Thursday, March 17, 2011

"No sustainable economic performance is possible without social cohesion"

You know they pay people huge sums to write things like that (though some readers of this blog might point out that at least they can spell).

In this instance the idiot who utters these words is the French EU Commmissioner Michael Barnier, scourge of the City and all round danger to economic growth.
"We need to put the financial markets back in serving the real economy and put the real economy back in serving growth and human development,"
Any cursory reading of Adam Smith, damn it. Ok he is a Frenchman. Any cursory understanding of the priorities of man will make him realise the fatuity of his comments. Buisness is run by people, individuals who are driven by the needs of individuals. They canot be harnessed to arbritary political wishes, in this case 'growth and human development' without too great a loss of freedom.

Indeed when they work at all they work in such a way (you know Michel, the 'invisible hand' basic stuff, do jkeep up) that indeed engenders growth and development. How the heck does he think we moved from the caves to where we are now with wide screen TV's the MCC and all manner of civilising influences? It wasn't because of some centrally imposed decision by the gnomes of Brussels.

What annoys me about this sort of Eu-jargonese drivel isn't that it isn'tr true, though it isn't. It is just that it is transparently and demonstrably stupid.

Though as an aside I do love the organisation of one of the participants in their games today,
 "Ms Benedicte Federspiel (Various Interests Group, Denmark)"


Edward Spalton said...

Just an afterthought.

Social cohesion IS necessary for national and public life. We used to have it. Is it possible in a multicultural society where people no longer have anything much basic in common but are divided into separate "communities" , each jockeying for position and each capable of being played off against the other by a manipulative political class?

David Mudrauskas said...

Some degree of social cohesion is necessary for economic growth, at least enough to ensure that you can do business. At least enough to ensure that your operations aren't crippled by violence, theft and other crimes. Enough to trust that borrowers will repay creditors or that the legal mechanisms exist to force them to do so.

If Barnier were referring to only this minimal level of cohesion, his statement would still be stupid, but I imagine he's suggesting that growth could benefit from a greater level. In any event it's worth noting that a business' success hinges on the extent to which markets perceive it as legitimate. Don't expect much in future earnings if the consensus emerges that your activities do more harm than good. I wouldn't expect to make much from investing in tobacco, for instance.

It's always preferable to operate in a setting where most people feel that they are benefiting from growth. It's for this reason that, although business decisions are motivated by individual interest, companies delegate considerable responsibility to their PR departments and engage in corporate responsibility initiatives. That's not to mention the issue that you'd have no business if nobody could afford to buy your products.

Gawain Towler said...

David, Edward,

Yes of course I think the word you are looking for is trust. Trust between individuals.

With that we can trade, without it we cannot.

Trust is reinforced by the rule of law, but not supplanted by it.

Barnier may be reffering to Trust here, but if so the point is slef evident, but I think that he is after a legislative approachj to building trust, enforcing trust if you will, and that, you just cannot do.