Shiny Happy People: The Future of Europe?

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.

Should Capitalism Come With An Instruction Manual?

Over a lengthy (and almost indescribably relaxed) breakfast this weekend, our CSO’s attention was diverted from his habitual rummaging through the FT Weekend magazine by a piece in the main section of the Financial Times. Voice of indignation is household name (Tobias Buck, 9th/10th March 2013) charted the rise of one Ada Colau Ballano (‘Ada Colau’), a 1992 graduate of Barcelona University’s Faculty of Philosophy who recently hit the headlines for her actions as a social activist during a briefing session on Spain’s mortgage crisis in the Cortes Generales: turning to the member of the Spanish banking association with whom she was co-briefing the parliamentarians, she labelled him a criminal worthy of treatment as such – and she has never looked back, with regular appearances in the Spanish media as a spokeswoman for the Plataforma de Afectados por la Hipoteca (‘Platform of Mortgage Victims’).

Colau’s group has collected 1.4m signatures in favour of proposed legislative changes to, amongst other things, make evictions of non-paying mortgagors much harder, and preventing banks demanding payment in full of mortgages on repossessed properties. In an era when suicides of soon-to-be evicted homeowners are an all-too-real occurrence, this would appear to be the type of step which should be contemplated; any system which evinces a lack of flexibility in the face of genuine human suffering is treading on thin ice.

Yet while compassion must ultimately reign supreme, we at Mediolana wonder whether these kinds of solutions are the correct long-term approach, because on some level they themselves enshrine a fundamental injustice: that of the debtor failing to make good on their promise to pay back money that is not theirs. Both the educational system and wider society must in the future take much more profound steps to ensure that mortgage-dominated financial crises of the type that threaten to decimate Spain are rendered much more unlikely to happen:

1. Capitalism: No One-Way Street. During the boom years to 2007 – and not just in the eurozone periphery – the idea that capitalism was perpetual no-risk feast, with everyone guaranteed a slice of Shangri-La, was perpetuated by policymakers, financial institutions and media organs – and gleefully swallowed up by the general public at large. That successful capitalism required hard work, delayed gratification, transparent (and accurate!) accounting and cutting one’s cloth accordingly (including not purchasing a house if the means to do so were not realistically sustainable) – all these and many more principles were pooh-poohed with a combination of bogus mathematical models and naive arrogance that merely fuelled the inevitable bust.

2. Capitalism: The Sum of Its Parts. Economic systems are not just abstract entities: they are constituted of people and organisations. And as much as those across the political spectrum may prefer to ignore this, the moral quality of these entities matters enormously. As the example of Silvio Berlusconi has copiously illustrated, if your country’s leader’s personal morals can be encapsulated in the phrase ‘bunga bunga’, they will probably have no compunction swindling you of your pension. On a more prosaic level, the honest negotiation and enforcement of contracts, business dealings and the like cannot proceed in a sustainable manner where the sole motivation for economic actors is that of personal enrichment.

3. Capitalism: Not the Same as Anarchy. The approach of Ms. Colau and her pressure group – while doubtless well-intentioned – in many ways betrays the impoverished understanding of capitalism that has characterised Spain in recent decades. At things stand, the Platform of Mortgage Victims are beggars pleading for clemency at the door of the Spanish government – whereas if they took a more consistent ‘zero bailouts’ moral and legal position, they would have a possibly irresistible case. In the absence of state aid for banks and population alike, the financial institutions would cease to exist – and with no counterparty to enforce the mortgage contract, eviction of indebted mortgagors would become a pretty slim possibility.

Monocle Magazine in Spain: Much More Needed to CTRL + ALT + DEL

The self-styled briefing on global affairs, business, culture and design that is Monocle magazine once again caught the eyes of our CSO for a recent article in the December 12/January 13 issue: Starting Again － Madrid. With Spain in an economic tailspin, Monocle sees a potential trend for salvation in the ‘remaking’ of the country’s capital by a new generation of entrepreneurs. With commercial rental prices in Madrid suddenly within reach of the first-time businessperson, and a supportive mayor - Ana María Botella Serrano, aka Ana Botella – trimming the layers of red tape that typically envelope Spanish enterprises, a veritable commercial renaissance is purportedly underway.

We at Mediolana would love little more than to believe that this is true. But a closer look at the article reveals just how far away Spain is from recasting itself as a place where export-led businesses can lead the way to an economic recovery:

1. Elitist Focus. By the article’s own admission, the entrepreneurs leading this charge are generally those with access to spare cash provided by their families – realistically, only a tiny percentage of people will fall into this category. While Spain’s savings rates accelerated markedly after the intensification of the economic crisis in 2008, these savings are being used for day-to-day living costs, rather than being added to any stocks of pre-existing liquidity.

2. Institutional Sclerosis. Entrepreneurs – even in Madrid – are still confronted with a waiting period of about three months for a simple business registration process – and even this has been possible only after the privatisation of the company registration sector. Given that businesses can be registered electronically or in person within a single day in jurisdictions as diverse as the United Kingdom and Turkey, this would appear to be an indefensible position to sustain; it is profoundly symbolic that despite a change of government in December 2011, this problem has still not been substantively addressed.

3. Glad to be of Service? Assuming that the businesses featured in the Monocle article are representative of this new trend of entrepreneurship – and notwithstanding the fact that we genuinely hate to knock any reasonable business idea – there does  seem to be an overemphasis on price-elastic industries with high overheads. Will a country with an official youth unemployment rate of 55% and rising be in a position to support rafts of new clothing stores or bar-restaurants, however funky?

Memories of Spain, 2002: When We Suspected Something Was Up

Unlike the Mediolana CSO Asad Yawar, most commentators – economic or otherwise – did not see the ongoing global financial crisis coming, and are as surprised as anyone to see affluent European countries such as Spain slide into what we have termed (and will soon flesh out in more detail) as a New Second World. But Mediolana’s CSO has long seen ominous signs in the Spanish economy since his first visit to the country in 2002.

Travelling to the Andalusian tourist triangle (Sevilla-Granada-Córdoba) during a blistering summer, our CSO noticed one or two things aside from the remarkably long queues at the entrance to the Alhambra Palace:

1. 1492-1992. Andalusia – one of the most dynamic places in the world during the Middle Ages – is a fixture towards the foot of modern Spain’s economic league table. Still, Yawar did not expect to find cities where between the expulsion of the Moors and the commencement of serious EU sweeteners, nothing much of note seemed to have happened. Particularly striking were the bus stations, ramshackle products of the pre-EU second and third quarters of the twentieth century which reminded our CSO of nothing so much as why Yugoslavs traditionally regarded their economy as superior.

2. Deep Structures. 2002 was a time when any half-sentient Briton could walk into a bank, lie about their income and have half a million pounds deposited in their account faster than the responsible teller could say ‘commission’. Rules about this sort of thing were tighter in Spain, but still: the good times rolled. Income was disposable and cash was flashed, yet a few enquiries in and around Granada revealed a real unemployment rate of around 40% in Andalusia – similar, ironically to that existing in much of the former Yugoslavia, except without the alibi of a recent war (and lavish EU members-only funds).

3. Euro-pa League? An impecunious Yawar (as well as his better-heeled travel partner) found the cost of the holiday eye-wateringly high, as everything from restaurant bills to accommodation tariffs – freshly priced in euros, with the peseta having been dumped at the end of 2001 – seemingly having at least one zero too many. When tourists are reduced to slumming it in Albaicín, one can be sure that the locals going to find the majority of stuff a tad price elastic – with both production and consumption cycles prone to the odd death spiral.

¡Ya basta! Spanish Fans Begin La Liga Exodus; Andalusian Clubs ‘First Hit’

Season ticket sales at #SevillaFC down 15% year-on-year, #GranadaCF attendances drop below 10k; #LaLiga 'unaffordable' tinyurl.com/a5excll—
Asad Yawar (@Mediolana) January 07, 2013

The Ghost of Christmas Present: Málaga Club de Fútbol Banned from UEFA Competition!

Málaga Club de Fútbol banned for 1 year because of unpaid bills; sketchy finances prevail, #Qatari owner 'ex-directory' tinyurl.com/bvalpyx—
Asad Yawar (@Mediolana) December 26, 2012

Thou Shalt Steal: Is Austerity Europe Losing its Conception of Morality?

Global media outlets covering the ongoing crisis in the eurozone periphery have tended to focus on the spectacular: violent strikes, massive demonstrations, the spectre of political extremism and swingeing cuts to public services. However, they have rarely given much coverage to changing conceptions of morality such as the one arguably represented by Juan Manuel Sánchez Gordillo, the 60-year-old mayor of Marinaleda, a small farming cooperative community in Andalusia, Spain. Sánchez Gordillo has become internationally notable for participating in raids on supermarkets, the booty of which is intended for the poor and hungry; as a politician with legal immunity, he can avoid arrest, but Sánchez Gordillo has publicly stated that he would happily renounce his titles and face prosecution for his cause.

Initially we thought that Sánchez Gordillo’s gesture was merely an interesting response to a crisis that has seen an intensity of public treasury larceny that has resulted in not a few transfers from relatively poor to overwhelmingly rich, but on reflection his ‘people’s raids’ appear to possess a far deeper symbolism:

1. An Ominous Sign. For all the undoubted privations that its population has been subject to since 2007, Spain is still (for now) a First World country: its citizens are by international standards well-fed, housed and clothed. If – or perhaps when – Spain begins its descent into the New Second World category that many Mediterranean economies look like sliding into, will the Sánchez Gordillo school of thought become more mainstream? Will two wrongs making a right become an operational norm?

2. Civilisation and its Veneers. A reasonably prominent elected official in Western Europe – a region which for all its current problems is at least presently prosperous and, by global standards, an ‘open society’ – is brazenly subverting one of the most basic moral precepts that binds together even the most primitive of communities: Thou Shalt Not Steal. In 2003, Western television viewers mocked the looters of Baghdad – a city wrecked by two decades of wars, excoriating sanctions and plummeting living standards. We were really entitled to feel superior?

3. More of the Same. Closer examination of Sánchez Gordillo’s record at the helm of Marinaleda reveals a communist utopia that receives the bulk of its funding from one or more governmental agencies: the European Union, the Spanish central government or the Andalusian provincial administration; this position seems all too similar to that of the financial institutions that claim an exemplary status yet need a bailout just to make ends meet.

Spain: A Socio-economic Laboratory Par Excellence?

The most recent issue (#104, Nov/Dec 2012) of the always thought-provoking Adbusters magazine contains an editorial-style article authored by Micah White entitled World Revolution. Knitting together numerous developments from the United States to Chile, China and Greece, White posits that a ‘global revolution’ could soon be upon us. While the concept is somewhat hazily-defined, the general thread of the article appears to suggest that new forms of protest and activism are challenging even the most ingrained social, political and economic structures in a way that may engender a popular worldwide revolt with near-mystical consequences.

It seems dishonest to cast aspersions on the assertion that remarkable developments – the result of many factors, including advances in communications technology, sinking developed world economies and desperate levels of corruption (particularly though by no means exclusively in Mediterranean states) – are discernible. But White’s extolling of collapse-defined Spain as a model leaves us wondering once more how much leftist economic theory has advanced since the November 1989 collapse of the Berlin Wall: the emphasis on communal living, the substitution of hard currencies such as the euro for time-based currencies like the ECO, and Robin Hood-style raids on large supermarkets seem broadly familiar.

These are no doubt timely and perhaps even necessary measures for millions of people – including those members of the credit-bubble middle class who now face living out the rest of their lives as negative equity statistics – for whom the formal economy is practically an almost-fictional construct. But a largely barter-based economy hardly seems like the ‘replicable solution’ White claims it to be: the minute one cannot trade services (owing to say illness or old age), the system theoretically leaves a person far more vulnerable than under many capitalist models. Communal living may be perfectly acceptable at the age of 20, but preposterous to most at the age of 35 or 40. And theft from retailers – while understandable in the context of the risk of mass malnutrition facing large sections of the Spanish population – is a paradigm of unsustainable practice. If White’s article is at all representative of cutting-edge social theory, then the Occupy movement has to ask itself some serious questions.

Inflation + Unemployment + Shrinking Economy = A Toda Máquina!

#Spain enters 5th straight quarter of recession with -0.3% contraction; official unemployment now 25%, prognosis 'dire' tinyurl.com/9d333om—
Asad Yawar (@Mediolana) October 30, 2012

Monologues from the Eurozone: Contradictions, Glamour & An Unnamed Associate

One of our number recently had one of those once-in-a-while experiences which makes a person wonder whether they are tuned into the same reality as the majority of the world’s population. It came in a Central London eatery, a glass-and-steel clone which one imagines was once the last word in high-definition living but now resembles just another asset on a private equity balance sheet.

Sipping a reasonably warm Earl Grey tea – a beverage which by some happy coincidence appears to have escaped total plasticisation – our representative was party to an extraordinary monologue emanating from the lips of someone who seemed to carry the entire burden of the heavily-indebted southern EU on their slender shoulders. A visibly upset former denizen of this now benighted economic black hole, this person passionately railed against the entire European project with all the force of one whose convictions have gone beyond the point of absolute and are now in the realm of  sublimity.

Thoughts ran through our representative’s head, of course. Lots of them. Perhaps it was not only the wealthy northern core of the EU which was to blame for the current crisis; maybe the generation of politicians in the periphery of Western Europe which signed over their countries to what they believed was a relentlessly prosperous future did not read the small print of accession; yes, even the possibility that nations such as Greece, Spain and Portugal – all in their own way prisoners of their own very different yet ultimately similar histories – could have run into the arms of the perfect Europe they perceived that little less uncritically…this dangerous ‘perhaps’ also entered their mind.