EUBULLETIN talked with Simon Q (nom de plume), a senior executive in a Fortune 50 Company, a lecturer on macroeconomic realities and the author of the bestselling ‘2084’ book. With a seasoned career throughout today’s Global World, his credentials on the disturbing points raised in the interview – concerning the gloomy prospects facing the Eurozone and future economy – are indisputable. This is the second part of the interview published in EUBULLETIN on 20 November 2015.
EUBULLETIN: With the anaemic recovery of the Eurozone economy, the Europeans are repeatedly told by financial pundits and politicians the message commonly associated with Keynesian theory: that they must start consuming more because consumption is supposedly an “engine” that “drives” economic growth. And this is precisely the most popular analogy in financial reporting and political discourse: that the economy is like a car. But critics would object that if the economy were a car, real savings and investment – rather than consumption – would be the engine that drives it forward, with consumer preferences surely sitting at the steering wheel. What would, in your view, be important lessons for public policy from this classical analogy?
Simon Q: Quoting Keynesian theories is a complete non-sense and shows the level of “non-understanding” of what the problems are… And one thing that is key to remember that it is not consumption that creates growth – it is employment (that is Keynes by the way)!!!!! We’ve lived under that illusion that consumption solves everything, fuelled more by consumer credit than by real value-creation. The strength of the lobby groups behind those theories is not to be forgotten. Here, I would recommend reading the book…
EUBULLETIN: The acclaimed yet polarizing economist, Paul Krugman, blamed in his 2009 textbook extended unemployment benefits as one of the main reasons for decades of European stagnation and high “structural” unemployment.
Simon Q: Well, Paul Krugman is no doubt an authority on economic matters, but not exactly of what Americans would call a “Liberal”. Also, as Toulouse Lautrec said, “Criticism is easy, it is the art that is difficult” and many politicians might indeed lack “artistic skills”…
EUBULLETIN: Do you agree that unemployment benefits and other similar monetary aids, which have exploded in recent years, are Keynesian macro follies that have contributed to the current Eurosclerosis?
Simon Q: One could argue that unemployment benefits create unemployment… they were invented when, all of a sudden, unemployment became an issue and thus an electoral ground (i.e. fertile ground to “grow” votes) when after decades of post-war growth, there was a problem… Would no unemployment benefits have created other jobs and economic growth in new areas because people would have had to get their act together? Maybe… in fact certainly, but it could have had immense socio-political consequences and proved disastrous for many individuals, families and communities… what would have been the right thing to do? I don’t know….
EUBULLETIN: Are you basically saying that unemployment benefits and other similar monetary aids serve as disincentives for people to be more productive in that they not only reduce employment, but reduce output and growth as well?
Simon Q: I happen to be a big fan of paying for something in exchange and an opponent of money for free, so yes, give benefits, but for something in exchange, like the people getting the benefits dedicating some time to the community that helps them. I believe it is far more respectful and would bring people together, and it would trigger new ideas, exchanges and encourage people on benefits to get back in the active world… The main problem being that once you start giving benefits, it is difficult politically (and electorally) to take them back. All is good when times are easy, but when the wind turns – like these past years – the political decisions are painful and electoral and socio-political consequences quite dire…
And one very important element that has been and will continue to be very disruptive is the evolution of technology… there again, overly used for greed rather than common good, due to the lack of political regulatory framework. Easy to say, far more difficult to tackle…
EUBULLETIN: With deflationary forces having been the source of a great concern in Europe, the falling energy prices are a separate, but closely related issue. The plummeting energy prices could provide a stimulus for the Western economies but they are clearly bad news and a big challenge for the oil-exporting countries, namely in the Middle East but also Russia and Venezuela. The singular aspect of the current slump in the oil market is its occurrence at the height of the deepening instability and a series of upheavals across the Middle East and also growing Russian appetite to project its military might overseas. This convergence of factors is problematic namely for the oil-dependent Gulf monarchies and also for the nations economically connected to them.
Simon Q: Good ol’ Vladimir (sorry no offense Mr. President) is the best at playing those parameters, very simply because he can… sorry for the comparison, but like the dog that licks its balls, he does it because he can! More seriously, he has the clout to do things that democracies cannot anymore… the chapters on this in the book are self-explanatory and, again, kind of entertaining, as you smile about living the very things described as the triggers of the implosion to come.
The points raised on the “Gulf monarchies” are in-line with what happens in the book, which is a simplistic summary, as today’s geo-politics (or yesterday’s for that matter) are far more complex, but the end-game will be the same… In geo-politics, wealth resides in force, not in money….
EUBULLETIN: With the risk to the stability and perhaps eventually to the very survival of some of the world’s most unsavoury regimes growing, do you think that this could create even more instability and insecurity particularly on Europe’s southern and eastern flank than what we see today? Could this process ultimately have far-reaching geopolitical implications for Europe’s own future?
Simon Q: Oooooh, yes, and it is happening. It started many years ago and it is just accelerating. The key is the weakness of political will for “uncomfortable” decisions in modern democracies, as the only ambition is to promise enough to get elected, supported by the ever weaker media, who has seemed to abandon burning any grey cells before drumming up whatever seems to be the flavour of the day. The latter points will likely go down in history as the biggest problem of all times, a democracy inevitably implodes due to its weakness.
To order this publication or for more information, please visit www.scaredorprepared.com .The book is available on Kindle at http://www.amazon.com/dp/B00IO54EB4 . You can also write to Simon Q. at SimonQ@scaredorprepared.com