Europe has only itself to blame
Capitalism in the West is not only deficient and diseased but is not working.
SCMP Business, July 25
Kevin has been a business writer for a good long period and for some prestigious journals. He also has superb insights to offer from time to time. Thus, where I would ignore a rant by other people against market liberty, I think I shall respond to this one.
But first, a word on words. I like to call it market liberty rather than capitalism for the same reason that I refer to 'the developing world' rather than 'backward countries'. Some terms are emotionally loaded.
Kevin had the judicious sense here to qualify his sweeping rejection of market liberty by the words 'in the West'. I'm glad he implicitly recognises that it has proved itself elsewhere in the world.
One part of the world where it has had little chance to prove itself for more than a century, however, is the one where the theory of it evolved to describe the practice. Europe is now a centre of government control. To speak of a capitalist Europe is about as far-fetched as speaking of a flying whale.
In the south the explanation may be that military dictatorship too long preceded democracy. Generals made arrangements with plutocrats for their joint comfortable livelihoods and, where matters of rights were concerned, prided themselves on the fine achievements of their ancient histories. It's a pretty good picture, I think, of Greece, Spain and Portugal.
And now these governments find their own people hiding from them on the reasoning that money extracted by government from the many is money wasted by government on the few. It's perfect reasoning in my book as a response to market liberty denied.
In northern Europe, a self-centred troublemaker by the name of Otto von Bismarck undermined market liberty in Germany from the 1860s onwards by dictating terms to industry as if employers were his generals and their employees his soldiers (they were).
Among other countries, the idea that personal liberty might extend to personal enterprise has never been understood in France, with the dire result that its working classes today are still remarkably poor for the supposed wealth of their country.
The Brits would like to be capitalists but have yet to figure out how. This always amazes visiting Americans. My cousins in the Netherlands know how but find their objectives of a comfortable life and plenty of self-praise more easily had through a career in the civil service. It's a sad basket all in all.
Find me a private European company of any size that generates its earnings from Europe alone. They have all moved abroad or been sold to foreigners. The only growing business in Europe is government.
Thus I quite agree with Kevin that something here is deficient and perhaps even diseased, though that is a bit strong. But if the workings of these economies are not working, don't blame the capitalists. It's not their hands on the levers. Although I understand how university students could miss something so obvious, Kevin has long undergone liberation from academia.
Not having the space to deal with all his contentions, I shall take up one more of them - 'Governments are up to their ears in debt and have no room for manoeuvre: if they try to boost growth they risk capital markets turning against them; if they choose austerity to get on top of the debt they risk sending growth plummeting and unemployment soaring.'
It is a conundrum indeed. But since when has it been the fault of the private sector that the public sector cannot restrain its appetite for debt?
The position is straightforward to anyone who has a little money to invest and is considering European sovereign debt. Do you invest in it at yields no higher than your bank pays on deposits when every day you see rising evidence of the risk of default?
Of course you don't. I'm astounded that some of these European governments can still get yields as low as they do on their bonds. But if they are unhappy, it's not capitalists turning capital markets against them. It's you and I who are doing it. And don't let anyone make you feel bad about it. You are doing what you should do.
Yes, the feed trough has not been filled to the brim in the European pigsty recently. Oh my, they do squeal about the injustice of it.