version meant like in the United States an Union train could run through the diverse European landscape and open up till then exclusive territories to new forms of investments. Most of them became real estate speculations i.e. English or German citizens investing in houses in the South and preferably with a view of the sea. That explains the readiness by all to accept this development despite of being a growing threat to both the environment and the economy. That housing bubble finally burst after 2008 and this mainly due to over spending with nothing in return.

Other policy measures would be needed to link European integration and expansion with some norms of how local cultures and economies are to be preserved while large scale business assumes more power. This should include also avoidance of perceiving the Southern European member states as if only tourist destinations or like Florida in the USA places to retire to. A simple example is New Zealand. That country does not allow people over 65 to enter on a permanent basis. For they could buy up houses and live there without ever joining the local community. If such a trend would go unchecked, it would lead to a demographic imbalance of society.

Just as immigrants move into Europe, so European populations shift their weight to preferred places in the South if they have the financial means. This has not been taken into consideration especially in places like Greece, Spain and Portugal. They are all preferred places to retire to and that means another kind of integration never envisioned by those who proposed the European Union instead of retaining the scale of a European Community. In addition, the crisis in these Southern member states has provoked a new wave of migration with ever more young people departing in search for jobs in Northern member states, preferably Germany. Since the latter has suffered a decline in young population such influx of young people is welcomed, but puts another pressure on places like Berlin where poverty is widespread and the once economical spaces which attracted especially artists becoming ever more expensive. There is fear, for instance, that Berlin will lose its creative flair as a result of over commercialization and subsequent gentrification. And once the Germany economy itself will be hit by recession, who knows how these places with already high unemployment shall perform when it becomes a matter of utmost important to prevent people from falling below poverty line.

Unification plans foresaw a single market, but these plans were not made compatible with the critical post-war notion that especially the German economy needed reform. Intended was to avoid the same old mistakes which led to the rise of Hitler to power. Shonfield in 'New Capitalism' explained one of the main aims when rebuilding the German economy after 1945 was to avoid leaving all the power in the hands of the big industrialists and banks. By 2012, the restaurative forces renewing their claims on power have become well established conglomerations with German banks still prone to commit the same old mistakes e.g. giving risky loans to the international shipping industry and therefore in need of huge bailouts. Given the general fear of the German population in currency devaluation, it was already a feat to convert from the DM to the Euro. Now that this has become a reality since the EURO was created as single currency, the German economy with its strong export orientation had the greatest benefit. Yet all indications are things are not as healthy as made to appear. Already SPD Steinbrück, candidate for his party at the upcoming general elections in 2013, has pinpointed one key worrying factor, and that is the increase in exports of weapons. Germany is by now the third largest exporteur of arms which spells troubles ahead not only for those regions in conflict but as well for the Germany economy. It is never a healthy sign when overdependent upon the weapons industry.

All that means Germany is again in the hands of big power players ready to sideline politics or worse it favors the kind of politics with an arrogant elite here and there the masses of silent workers and small to middle sized producers. There are reports that the middle class in Germany is shrinking rapidly. Such bipolarity furthers the kind of thinking as portrayed by ex German banker Sarrazin. His political statements underline one danger quite directly. Already prior to the rise of Hitler, there were campaigns under way to oust modern artists. The main argument was that they would undermine the creativity of the 'Volk' - people! Likewise today, Sarrazin paints the fear on the wall that Germany shall be destroyed by the many non-Germans coming into the country. He means above all the Turkish-Muslim population.

Why mention this in the context of discussions about the economy? Despite Sarrazin having been a high profiled executive of the German bank so that some sophistication in mind and thought could be expected, his political thinking slides below any logic. It reveals another, much more hidden thinking behind mere economics. That is at times most confusing but proves the point of Mannheim in his 'sociology of knowledge', insofar there are determinants at work and which do make up an entire social structure.

If not scientifically founded, then it is still a fact that such opinions reflect the small talk going on in a society which has grown again afraid of itself. The press picks this up and reproduces 'fear mongering' on a large scale.

The dilemma for Germany is, however, a need for highly qualified workers while keeping the low skilled out. This immigration policy is at best highly discrimatory.

The problem is not one of Germany alone. Given lack of basic skills and a high level of unemployment throughout Europe along with inadequate education and training to link up with the needs of the new economy, how best to prepare for the future becomes ever more urgent. Thus EU Commissioner László Andor speaking in Pecs at the conference 'Inclusion through educaton and culture' on Oct. 15th predicts in line with the EU strategy for 2020 that:

"There are more than 80 million adults in Europe lacking basic skills. This means they are several times less likely to access and be able to upgrade their skills than people with high attainment levels. This leaves them exposed to the risk of unemployment or precarious jobs and situations of poverty and social exclusion.

Yet, by 2020 over 31% of all jobs will require high qualifications compared to some 27% today. This means 16 million more jobs will need to be filled by highly skilled workers. An additional 4 million jobs will require medium-level qualifications. But the number of jobs where people will only need basic qualifications will fall by 12 million."

To this situation of the unemployed and those living at risk level, the financial crisis adds much more uncertainty than what has been acknowledged so far. As the case of Greece shows, hedge funds have spun out of control and with it state deficits. Somehow many kept just spending without asking where does the money come from. Louis Baeck describes in his 'Standpunt' (standpoint in Flemish) as a pertinent need for economic and fiscal harmonization to ensure that the EU common market functions in a way that current trade imbalances can be corrected. In particular, it means that the German surplus and deficits of the Mediterranean countries is unsustainable. He thinks the decisions made by all actors in May 2010 is a step in the right direction, but a lot shall depend in future on improving the institutional capacity further the EU economic governance.

There is another matter to be addressed. How the crisis is used to let go through almost without any further scrutiny large scale investments. They are made without regard for their environmental impact but are accepted out of fear otherwise the huge state deficit crisis cannot be resolved. For example, it is said repeatedly in Greece that investments are hindered by an inefficient bureaucracy. That truism is upheld no matter what and the press echoes these claims. In reality, it frees the possibility of making uncontrolled investments without demanding any kind of public accountability, never mind to ask that culture is taken into consideration. The latter would mean to apply the method of cultural impact assessment to every investment project. Unfortunately until now this method of not just risk but cultural impact assessment has been refuted even though culture as a selection screen can ensure that highly quality investments are made. Too often justification for investments is reduced to the sole criterion of job creation, when in fact taking culture into consideration demands a lot more.

The experience of the Article 10 ERDF project CIED was that the demand to take culture into consideration prior to accepting any investment does not mean to be against any kind of large scale investment per say. In the case of Cardiff, when re-developing the entire former coal port and investors were sought, yes, fewer investors were found since many found culture as over complicating matters. But then the offers made in compliance with this demand, they were of much higher quality and proved to be at the same time novel in design and sustainable. As a consequence of the constraint the local cultural setting should be preserved, instead of a new transport road cutting through an existing village rather a tunnel was build to go underneath instead. Also public art was used to provide orientation a major junctures. In what had been previously waste land or just empty harbour space with nothing for the eye to fasten onto, a cultural landscape was created.

Fore mostly investments should be made that ensures the people who live at that location have a future. Investments must keep pace with what people need to qualify for the next higher level of life. It is well known the more production but also consumption, the greater the need for waste management. Too often the latter aspect is forgotten or left out of the development equation.

When it comes to realize a good economic development, many tough fights lie ahead. Also many governmental levels are not interrelated in a transparent way. While administrative reform is needed, politics seeks too often short-cuts when things improve only in the long run with a steady and consistent way based on a culture understood best as a search for truth. Never should economic reality mean a freedom for all and those with the power to do whatever they like. That is why economic governance has to be checked by such cultural reflections capable of bringing about a cultural governance of the economy.

Many mistakes were made during German re-unification. For instance, Leipzig allowed and preferred investsments on the so-called 'Green meadow'. Although this allowed circumvention of cultural heritage and other obstacles if old parts would have been renewed, the negative impact of a failed investment in the city is only felt twenty years after 1989. Leipzig supposed to be one of the most dynamic cities in Eastern Germany, but which has in 2010 a risk rate of 27% for people to fall below existential minimum and therefore into poverty. It is the highest rate in all of Germany. If that is the case, it would mean every fourth person in Leipzig would come close to this poverty line as established as main criterion of the European Commission.

Poverty can be defined in various ways but deprivation of quality of life just one example. Often it is being overlooked that people deprive themselves from participating in social life because they are so sacred, that they do not undertake anything and thus remain without further going experiences. By remaining at home and just sitting in front of the television set, they lack the cultural participation needed to invest in their lives. Instead in their social isolation they come very close to what Vincent Van Gogh depicted in his painting of the night cafe: men sitting alone at tables, their glasses half empty and their eyes blank due to starring into an unknown future without prospect of any hope to get out of this misery while the waiter appears as butcher of time for time is simply wasted away.

There are many programs and agencies seeking to take care of those who 'do not make it on their own'. Yet those welfare agencies claiming to be engaged deal with the money made available for such a social purpose handle the funds in a mostly intransparent way. The same is known about international agencies with overhead costs claiming sometimes 80% of the resources while presumably only 20% goes to the end receives. In terms of perception and interaction, as long as these people without jobs and future in society sit around and do not disturb anyone, no one really bothers to take a closer look as to what is happening in this neglected corner of society.

The question has to be then what would activate them, and indeed what kind of economy could give everyone something to do just as is the case in former local economies when even the mentally retarded was given a chart by which he could transport goods and thus integrate himself into society. It is the overt rationalization for the sake of making more profits which discards so many people who could have been kept on the job had another thinking prevailed. There are efficiencies which are more humane than those linked to the need of being competitive on the global market. In turn, there are fear factors invoked all the time as if a company cannot keep up if nothing new is invented and therefore it is foreseen when the old products no longer sell.

People in despair have no story to tell. They cannot discuss with others the economy in a way that they can affect decisions. Interestingly enough the usual criticism is levelled only at politics in general when it comes to referring to the democratic gap. In reality, this gap is even larger with regards to the economy for there people have even less a say. That is taken care by those who knew how to make money and therefore have become managers and share holders who have a say in things e.g. Soares. Even though highly eccentric, the listening to only these voices is brought about by politicians who seek magic solutions and therefore look upon these powerful figures as potential saviors. Politicians readily know how to articulate the difficulties they have with making decisions and thus only few participate in efforts to make the right decisions. They supposed to be for the sake of the people but then 'people' is such a vague term in reality, that other interests replace any accountability meant by evoking such a term.

Naturally China knows with more than 1 Billion people something has to be done to secure the food supply for the future and thus they invest heavily in African farm and from where the harvest food shall be taken to Piraeus to be processed there before being shipped back to China. That is a huge logistical operation and explains why the Chinese have bought into the container terminal of the port of Piraeus. Naturally such an investment is welcomed in Greece burdened in 2010 by a huge state deficit. This underlines that state finances can only be consolidated if all the losses incurred can be off-set by new business prospects.

This pertains not alone to Greece. Germany benefits as well from the growing business with China. Its presence is being felt everywhere including in the art market in Berlin. The presence of new amounts of money leads in turn to rising rents for apartments and thus makes it more difficult for those who live near or at existential minimum.

The notion that these spectacular solutions will benefit everyone is one of the greatest illusions. While some win, many loose and there is no time in-between adjustments in need to be made and real suffering on the ground when it comes to face the consequences of these moves by the new economic giants. In the past that governed very much the relationship between the USA and Canadian economy and a descriptive saying was when the elephant wishes to turn in the sleep the mouse be better prepared and move out of the way before that heavy weight comes down to rest on the other side.

HF 20.10.2010 (up-dated 23.12.2012)

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