Category Archives: Economics
UK town centre vacancy rates reach 11.9% in April 2013, meaning nearly 1/8 of 'mainstream' commercial premises empty; recession 'corrosive'—
Asad Yawar (@Mediolana) May 21, 2013
One of the largely-unheralded casualties of the most recent property bubble in both the United Kingdom and the United States is a group whose relative lack of access to the corridors of power often sees it ignored by policymakers: young adults. With prices for housing – whether rented or purchased – long in parodic territory in metropolises such as London and New York, the lack of posited solutions for such an obvious problem is one of the genuine intellectual disappointments of the twenty-first century. Well-intended proposals such as microflats – tiny apartments that seem designed for large rodents rather than anything approaching a humanoid – have only served to highlight the lack of imagination evident in addressing this crisis; many young professionals have turned to internal or external migration as the only viable exit.
It was with this in mind that our CSO was struck by a novel form of housing being formulated at the Media Lab at the Massachusetts Institute of Technology (‘MIT Media Lab’). The CityHome is an 840ft² property the main room of which – via the use of robotic walls, appliances and furniture – can transform into any number of large rooms at the flick of a switch. One minute it can be a large dining room with space for up to fourteen people; the next, a home gym; the next, a large kitchen. While the project is still very much under development and its limitations for anything other than one-person occupancy are clear, the massive corporate underwriting of the MIT Media Lab means that should the construction industry find this idea a winner, CityHomes could soon be making their way into a newly-constructed apartment block near you.
As brilliant an idea as it is, however, the CityHome does not address the ultimate question of its own perceived necessity. Would there be any need for such electronic ingenuity in the event of a simple rise in interest rates which would end subsidised money and rebalance the housing market? As red ink soaks the balance sheets of financial institutions in both the great financial centres of the last century, it seems almost churlish to ask.
One of the most brilliantly provocative pieces that our CSO has recently come across is Financial Times doyen Simon Kuper’s Smile if you’re European (3rd May 2013). Kuper convincingly posits that while the banner headlines concerning Europe pertain almost invariably these days to crisis and decline, the continent’s ‘terrible time’ is not necessarily one that looks so bad ‘compared with probably every other continent and any time in history’. The co-author of the wonderful Soccernomics cogently points to Europe’s exceptional paucity of large-scale violence, high life expectancies, relative lack of corruption perception and economic equity as reasons why life even in dynamic emerging markets will take a long time to catch up to what is considered ordinariness in the Old Continent.
Yet as convincing as Kuper’s analysis seems, after some reflection we at Mediolana believe that he has neglected to give weight to several factors which may point to a less benign future for the land mass that did so much to define much of the nineteenth and twentieth centuries:
1. Geography. Kuper is writing from Turin, home of Juventus and Fiat, and one of the most affluent and well-run cities not just in northern Italy but the entire world. A perspective from several other football-mad European metropolises – Madrid and Lisbon, let alone Athens – is pronouncedly different; in an uncomfortable number of countries, the European dream of tidy prosperity has already been annihilated.
2. Change. As those familiar with Asian and African history will no doubt be especially aware, great societies can and do go into astonishing decline which may not be arrested within any reassuring timescale. The dispassionate observer can see traces of this in countries such as Spain, which lost 2.7 million mobile telephone subscribers in 2012 and whose digital telecoms base continues to shrink. At the same time, the last few decades has seen the near-monopoly which the developed world held on the Wonders of Modern Life – such as metro systems, higher education and world-class ice-cream and coffee – eroded.
3. Generation. As someone born in 1969, Kuper would have had access to a normal jobs market upon graduation from university in the early 1990s. To anyone facing relevant unemployment rates of c.50%+ in countries as diverse and Portugal and Bosnia, the future prospects of Europe minus the chance for reasonable remuneration and capital accumulation will look decidedly different.
The Sky’s the Limit: Champions League ‘Finalists’ Borussia Dortmund Ink Airline Marketing Agreement!
McDonald's announce Q1 2013 global sales slide of -1%, with the US (-1.2%), Europe (-1.1%) and Asia+Africa+ME (-3.3%) all recording slippage—
Asad Yawar (@Mediolana) April 22, 2013
Back in 2007, our Creative Director & CSO Asad Yawar foresaw the rise of Turkey – something not even on the global international relations agenda at the peak of the Euro-American credit bubble – as having ‘far-reaching implications…for Europe, Central Asia and the Middle East’.
Since that time, Turkey has been the only major European economy aside from Germany and oil-rich Russia to come close to transcending the global economic crisis. But its longstanding trajectory of joining the European Union – a goal which was confirmed with Turkey’s official bid to join the European Economic Community almost exactly twenty-six years ago – does not look nearly as attractive as it might have done even five years ago. A condition of Turkey’s EU accession is the eventual replacement of the Turkish lira with the much-maligned euro; given the experiences of present eurozone periphery countries, where even sacrosanct pillars of private property such as bank deposits and gold have become collateral damage in a financial armageddon, it is doubtful whether a country which could in theory gain many of the benefits of European Union membership without actually joining would choose to take the obvious risk constituted by signing up to the EU.
With an ever-growing international reach – Turkey’s foreign aid budget nearly doubled from 2011 (US$1.3bn) to 2012 (US$2.5bn) – the state that contains the former imperial capital of the Ottoman Empire clearly has options regarding its future alliances. But what, if any are the alternatives to the EU? After some contemplation, we at Mediolana came up with the following:
1. Shanghai Cooperation Organisation. This international bloc – ironically headquartered in Beijing – is fundamentally a Eurasian security alliance. While the current Turkish Prime Minister Recep Tayyip Erdoğan has openly stated his keenness on joining the SCO, these sentiments do not appear to be shared even by other senior figures in his own AK Party, and it is easy to see why. Totally dominated by Russia and China and offering little in terms of environmental or human rights standards, Turkey would have little leverage within this grouping and would have no additional incentives at all to improve two of its (presently) weaker areas.
2. Organisation of Islamic Cooperation. Historically one of the great sleeping giants of international relations, the OIC should in theory be an arena where Turkey, which is already a member state, can further its goals. And from 2005 to date, a period when Professor Ekmeleddin İhsanoğlu has been Secretary-General of the OIC, Turkish influence within the organisation has been palpable. However, Turkey has not traditionally enjoyed a prominent position within a largely ineffectual organisation that has been characterised by the power struggle between Saudi Arabia and Iran. The forthcoming supplanting of the present Secretary-General by Saudi former journalist Iyad bin Amin Madani means that the OIC is unlikely to adopt a Turkish agenda in the medium term.
3. Turkish-Islamic Union. This is an international bloc which presently does not formally exist but which is being heavily promoted on A9, a Turkish television station established in 2011. This fact alone would not normally qualify it for serious consideration, but judging from the calibre of people from the worlds of academia, journalism, business and politics that have already been interviewed by this channel and who have expressed a desire to see Turkey take on this type of leadership role within the Islamic world, A9 seems to have an influence disproportionately large compared to its modest audience share. The main advantage of this grouping for Turkey is that it would get to design the institutional architecture from the TIU’s inception, which in theory could make it much more functional than, say, the OIC or EU; while the provisional name of the organisation is unlikely to inspire Arabs or Persians, the essential concept deserves consideration.