Sunday, January 22, 2006

The End of an Era in Europe

Telegraph | News | Red tape 'turning best firms away from Europe' Europeans like to turn up their noses at capitalism. Well it seems the reverse is now also true.
Europe's most successful companies are turning their backs on EU markets because of red tape, a high-level report said yesterday.
The lack of investment was so dire that it threatened Europe's "comfortable" way of life. "Europe has to act before it's too late," said the report's author, Esko Aho, the former prime minister of Finland.
Communism and Socialism only work if everyone plays along. The realities of global competition mean that money and jobs will move away from countries that impose too many ridiculous laws.

Once upon time, I worked for a large multi-national doing high-tech manufacturing in various countries around the world. We wrote the software for running the manufacturing lines in the US. We had to have special versions of the software for Germany because we could not - even by implication - track the productivity of individual workers. That would have been too much like capitalism. We were tracking who was qualified to run which operations via a security module and we were tracking the position of every piece of product on the assembly line because the cost of each item was high enough that standard accounting rules dictated serial number tracking not just by part number. So we could tell how long any individual spent working on any individual part. This was forbidden by German law.

Europe seems to be in the position of a pensioner who is consuming his investment capital. But Europe cannot hope to die before the money runs out.

The indicators of trouble are everywhere. Here is one:
[The] report listed a string of gloomy indicators. In 1992, six out of the 10 top-selling pharmaceuticals were produced by European companies. In 2002, this figure had fallen down to two. European firms invested billions more in the United States than US firms invested in Europe.
Investment dollars, education and other indicators all point to Europe falling behind.

The excuse is that Europeans are "comfortable." But that is only true in some areas. Do you remember the riots in France? Those young men (of non-specific ethnic background) who were burning all those cars, were not comfortable.

The European leaders response? Throw money at the old industries, cars, steel, etc. In short the leadership is beholden to the unions, who don't appear to want change, and are unwilling to face reality. A reality that includes the many problems in the "suburbs of Paris," for example.

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