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Monthly Archives: June 2012

One of my duties as author of this weblog is to monitor how the boycott of Holland is progressing. My method of monitoring is to google on “boycott Holland”. This recently gave the curious phenomenon of a boycott of a store of Holland & Barrett in Brighton and Hove in the United Kingdom.

The suprise is also that the call for this boycott of this particular store has to do with workfare.

In itself workfare is part of the solution of unemployment, and thus there should not be much opposition against it. Clearly there must be a living wage and the subsidies for the employer should be manageable and not destroy competition. When these conditions are not satisfied then there is reason for opposition. A rough look at those websites suggests that the system of workfare that the UK is setting up indeed doesn’t yet satisfy such conditions. A problem however is economic theory.  It is not unlikely that economists in the UK lack the proper theory as explained in my book DRGTPE plus the part that is being censored (what this weblog is about). Economists without the proper theory can do anything, also in the UK.

Thus the boycott that is being organised in the UK should not just be that store Holland & Barrett but should concern the whole country of Holland.

There appears to exist also a group calling itself Solidarity Federation that supports that boycott. There is a person calling himself Johnny Void, also labelled as “a radical blogger and claimant activist”. Curiously, part of my analysis deals with the tax void, so there is some overlap here too.

I am the first to admit that the world crisis is more important than what is happening in Brighton and Hove. The events in Syria also warrant more attention. However, it is useful to monitor how the boycott of Holland is progressing, and the confusion in Brighton and Hove has been duly recorded.

The best course for the European Union is to extend or join up with Russia and Turkey, thus the formation of an economic area instead of a United States of Europe.

Can someone explain this to Kanzler Merkel ? She is so focussed on European integration that she forgets about nationalism. Nationalism is required for democracy, sovereignty, likely even some self respect and the ability to feel solidarity with the needier in society. Nationalism can become nasty when impopular measures are imposed by a foreign ruler, such as Brussels. Kanzler Merkel’s strategy of European integration kills the goose with the golden egg of national democracy and accountability, and it imposes a foreign rule that will be hated. The British have been trying to explain this for decades but it doesn’t penetrate into the thick German skulls and the ephemerical thinking of the French who rely on the German funds.

Curiously, Spain is much in favour of European integration as well. Both Germany and Spain have looked to Europe as a solution for their own internal problems. Perhaps those nations need to team up more so that the rest of Europe can have more peace.

W.r.t. the elections in Greece this Sunday: some economists argue that if Syriza wins sufficiently to create a political stalemate in Greece, then a Greek default and return to the drachme could be borne by the rest of the eurozone, even though it would be a disaster for the Greeks themselves. Short term economics differs from longer term political economy however. The perspective of something like Zimbabwe between the center of Europe and Turkey is not appealing. It could be equally disastrous for Europe as well, in terms of governance. It increases the risk of closer European integration in the eurozone and thus greater instability in the future.

We can see nationalism at work in this Syriza party. They accuse the foreign troika of EU, ECB and IMF for their hardship. While the troika has been aiding. At best they could accuse the Greek elite itself for tax evasion. Syriza claims to be a coalition of leftists, and as such they ought to be internationally minded and against the local rich who evade taxes. Instead, they are nationally minded and defend their national elite. National-socialism, isn’t it ?

Professor Yanis Varoufakis supports Syriza but his “modest proposal” has always been that Germany bears the financial risk so he has been generating noise for two years now. His reasoning also loses from the sharpness shown by Jonathan Swift’s original “Modest proposal” in 1729 that the poor in Ireland sell their children to be eaten by the rich.

Greek people are challenged to vote wisely but confused by all that noise. ND and Pasok are linked to tax evasions but somehow worked along with the Troika. Are they really tackling the tax evasion now ? Syriza isn’t linked to the past tax evasion but its rejection of the troika doesn’t state the true consequences, hence it is irresponsible and misleading to the public.

My proposal for an Economic Plan for Europe contains the suggestion that Italy and Greece create international investment zones. Klaus Kastner followed the same reasoning. It is rather amazing that we hear little about this in the international discussion. All this does confirm my analysis that democratic nations need Economic Supreme Courts to guide national decision making. These Courts can exchange information and co-ordinate international analyses that currently are lost in the noise.

Yes, a Götterdämmerung can come about with a lot of noise instead of music.

Science journalism is one of my favourites. Scientists Luis Alvarez and Jan Smit discover that a meteorite destroyed the dinosaurs but it are the journalists who turn this into an exciting story, with some artist drawing pictures of it. Hanns-Peter Boehm coins the word graphene in 1962 and Andre Geim and Konstantin Novoselov get a Nobel Prize for it in 2010, but it are the science journalists who translate the fascination from the highbrow level to what simple lowbrows like us can understand. In English, there is distinction between science and the humanities, but science journalism would cover both areas.

Unfortunately there is a gap or black hole between science journalism and the economics section in the newspapers. Economic science does not get reported on very well. The economics section tends to focus on the markets and economic policy, and the science journalists either don’t regard economics as a science or assume that all aspects of economics are already reported upon in the economics section.

The gap causes an imbalance in standards. To report on a Nobel Prize in economics, newspapers may invite an academic professor of the same area to explain what it is all about. Matters that are less obviously scientific they will handle themselves. Now that Paul Krugman has a new book End this depression NOW! he is interviewed by a reporter from the economics section. The reporting thus is not subjected to the same standards of quality as one presumes for the dinosaurs or graphene.

We seem to get reports like this: When the meteorite hit, all dinosaurs were lifted five meters in the air, and few survived the subsequent drop. If the dinosaurs had been intelligent they would have shot the meteorite from the sky. Graphene will replace ice as the surface for icescating. In the future, graphene will also improve your sex life.

To my earlier weblog entry on the Spinoza Prize of last June 4 I can include the note that there were also science journalists present. It appeared that no science journalist showed any interest or alarm at my protest against the censorship of economic science by the directorate of the Central Planning Bureau. Some even began to slander. Here is a letter (in Dutch) to the Dutch society of journalists. I haven’t received a reply yet, it is almost ten days later, and it really concerns censorship of science and the slanderous behaviour by members of their society.

Looking at newspapers in other countries it seems that the gap between science reporting and the economics section is rather common. Thus it would not be something peculiar for Holland. But it may well be that international journalists and Dutch journalists react differently when the gap is pointed out to them. Most likely there are deep ingrained social conventions that make it hard to close the gap anyway. Science and journalism, a fascinating pair.

Eleven prominent Greek academic economists wrote an SOS in I Kathimerini June 3. Non-Greek economists can agree with a lot of what they say. If Greece leaves the euro then this will be rather disastrous for the Greek people. Out of the eurozone, international credit will be difficult, and Greece would have to accept much more austerity than what is now formulated in the agreements with the EU, ECB and IMF. If the Troika would block further support then Greece would have little option but leave the euro. Thus it is better to accept the agreements and concentrate on the true solution which are the internal institutions in Greece. The head of the Greek tax authority SDOE Nikos Lekkas confirmed that tax evasion amounts to 40-45 billion euros a year: “If we could raise even just half of that, Greece’s problems would be solved.” A similar problem exists in Italy and it would help if Greece criticises Italy but also resolves its own problems here. The new French President Hollande is pushing for an investment and growth agenda. This has always been part of Kanzler Merkel’s plan too but first she needed to establish austerity, otherwise all the new funds would evaporate again. The future is bright and the SOS thus is a voice of reason.

The problem with the SOS is that the population has a hard time swallowing this. The political parties who support the agreement are also historically linked to the inefficiencies and tax evasions. The SDOE informs us that banks do not provide information about their clients so that tax collection becomes impossible. But these banks only survive because of European aid. Have these banks and their Greek governers not learned what this crisis is about ? These banks are protected by laws created by the old political parties. The only way for the population to do something about tax evasion by the elite is to reject the old political parties and to switch to the new ones. But, the now popular SYRIZA rejects the agreements and can thus cause Greece to leave the euro. If a new government would indeed reject the agreements then there will be an uproar in Europe. First Greece borrows too much, then it is aided, and then it demands more aid ? Does the Greek orthodox church condone theft ? Thus, Greece is locked in unreason and the future is not so bright.

A subsequent problem is that Kanzler Merkel may be in an overdrive now towards European integration. In standard economic theory a currency union can only exist if it is supported by a fiscal union. Germany and France are committed to Europe and are moving to the unavoidable conclusion that much more integration is necessary for the eurozone to work. One good idea is an European Banking Authority so that also such problems with tax evasion are solved. Deposit insurance for retail banks is a relic of the past. With modern technology each household can have an account at the Central Bank where their money is safe, and retail banks can be regarded as franchises of that Central Bank. Current laws allow banks to record deposits on their balance sheets but this is medieval accounting based upon gold and bundles of paper, it contributes to boom and bust cycles, and in this electronic age we can stop banks recording deposits as their own money. Some aspects in this movement towards more European integration thus are interesting. But Germany and France may also go too fast. Herman van Rompuy circulates suggestions of an elected EU President and a reorganisation of the EU Parliamentary structure, and the formation of an EU Ministry of Finance. Perhaps Southern Europe is desperate enough to accept this, perhaps the peoples of Germany and France are so committed to Europe. Perhaps This Is The Moment, where the EU makes the final step. But we can also expect the UK to jump out, and eventually all peoples in Europe will feel resentment against Brussels, since a crisis about a euro that becomes hated cannot be a foundation for European co-operation.

There is also a non-standard economic analysis, a new perspective on the conditions for a currency union. Let each democratic nation create their own Economic Supreme Court, based in economic science, and with the power to veto a national budget if it contains wrong information for the general public. The rules of Maastricht must be extended with a tax on surplus countries, so that the predatory pricing of exports by Germany and Holland can be countered with investments in the deficit countries. To consider these new ideas is the real challenge to politicians and their economic advisors.

To the president of the International Statistical Institute (ISI)
Dr. Jae C. Lee
CC. Zoe Georganta, Nikolaos Logothetis, Andreas Georgiou, Hallgrimur Snorrason

Dear dr. Lee,

I read the letter by Georganta and Logothetis at http://www.zoe-georganta.co.uk.

This is getting complex. It indeed seems that ISI gets its main information from mr. Snorrason, vice-president of the ISI, so that the complaint by Georganta and Logothetis is correct in that respect.

It remains unclear what actually happened with the Greek statistics of 2009. Here are my own questions: https://boycottholland.wordpress.com/2012/02/19/dutch-censorship-versus-greek-statistics/

(It so happens that ISI is located in The Hague, but I advise to a boycott of Holland till the censorship of economic science there is resolved. See above link too.)

Eurostat observes an improvement in the quality of the statistics, but Georganta points to a disaster at the current population census, see her website for that other document. If there is chaos in Greek statistics then some can argue that only the EU and IMF can help out. There is some indication from the world of environmental statistics that dr Walter Radermacher, now at Eurostat, did not understand the distinction between science and politics, see http://mpra.ub.uni-muenchen.de/12690/

If this issue is not resolved in a decent manner, it will generate miscomprehension amongst our fellow scientists and likely also the general public. It is too simple to leave the investigation to the Greek justice system, since people might look at it wearily. Even Eurostat in 2003 had its own fraud case.

Thus, I propose that ISI sets up a five day conference in Athens, with ISI members attending, supported by interpreters and film makers, with trained interrogators and assistance from Interpol, and with reporters from the NY Times, where the main actors can say what they want to say, produce the relevant powerpoint presentations and documents, and where witnesses are heard, including professors from the various universities, all under oath and with legal protection.

Since ISI is confident that Georgiou and Snorrason are on the right track, you would not mind such a procedure, and might only consider it superfluous. But it would be very important for Statistics, and I hope that you will recognize that.

Sincerely yours,

Thomas Cool / Thomas Colignatus
Econometrician and teacher of mathematics
Consultant to the EU anti fraud unit UCLAF / OLAF in 1993
http://www.dataweb.nl/~cool/
https://boycottholland.wordpress.com/

PS. After sending this email I noticed that Georgiou has studied ways to profit from surprise data, see A.V. Georgiou, “Excessive Lending, Leverage, and Risk-Taking in the Presence of Bailout Expectations“, IMF WP/09/233, 2009. Studying this can be done with full integrity and is necessary to take measures against it. But it adds to the questions that can be asked.

NWO is the Dutch Organisation for Scientific Research and it regularly hands out the Spinoza Prize to the sum of EUR 2.5 million per winner. Spinoza himself would not qualify for the Prize since the candidates must have a tenured position – unless the desk that he worked on can be counted as an international center of excellence.

While NWO looks like a scientific organisation it also destroys scientific freedom. It assists in the censorship of science in Holland. It uses a marketing ploy to act as if it advances science, while in fact it ensnares those minds that otherwise could roam freely.

The winners 2012 are Mike Jetten, Ieke Moerdijk, Annemarie Mol and Xander Tielens. The Prize puts them in the luxurious but also responsible position to allocate their joint EUR 10 million wisely. The greatest exercise in responsibility would be to refuse the Prize. They would tell the world that science ought not partake in a sham and masquerade.

Is NWO really a scientific organisation ? The funds are from Dutch Ministries, supposedly without strings attached. But the government has been shifting funds away from the universities towards NWO and “partnerships” with market companies, so NWO might be regarded as a string itself. The board is appointed by the crown and the director worked at the Ministry of Economic Affairs before, though the latter doesn’t say anything in itself since it might also be that he fled from bureaucracy to scientific freedom. There is no democractic process by which managerial positions are voted on by scientists. NWO is part and parcel of a management structure where programs are formulated, project proposals judged and managed, and results marketed. Success in research is measured like in citation scores. This conserves the practice of commercial publishing companies, while scientists in a democratic process might well use the funds to speed up the open source publication process, and allow a bit more for books than articles. Scientific organisation is still rather medieval, with first an M.A. or M.Sc. then a Ph.D. and then a possible professorship. John Maynard Keynes was never a professor. Becoming a professor will to a large extent be a matter of luck and having the right connections, and then the medieval hierarchy creates an amazingly great number of biased people who tend to pull rank. Undeniably there are hundreds of honest people in the NWO network trying to do science (and all have the benefit of the doubt without proof of the contrary), and clearly there are papers published in the international journals, and possibly Dutch science is a “success” in that respect, but there are also reasons to be critical. Why can scientists not be respected and allowed their own responsibility, why do politicians put so many restraints upon them ? What, also, is the research that does not come out of NWO ? What are the names and ideas that we do not hear about ?

NWO might give an example such as “Last year we rejected a proposal for a perpetuum mobile” but I am suggesting that there is a better model to finance science. Universities might agree that they can use the funds much better (though we also may be critical of universities).

For example, there is still this issue for NWO, and it still isn’t resolved. That it is old does not mean that it has been solved. (Unfortunately this is in Dutch only.)

When the winners 2012 were announced, it was mentioned that there had been 28 candidates. Only top institutes can nominate candidates so these 28 must have been top candidates. Or, given that we are critical about these institutes, these 28 are equal to be critical about. By a curious process of discussion, perhaps weighing, seizing, multiplication and taking roots, or perhaps throwing dice, the committee finally took 4 from those 28.

For NWO it is a no-brainer. The money would be spent anyway. By heaping a lot of money on a few  there can be a Media Event such that tv and newspapers have something to report on. Not because of a result but because of money. Each M.A. or M.Sc. interested in science would already know how to spend the funds, or at least know how to find out how to spend it. The Prize curiously gives that freedom and responsibility that scientists could be trusted with anyway (yes, if they are scientists). To suggest that you need to be “special” to be respected with that responsibility is actually disrespectful to science.

After his burial, Spinoza’s body was removed by vandals in the night, and the memorial grave in The Hague is actually empty. Thus, technically, Spinoza cannot turn in his grave. Technically, though, few could do so anyway after death. Hence we may still imagine Spinoza virtually spinning in his grave.

In Athens, musician Antonis Perris (60) was taking care of his mother (90) for 20 years. She was diagnosed with Alzheimer with schizophrenic fits. In his blog he wrote: “Nursing homes don’t accept patients who are such a burden. The problem is that I was not prepared … when the economic crisis hit.” Apparently it was impossible to sell the house and rent somewhere cheaply. He took her to the roof of the apartment building and then took her along in a jump (Athens News May 24).

Dutch reporter Ingeborg Beugel reports about it in NRC Handelsblad today, June 2. Her article of three columns gives many other examples of a country falling apart. Her article is impressive, and she has been on Dutch television this last year in frequent reports about the plight of the Greek common people.

Yet, check whom she blames: “The Greek people has been a victim of thirty years of corrupt governments and bad financial policies by Greek politicians and Brussels.” She also holds that the euro was a miscalculation, only useful for the North and not for the South. She claims that the European democracy has fallen victim to the financial markets. “Either Europe listens to the voice of Greek people [that this austerity needs to be renegotiated] or we better abolish the idea of a democratic Europe.”

I beg to differ. Now, you need to understand that I propose a new economic theory so that it is easy for me to disagree with Ingeborg, and my rational argument doesn’t weigh much against her compassion. Yet, let us try to see where we can get.

Surely it is Europe that held the Greek government accountable to the eurozone rules but it are the Greek themselves who subsequently took the measures that caused Antonis Perris to take his mother in that jump. There are rich Greek people who could have helped Antonis. Earlier I referred to the incomes of Greek parliamentarians who might take a 50% cut. There is no need for the Greek to prey on each other. It is their own lack of solidarity and mutual respect when they do so. It are the rich and educated Greek who are unpatriotic, who haven’t listened enough to Tsitsanis, Theodorakis, Irini Pappas, Georgios Dalaras. It are the Greek themselves who voted for those corrupt governments. Grow up, accept the responsibility.

The Greek people might be indignant about the tax evasion in Italy too: “Italians evade taxes to the tune of €120bn a year, according to Istat, the national statistics agency, a significant part of a black economy that accounts for at least 17 per cent of gross domestic product.” (Financial Times Jan 8 2012).

Stephen King explains some reasons why the rich might be taxed more (Guardian, May 1 2012). I suppose the Greek orthodox church can be regarded as very wealthy.

Thus, dear Ingeborg, I am very much in favour of your argument about helping the Greek common people, but the argument becomes stronger when put within a sound economic analysis. The Greek people could kick out those corrupt politicians, grow up, accept responsibility, share their burden, and adopt, for example, the economic plan for Europe, that would help the whole continent and not just Greece. The argument can become so strong that the rest of Europe joins in and becomes grateful to Greece for the moral fiber that it shows.

It so happens that I am almost 60, that my mother is 91, and that my third name is Anthonius. I am deeply touched by Antonis’s plight and curse all who isn’t. Are we people or beasts ?

PM 1. The comment by Christine Lagarde of the IMF (who doesn’t pay tax) about taxes and the plight of children in Greece and Niger might be honest but remains a faux pas. My worry is that I haven’t had a reply to my letter to the IEO of the IMF.

PM 2. Greek professor Yanis Varoufakis is defending his “modest proposal” for eurozone bonds all over the world. The world wants to hear what the Greek think themselves and he gets that ear. I disagree there too and I think that he is creating noise. Consider the example of a young delinquent beating up an old lady. The proposal is to take away his beer. Will this punishment stop the delinquent ? Unlikely. It is better to take away his beating bat. In the same way the eurozone bonds that Varoufakis proposes take away the German and Dutch advantage of lower interest rates while the real problem consists of their export surpluses. See this earlier discussion.

PM 3. There is now some discussion about a Northern euro versus a Southern euro. But it suffices to put a tax on countries with an export surplus which funds get invested in deficit countries.