Author Archives: Edward Hugh

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

Where the River Bends

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I don’t know how many of you are familiar with the female Iraqui blogger River Bend, but my feeling is that those of you who aren’t would do well to make her acquaintance. Juan Cole describes her in his blogroll as an Iraqi nationalist, but reading the posts she doesn’t seem to be a nationalist in any stronger sense than say Blair and Bush are patriotic, or than Schroeder and Chirac are in the defence of their respective corners (of course this may well be problematic, but it is just to put things in perspective). Iraqi nationalism could also mean Baath, and this isn’t the case here. Indeed what she has to say about the Kurdish question is remarkably similar to what the Spanish PSOE seems to be proposing in connection with the Basque and Catalan ‘problems’ here in Spain. And this is not an idle comparison, since I think if you don’t get your mindset round what the ‘problem’ is in Spain, you are never going to begin to understand what it is in Iraq.

Reading one of her posts earlier this week, I couldn’t help been drawn towards an unfortunate parrallel: that between what is now taking place in Iraq and the topic of one of Scott Marten’s recent posts: the headscarf. Wouldn’t it indeed be ironic if we were about to witness a similar – if diametrically opposed error – being committed in two places at once? Whilst young French girls may be denied the right to religious expression at one end, young Iraqi ones may be denied the right to secularism. at the other And all in the name of democracy. Strange world.
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Living in Denial

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No this is not (yet) the title of one of my new pages (although we were looking into living in sin, but unfortunately it’s already taken). No the denial I am referring to is much nearer home for most of us, since it is up there in Brussels. “European Union nations are dragging their heels in their ambitious drive to become the world’s most competitive economy by the end of the decade” or so we are lead to believe from the EU annual survey published by the Commission on Wednesday.

This foolish piece of what the Spanish would call ‘chuleria’ (no easy translation but I suppose you could try vain self-important show-off bragging) – the pledge to overtake the US by 2010 – was adopted at the Lisbon 2000 summit. It was madness in its moment, now it looks just plain ridiculous.
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The Price of Obesity

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Economist for Dean Lerxst gets hold of something really interesting in a post yesterday ( which Calpundit also picks up on). He draws our attention to the fact that some US economists have recently been arguing that there has been a significant rise in individuals claiming disability benefits and this has taken a large number of workers out of the labor force, thus – at a stroke – reducing the “official unemployment rate”. The research by Mark Duggan and David Autor is discussed in a NYT op ed by University of Chicago Professor Austan Goolsbee.

Lerxst also highlights the significant role obesity may play in this. He cites an article in Friday’s Wall Street Journal describing a new study by RAND Health economists showing that obesity may actually be the “primary” explanation for the rise in the disability rolls. According to Dana P. Goldman, director of health economics at Rand and the principal investigator on the study cited in the WSJ there is “evidence to support (the idea) that obesity may be a primary reason.”
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Diversity Within Unity

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Following Scotts recent post in the mailbox we have Amitai Etzioni drawing our attention to a piece he wrote on the same topic in the International Herald Tribune. His key point seems to be that it is important to “utterly reject the multicultural notion that we should abolish societal identities to accommodate the sensibilities of the newcomers”.

I appreciate the thrust of what Amitai is saying here, but I still think he is mistaken. Identities are not static, but fluid: they are processes. Our identities as much as the cells which compose our bodies are changing everyday. We do not need to abolish anything, but we do need to accept both the fact of and the need for change. To do otherwise would seem not to be living in Europe, but rather to be living in Denial. So in this context I would prefer to go down another road, that opened up by the French Philosopher Emmanuel Levinas: one of the measures of our degree of civilisation as a community is our open-ness to the other. This would be my main point of departure from the US notion of diversity, which for all its sophistocation and its appeal, is still feel IMHO far too structured by a US, non-US dichotomy: one that we here in Europe are in danger of assimilating. The limitations of such a failure to grasp the radical difference presented by ‘otherness’ can be found, for example, in the attitude to Japan (why can’t these Japanese just set up a normal capitalist system like everyone else does), in China (why don’t the Chinese simply rebel against all this centralised communist dictatorship stuff), or – dare I say it – in Iraq (why the hell don’t these guys just accept democracy).

What Levinas suggests is that we are setting up the problem in the wrong way. The other is just ‘other’. Our challenge is to accept this. To take the marriage (or co-habitation) model: love is not consuming the partner and turning them into a figment of your own desire. Love is accepting your partner as they are, warts and all, and loving them for what they are.

Ok this is strange stuff for an economist I know, but there it is. I have pasted an extract from Amitai’s piece below. There are lots of other arguments worthy of consideration, about schools about common language, about you name it. This discussion is important, say what you feel like saying, maybe he will join in.
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Important News For Europe

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OK I’m pushing the point quite hard here, but what I want to emphasise is that a European blog in a global world has a pretty broad reach. The latest round of US employment figures are in, and they are nowhere near as pretty as everyone (including even me) was expecting. Over 400,000 people stopped looking for work due to the fact they considered the jobs weren’t available. The most important thing is that manufacturing industry is expanding production without hiring, in fact jobs were lost, while hours worked went down not up as they should have if the recovery was really gathering momentum.

So the situation is extraordinarily complex, the big Asian wheel keeps on rolling, the US turns round and round but not quite quickly enough, energy leaks out of the system, and we here in Europe catch the backdraft. Which means that today the euro touched another record high of $1.2868 before falling back slightly. Economics as they say is not a zero sum game, so among the possible results are both win-win, and lose-lose. America’s discomfort is not our great opportunity.

Meantime back over here the Parmalat scandal trundles on with the Bank of America offices in Italy being raided, and Grant Thornton expelling its Italian business – which currently has two of its partners in prison – from its global network.
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Things That Can’t Go On Forever, Don’t

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Ok, the sun is shining nicely down here in Barcelona right now, so maybe this is a good moment to come out and provoke a storm. The euro: something gives, but what? Actually it is perhaps ironic that I have chosen today of all days to write this, since for once it seems the euro may fall rather than rise: well to someone who is accustomed to marching out of step, this almost seems par for the course. Never mind, tomorrow, or the day after, we will be back to normal, and the seemingly unstoppable rise will continue. The only remaining question really is: where is breaking point, and what will happen when we get there?
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Methinks We’re On The Slippery Slope

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OK you may be in for a bout of solid over-posting. There seem to be some signs in the air that push may be about to come to shove. Tomorrow I will try and do something on financial architecture and the euro. Meantime this is a ‘light’ warm-up post. The efficient cause is today’s news from Portugal, which suggests that the supposed Harrod-Balassa-Samuelson free-lunch-honeymoon (which has to count as one of the worst pieces of ‘justifying what there is simply because it is’ pieces of quackery where there should have been solid science known to recent history) may be about to come to an end. One of those darned ‘catch up’ economies may have just caught up so hard that’s it’s come to a dead halt. The Bank of Portugal has predicted growth of only 0.75% this year, and even that only if there is the anticipated growth in global demand (which I doubt extremely). Those who have read my Parmalat post will have seen that I am already begining to speculate about whether we are about to see the end of growth in the Italian economy, well just remember Portugal is lined up nicely in the queue to see where lunch is going to be served.
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Parmalat: Just Another Scandal?

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On a day which sees the Parmalat heat being turned up to full blast, with a looming ‘cara a cara’ between former Chief Financial Officer Fausto Tonna and Parmalat chief legal counsel Gian Paolo Zini, and while in the United States a class action law firm has named investment bank Citigroup Inc and auditing firm Deloitte & Touche Tohmatsu among defendants in a lawsuit against the food group – a lawsuit incidentally filed on behalf of a U.S. pension fund (oh when, oh when will we get class action lawsuits here in Europe) – on such a day it might well be worth asking ourselves one simple question: is this just another one-off scandal?
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Merry Xmas

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Just to say, sorry I haven’t been around too much recently. That will change in the New Year. I hope people in Italy aren’t going to be stuck for food. I also note that the US has one more problem to add to the list. This latter should come as no shock, for reasons you can find explained here and in particular here. Apart from anything else, the virtual inevitability of this is connected with something called the Gibbs Principle. The Mad Cow site used, in it’s day, to be one of the best on the net as far as I was concerned, and it is a pity that more have not followed the model. Ok that is enough of this gruesome topic, or you’ll all be vegetarians by tomorrow. So what about xmas?
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Getting Endorsed

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In the US presidential elections the big news of the week must be the endorsement of Howard Dean by Al Gore. A somewhat smaller, but still interesting, development – although this isn’t exactly new, but simply new to my attention – is the fact that someone has created an Economists for Dean weblog. Finally, if you are really short on ‘breaking news’ and if you really want to go down to the fine print of the week, you might just notice that I seem to be included in the sidebar, in amongst a variety of other economists who undoubtedly have rather more public appeal than I do. I would like to say that as a European I consider it an honour to figure in such company: this does however present us with a number of questions worth thinking about, and it is to those that I would now like to turn.
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