The roots and the current practices of the International Relations (IR) discipline used to be a matter of intellectual history, with occasional doses of self-criticism. For a while now, however, larger debates have developed around three central claims:
In the US and elsewhere, IR lacks diversity in terms of gender and race
In global IR, American / English-speaking / “Northern” voices are privileged
More biographical diversity would open the doors for more intellectual diversity
With the “Global Pathways” project, we provide empirical insights about IR research around the world. This includes information on the contents of research articles as well as citation patterns. But the first question concerns authorship: Who publishes where?
This blog post summarizes the findings of our new article in International Studies Review. With generous help from colleagues at the TRIP project and in Japan, we coded authorship information for roughly 2,400 IR articles in 17 journals from around the world (2011-2015). Crucially, this dataset includes many works outside the Web of Science!
Three main findings
-1- Local clusters everywhere. Across all journals we investigated, “local” authors (with jobs in the same world region as the journal) account for the biggest chunk of articles. This is true irrespective of journal reputation, citations counts, or target audience. However, top-ranked journals additionally tend to publish much more work by authors with ties to rop-ranked institutions (as measured by the global TRIP survey).
-2- Variation in diversity. Some journals have a more geographically diverse set of authors than others. To some extent that’s due to language barriers: not that many people can write a research article in German, for instance. Yet, we also see a crowding-out effect in journals that are key destinations for North American scholars. Diversity is highest in the “goldilocks zone” of journals with just the right amount of international visibility.
-3- Researcher mobility matters. We traced where authors studied and received their doctoral degree. In combination with professional affiliations, we can thus create a typology of authors. Those who publish in a region to which they don’t have obvious ties can be called academic tourists. They often hold North American, British, or European doctorates. But migration also contributes to the globalization of IR, as people acquire doctorates abroad and then publish as expats, returnees, or members of the academic diaspora.
Taking mobility into account, many journals are thus more geographically diverse than they seem at first glance. We take this as good news for intellectual diversity! At the same time, the majority of globally visible IR research seems to be authored by scholars trained in a relatively small part of the world. In the article, we discuss a few efforts that journal editors can take to (further) increase authorship diversity.
Upcoming publications by the Global Pathways team will study how biographical backgrounds are linked to the contents of IR research as well as to citation patterns. We would love to hear what you think about our findings!
Lohaus, Mathis/ Wiebke Wemheuer-Vogelaar (2020): "Who publishes where? Exploring the geographic diversity of global IR journals.” International Studies Review. DOI: 10.1093/isr/viaa062
How do you make a career in international organizations? During the summer term, me and my team at the department of political science at the University of Jena organized a speaker series on “Starting Your Career – International Organizations as Employers”. The series aimed at giving students at the University of Jena the opportunity to get to know the variety of possible tasks in international organizations and to familiarize them with the requirements of working in such organizations – especially since many do not want to pursue a PhD. We deliberately decided to invite young professionals who recently made their way into these organizations and started their career as we agreed that they would better relate to the lives of students, their questions, and their concerns. A pragmatic and informal exchange with young professionals would allow for a (more) realistic assessment of the requirements and the actual daily work in this career path, we reckoned.
We hosted six young professionals as speakers during the summer term. They work in large governmental international organizations, such as UNHCR and OCHA, as well as NGOs and think tanks, including the Aspen Institute, Democratic Society, and Polis 180. Each speaker kick-started the evening with a short presentation – including information about the organization, their personal backgrounds, their career trajectories, and anything else they deemed insightful and important. Afterwards, we opened up for a Q&A which usually lasted about an hour due to the many questions and feedback from the audience.
In December 2017, Transparency International’s German chapter hosted an event to reflect on twenty years of OECD anti-bribery efforts. Some points I found particularly interesting are summarized below. Please accept my apologies for the nerdy focus on details …
During election day, our group visited a good number of polling stations in the Charlottenburg-Wilmersdorf district. At each stop, the observers asked a set of questions: How many voters are registered, how many have voted so far, did anything out of the ordinary happen? We then usually stayed for a while and observed the voters come and go; while the morning was relatively quiet, we saw significant traffic in the afternoon (overall turnout was 76%).
Things I learned about elections in Germany
All polling stations were similar, which should not come as a surprise given Germany’s reputation as obsessed with rules and procedures. We still saw some interesting deviations. Some polling stations were set up in spacious rooms while others felt overcrowded. The smaller and less accessible locations were also those in which the volunteer staff was under more stress and the lines were much longer. It seems pretty trivial to point out that polling places should offer sufficient space, but apparently this is an issue even in a country as rich as Germany. (Side note: Even in the most crowded place, nobody was complaining. “We have to work with what is available”, one staffer told us.)
The volunteers running the polling stations (usually in teams of eight) were focused, well-organized and friendly. Still, some teams were more efficient than others when it came to double-checking voter records and setting up the room in the most favorable way. This suggests that the pre-election briefings held by the election authorities could be a little more practice-oriented.
In addition, a few of our interview partners were surprised to be visited by observers, sometimes to the point of being suspicious. In the most memorable moment of the day, we were led to a small room to await further instructions; it almost felt like an interrogation as depicted in spy novels, only that it happened in a German primary school. I guess the lesson here is that future briefings should mention the concept of EOMs and the existence of the OSCE…
What’s the point of observing elections in a consolidated democracy?
Election observation missions are only conducted with the consent of the respective government. The German federal government invited the OSCE Office for Democratic Institutions and Human Rights (ODIHR) in 2009, 2013 and 2017. But why send teams to one of most consolidated democracies among its 57 member states? In their 2017 pre-election “needs assessment” report, the OSCE experts mentioned campaign finances and the neutrality of media reports as potential issues — but strongly expressed their overall confidence in the electoral process. In contrast to 2009 and 2013, the OSCE Parliamentary Assembly then chose to send a full-fledged delegation.
In the IR literature, it has been noted that international observers have become a fixture of elections around the world. Judith Kelley has argued that “once many honest governments had invited monitors, not doing so became a self-declaration of cheating”. Even for those intending to cheat, it might be more rational to invite observers and risk being caught than to face blanket criticism for the lack of transparency. Election observation thus triggers interesting cost/benefit calculations for individual states.
For front-runners, such as Germany in the case of elections, opening themselves to scrutiny strengthens claims to moral leadership. Assessing all group members in the same way also counters accusations of double standards. But what happens if observers find even minor shortcomings in the procedure of self-proclaimed leaders? The laggards in the group could now point out that nobody’s perfect and accuse their critics of hypocrisy. Moreover, autocratic states could send delegates to participate in election observation abroad, signaling adherence to democratic norms without incurring real costs.
It seems important to go beyond individual cost-benefit calculations and rather consider the group dynamics of peer review and potential norm internalization. Peer review is often used in international forums: not just regarding democratic elections, anti-corruption and other governance issues, but also with respect to more technical implementation issues.
My day with the OSCE leaves me wanting to learn more about signaling, reputation and peer pressure in the context of heterogeneous groups.
In November last year, the first protests against the Ethiopian Government unfolded in the Oromia region when the government wanted to expand the margins of the city of Addis. As this implied the resettlement of the local Oromo population, this was considered by the Oromo – the largest ethnic group in the country – as a further expression of their political and economic marginalization.
The situation calmed down a little over spring this year and erupted again in summer, when the Amhara people in the North started anti-government protests. The military was deployed and further unrest unfolded again in the Oromia region. For the first time, an alliance between the Oromo and the Amhara was built. Since November last year, at least 500 people have been killed by security forces and tens of thousands have been arrested according to Human Rights Watch. What started as protest against the expansion of Addis turned into an expression of general dissatisfaction with authoritarianism and lack of public participation in the past two and a half decades.
On October 9, the Ethiopian Government declared a state of emergency for the first time in 25 years. This was after more than fifty people died at an Oromo religious festival in Bishoftu (close to Addis). A week after, further details on the state of emergency were made public. Now, the government can arrest and detain for six months (the duration of the emergency state) any person contravening the emergency prohibitions, and conduct searches without a court warrant.
There are now severe restrictions to the freedom to assembly and protest, and any communication with foreign governments or foreign NGOs “that is likely to harm sovereignty, security, and constitutional order” as well as any communication with “anti-peace groups” is prohibited. Moreover, the Government can monitor and restrict “messages transmitted” through different sorts of media outlets. This is reflected in cutting off the internet access through the mobile network, which is a major internet access route in Ethiopia, as well as the disabling of social media.
On October 15, shortly after declaring the state of emergency, the Ethiopian Government also announced reforms, including a reform of the electoral system from first-past-the-post to proportional representation. A change of the cabinet has already taken place, and tackling corruption has been declared a priority.
So why are these developments in Ethiopia the most under-reported conflict in the world?
To reiterate: Ethiopia is experiencing political unrest over an extended period, and the state of emergency has been declared for the first time in 25 years. This could be reason enough to report on the situation, but there is more: Ethiopia has the second largest population in Africa (with nearly 100 million inhabitants), only topped by Nigeria. Secondly, Ethiopia’s GDP grew rapidly over the last years, with a growth of 9.6% in 2015. Thirdly, Ethiopia is considered by many as a bulwark against Islamist movements on the Horn of Africa. Despite recently retreating some forces, Ethiopia has been very active in the fight against al-Shabab in Somalia.
The importance of Ethiopia (for the West) is a good reason to follow the current political events. At the same time, it provides at least a partial explanation for the lack of coverage. Looking at the increasing levels of development assistance (ODA) to Ethiopia, most notably the United States and the United Kingdom, it seems as if the West buys into two arguments by the Ethiopian Government: Political participation and democratic rights are less important than (1) Ethiopia’s economic development and (2) regional stability in the fight against terrorism.
For the U.S. and the United Kingdom, this is also reflected in their national focus on the “war on terror” and their own balancing of national security in relation to human rights. A similar dynamic exists with regard to the World Bank’s and other donors’ prioritizing of poverty reduction over issues of political governance when they decide on Ethiopia’s ODA levels.
Though it has to be mentioned that the U.S., among others, expressed that they were “deeply concerned” over the situation in Ethiopia, actions speak louder than words. It needs to be seen whether or not Western ODA levels continue to grow. In the same manner, we should all observe (and report on!) whether or not the Ethiopian government will really deliver on its reform promises.
On July 9, the Indian army killed a 23-year-old popular Kashmiri militant, Burhan Wani. Since then, the region is under strict curfew. Due to the authority’s iron-fisted response to dissent, over seventy people are dead, more than eight thousand civilians are injured and about six hundred are blinded due to the use of pellet-guns. The right-wing Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) remain unwilling to treat Kashmir as an international political issue and continue to disengage Kashmir’s demand for self-determination.
The former state of Jammu and Kashmir, ruled by the British-installed Dogra monarchy, is now divided between India, Pakistan, and China. The monarchy, through different periods, had seen several upheavals from its subjects. These Kashmiri uprising(s) paralleled the subcontinent’s anti-colonial struggle against the British rule. The British exit from the region in 1947 led to the partition of the Indian subcontinent, birthing two new countries—India and Pakistan. This left the Dogra king of Kashmir, Hari Singh, with an option to join either of the newly formed modern nations.
Singh, presiding over a Muslim majority, remained undecided. The undecidedness of the Kashmiri monarch is attributed to the complex political nature of Kashmiri society. The uprising in Poonch region in 1947 that sought to join Kashmir with Pakistan proved that the national will of Kashmiris could not be galvanized for a merger with either one of the nations. In the Kashmir valley, the popular leader Sheikh Abdullah propounded politics of Kashmiri nationalism with strong opposition to the idea of partition. To quash the Poonch rebellion and to deter the tribesmen entering from the north in support of the rebels, fearing that the rebellion would break the country, the monarch sought the Indian military intervention. The military help came with a condition to accede to India.
The panel did not directly address the scenarios, but rather focused on current challenges for the EU that have long-term consequences. Not surprisingly, the three main topics were challenges related to refugees/migration, the rise of European populism, and the consequences of Brexit.
I’m not an expert on any of these issues, but I found the following bits the most interesting:
Who is leading EU (foreign) policy-making? Echoing the famous “which phone number do we call?” argument, Frances Burwell adopted the American perspective and asked Germany to step up its leadership, including a bold decision in favor of mutualized debt and increased defense spending. Daniela Schwarzer pointed out that German leaders might think they did the Eurozone a favor over the past few years, but people in Athens see it differently. (Nobody made an attempt to defend German foreign policy choices…)
With an eye to the looming Brexit referendum, panelists suggested the UK might no longer be a reliable partner for European cooperation. Mr. Conte (EEAS) said that Brexit would mean losing one of the few members “with a strategic vision for the whole world, not just some regions” — but also result in one veto player less.
What about the European Union’s credibility and “soft power”? Andrey Kortunov described the EU as long-term “focal point for intellectual aspirations as well as material envy”, but said that the feasibility of the European model is now being doubted in Russia. Still, he urged European diplomats to focus on their comparative advantage: linking development and security (rather than trying their hand at geopolitics).
Anne-Marie Le Gloanec asked: “Do we still have the resources and soft power we thought we had when we wrote the first strategy in 2003?” Her diagnosis, citing the EU-Turkey deal on refugees and the EU’s actions in the MENA region, was rather negative. For the EEAS strategist Conte –not surprisingly– the answer was to develop a strategy revolving around “flexibility” and “credibility”, that is, member state activism and cash.
What role for the EU External Action Service? Not surprisingly (again), the EEAS representatives were confident about their ability to act and speak for the Europeans. Other panelists seemed skeptical regarding the service’s mandate and operational capabilities. Robert Cooper pointed out that “strategy” documents often amount to “bullshit”, and also said that EU members must invest in their foreign services’ day-to-day capabilities.
At a more fundamental level, the aforementioned call for national leadership seems at odds the very idea of the EEAS. Stuck between unwilling member states and external actors that don’t take her seriously, the high representative Mogherini indeed seems to face an “impossible task” (Le Gloanec).
What and where is our border again? Mr. Leggeri from Frontex, who seems to be a social constructivist, emphasized the need for a “credible external border” that is “emotionally perceived as ‘our’ border”. He added that he was “appalled” by the precarious situation in Lesbos “last year”, but said things were improving on the ground. Frontex, in his view, needs more resources and a mandate to plan for the future and do things other than emergency responses.
Some panelists made related points about what the EU can and should do beyond its external borders, but ultimately with a view to stabilizing them. On MENA, Sylke Tempel urged policymakers to work on good governance issues, as people there had “neither taxation nor representation”.
Should we embrace multi-speed Europe on social issues? Closely related to the idea of borders, some parts of the discussion addressed differentiation within Europe. Francess Burwell urged EU leaders to make a choice on migration: Ultimately, are the Syrian refugees going to be ‘visitors’ or ‘citizens’? (Her advice was crystal clear: Europeans need to work on turning them into the latter!)
The old debate about multi-speed Europe applies to social policy — which, in Europe and beyond, inevitably has consequences across borders. A member of the audience suggested to just accept the fact that Hungary, Austria and other do not wish to support Chancellor Merkel’s humanitarian policies. In response, Daniela Schwarzer instead called for a push-back against illiberal developments.
In sum, the panel discussions at the Dahrendorf Symposium raised many interesting questions (although, as usual at such events, they could have been even more focused). It was great to have practitioners, advocates and academics illuminate different aspects. With the Brexit vote around the corner and half a dozen crises ongoing in the neighborhood, readers of this blog are well advised to keep an eye on the EU …
Last week I had the pleasure of attending (parts of) the 2016 Dahrendorf Symposium hosted by Hertie School of Governance, LSE and Mercator foundation. The event focused on European foreign policy. I will summarize the debates on the final day in a separate blog post.
A few months ago, Hertie School hosted a scenario planning workshop as part of the Dahrendorf project. It focused on the EU’s relations to other world regions, trying to draw up scenarios for the year 2025. Meeting in five different working groups, the participants developed scenarios for the future relations between the EU and the U.S., China, Russia and Ukraine, Turkey, and the MENA region. Given my interest in forecasting and curiosity about scenario planning, I gladly signed up and contributed to the EU/U.S. working group.
At the Dahrendorf Symposium last week, Monika Sus and Franziska Pfeifer (who are coordinating the scenario project) briefly described our method and results to the audience. The publication with our 18 (!) brief scenarios is available via the Dahrendorf blog: European Union in the World 2025 – Scenarios for EU relations
The results are interesting and I really encourage you to download the document! Personally, I particularly enjoyed the process. It was a great exercise to think about basic assumptions we have about transatlantic relations; to identify key drivers relevant for change; and to come up with scenarios that reflect the most relevant combinations of key drivers taking particular directions.
Let me indulge in a bit of self-promotion and quote the intro to my group’s scenario:
“In the years up to 2025 there will be a situation of balkanised technological regulation in the EU, driven by political debates which emphasise the need to shield national markets and societies against the uncertain effects of technological progress. On the other side of the Atlantic, political leaders will continue to embrace new technologies, with an emphasis on keeping the competitive edge also in terms of offensive capabilities in the cyber and AI realms. Only after a series of trigger events, increasing the pressure on decision-makers, will transatlantic leaders be willing to invest in a new institutional framework to manage the political problems associated with technological progress.” (‘Transatlantic Frankenstein’ scenario)
Then, of course, there was the Dahrendorf Symposium, which included a couple of workshop sessions (that I couldn’t attend) and two round-table panels on the final day. I will put my summary of these discussions into a separate post.
The subject of creativity has been on my mind lately. As part of my dissertation research, I had to look at theories of policy entrepreneurs. Entrepreneurs are said to be many things — risk-takers, charismatic, disruptive.
But they are also said to be creative. They have insights on resources and constraints that lead them to act differently than their peers.
Diligence Contra Creativity?
We could say the same about scholars. Some scholars are like entrepreneurs, trying to revolutionize their discipline with bold new approaches. Some of these insights work, while others flare out.
Other scholars are less adventurous. They prefer to work within well-defined research traditions and grind out modest contributions. Even within this group of scholars, however, I often find that — at least in their own minds — they see themselves as creative.
But all researchers, no matter what field, soon find that diligence is the key to success. Without it, you get nowhere. Coding data, writing and rewriting, formatting bibliographies — without the ability to handle the minutiae of research and scholarship, you are nowhere. You have nothing.
And perhaps all this diligence does something to your creativity. Perhaps it makes you more guarded, less bold. You learn to write and think defensively. And perhaps these habits of mind inhibit your ability to make new breakthroughs.
I’ve been trying to rediscover my creative self. I’ve also been trying to write something meaningful on creativity. It’s hard. And perhaps it’s something I haven’t been attacking creatively enough (or shouldn’t be attacking at all).
Many things have been written on creativity (some of them not all that creative). But my favorite quotes on creativity come from an Isaac Asimov essay I was recently introduced to. The origin of the article itself is fairly interesting. It was the result of an official, government-sponsored project to think creatively about a very difficult problem. I encourage anyone reading this to check it out.
What’s interesting about the 1959 essay is its cynicism toward government-sponsored creativity sessions. Following the September 11, 2001 attacks, there were all sorts of reports and media condemnations of the intelligence community’s failure to connect the dots — in a broad sense its failure to be creative. It’s bizarre to charge a government bureaucracy with a failure to be creative — as if creativity can be produced through a bureaucratic process. And in the aftermath of the attacks, the government sponsored a slew of workshops with “creative types” (novelist, actors, directors, and other eccentrics) in order to “red team” more possible scenarios.
Thinking about these sessions in light of the Asimov article is interesting because Asimov is skeptical that creativity can ever be the product of a governmental process. But he does have a few key sections where he suggests some ways that creative outputs may occur through government funding. Again, I encourage you to go right to the source material.
Eccentricity and its Limits
Here is one quote from the article that got me thinking:
“A person willing to fly in the face of reason, authority, and common sense must be a person of considerable self-assurance. Since he occurs only rarely, he must seem eccentric (in at least that respect) to the rest of us. A person eccentric in one respect is often eccentric in others.”
My first thoughts on this quote have to do not with creativity but with the limits of rational judgment. Let’s say we are able to get a bunch of eccentric/genius types together. And let’s say one out of twelve has a very useful idea. Would we be able to pick out the one good idea successfully?
My answer: I don’t think so.
This is based on observation. We frequently see someone who is right about the next big event or who was warning us about some danger that was about to occur. They are usually columnists, commentators, think tank scholars, or something of the like. But typically we only find out who is right after the event has occurred.
So, not only can we not know which eccentric is the right eccentric, but we (or they) only benefit from their eccentricity if they are willing to put their ideas into practice or risk something they have to make their eccentric ideas work or to get noticed — as entrepreneurs do.
Since entrepreneurs often fail, they need to have either extraordinary insight or they need to be people of “considerable self-assurance” who take risks in spite of the consequences of being wrong.
Isolation and Unconscious Thought
Here is another quote that got me thinking:
“My feeling is that as far as creativity is concerned, isolation is required. The creative person is, in any case, continually working at it. His mind is shuffling his information at all times, even when he is not conscious of it. (The famous example of Kekulé working out the structure of benzene in his sleep is well-known.)”
Isolation? I’m not sure isolation is necessary. Especially in my research on political entrepreneurship, the eccentric types need lots of exposure to their natural environment. Insights come from “continually working at it,” but usually in a social context. For some types of breakthroughs, isolation might be necessary, but for myself I prefer to work with others, especially when I’m stuck on a problem. Isolation might make people weird, but not necessarily in a way that provides useful insights about things in the world.
The part that rang most true for me was the idea of the mind shuffling information, even when “not conscious of it.” I’ve become a true believer in defocused concentration. N.N. Taleb, the famous thinker on antifragility, has talked about the benefits of walks. I find that menial tasks often have the same effect. When I am doing something that requires little thought, but involves lots of motion, I can often have a mental breakthrough. (There is actually an episode of the Big Bang Theory where Sheldon put this theory to work by trying to come up with a breakthrough by working as a busboy at Penny’s restaurant.)
For some reason, I get insights right before I go to sleep. Actually, I get them at the very moment where my mind begins to relax and slip into unconsciousness. This has become so annoying that I’ve just left a notebook by my bed so I don’t have to get up again and walk to my laptop.
Brainstorming Sessions — Real and Fake
A while ago, (I can’t say particularly where or when) I read about a certain government department holding brainstorming sessions. I tried to picture what this must have been like. My mental image was not of a real brainstorming session, but of a bunch of government bureaucrats sitting around, floating mildly interesting ideas with little risk, moments of uncomfortable silence, some obligatory back-slapping, and then calling it a day.
Again, I don’t think a real brainstorming session can occur in a place like a government bureaucracy, or even a large corporation for that matter. Eccentricity in those kinds of contexts can be dangerous. (Maybe if it was a corporate advertising agency. Maybe.)
So here is my last quote:
“But how to persuade creative people to do so [get together for a creativity session]? First and foremost, there must be ease, relaxation, and a general sense of permissiveness. The world in general disapproves of creativity, and to be creative in public is particularly bad. Even to speculate in public is rather worrisome. The individuals must, therefore, have the feeling that the others won’t object.”
This is where academia often fails. Conferences, peer review, and other such academic conventions work against creativity. Usually, the only way around these inhibitors is to avoid them for a while. You have to find a context where genuine creativity is rewarded, and that can be difficult. An academic conference of like-minded individuals looking for a breakthrough might work better than some of the conferences I’ve been to (where scholars spend more time avoiding being wrong).
Like-minded scholarly communities help. Parties help. Talking with sympathetic friends helps. I’m also encouraged by the number of forums that have opened up for scholars to do “official bull-shitting” like blogs and web journals that have more flexible editorial requirements and allow speculative essays.
Another idea, keep a journal with ideas only you’ll ever read. (I guess isolation can be productive!) Then when something is ready to come out of the journal, let it out.
Creativity Finds You
Here is my simple definition of creativity: the mental state of childlike wonder.
If that is the case, then you need to find ways to put yourself in mental states where it’s okay to be odd, unique, experimental — and just plain wrong. It’s difficult to find those spaces as an adult, but not impossible. The problem is that many places within the university are not such spaces. Many places in public life are not such places. They are places of adulthood and consequences. They are places of diligence.
Creativity is what happens when you stop trying so hard.
Recently, German media entered uncharted territory. While conservative newspapers have always identified the Greek government’s profligacy as root cause of the ongoing crisis, the liberal press had maintained more balanced positions. Yet on July 9, 2015, the weekly DIE ZEIT asked: ‘The Greek trap – the crisis-ridden country has a culture inimical to achievement. How can it be overcome?’ DER SPIEGEL proclaimed (in its July 11 issue) the necessity of ending the German romanticization of its arcadia in Attica. The title read: ‘Our Greeks – rapprochement with a strange people’.
Since when has culture advanced as main explanation for a country’s (economic) misery? How can shortcomings in a state bureaucracy be taken to explain an entire people’s failure of achieving prosperity and societal welfare?
In logical consequence of this narrative, the subsequent Eurozone-Greece agreement of July 13, 2015 figured as ‘the most intrusive economic supervision program ever mounted in the EU’ (FT). The drastic measures alongside the required ‘ownership’ of reforms revealed the deep mistrust in Greek institutions. The source of most, if not of all, failures was located in the Greek government’s incapacity, or reluctance, to accept conditionalities and implement reforms.
Unit labor costs and competitiveness in the Eurozone
This is yet another instance of misinterpreting the symptoms of a disease rooted in the fundamental misalignments within the Eurozone. There have been idiosyncratic issues in Greece (reporting failures, unsustainable debt since 2010), just as there have been home-grown issues in other crisis-hit member states contributing to the current escalation. However, these problems represent only the tip of the iceberg. It is not the misbehavior of individual governments, let alone cultures, which underlie the seven-year-old crisis. It is persistent failures in the economic governance of the Eurozone. Recent data from other Southern members are hailed as heralding the end of misery (EC, Reuters, FT, WSJ). The following discussion will demonstrate to the contrary: as long as the shortcomings in the institutional set-up of the Euro and the failures of member state coordination of fiscal policies persist, the crisis will continue. Greece today, who tomorrow?
Unit labor costs, the ratio of total labor costs to productivity, are interpreted as the best approximation of an economy’s competitiveness. Judged by these standards, today’s Germany is competitive. This is not merely due to its superior productivity though. German multinationals as well as the famed Mittelstand are very capable. But the great divergence of unit labor costs compared to Southern European economies was due to wage restraints and welfare cuts, beginning with Schröder’s Agenda 2010 in the early 2000s (Mickey Levy, Flassbeck, Spiecker, The Economist). Addressing ‘the sick man of the Euro’, the reforms (and other factors) put the German economy ahead. This was achieved, however, at the cost of society’s lower strata and its Euro partners, as evidenced by subsequent divergences in balance of payments across the Eurozone (Gavin Davies). Bound by the Euro, others could no longer devalue their national currencies to improve competitiveness. During the decade of the European boom, no one seemed to worry. Southern economies expanded strongly, while Northern capital was flowing in and financed investments and consumption. Consumption of Northern, of German goods for that matter. Apparently unnoticed, Eurozone’s North and South diverged.
Since the onset of adjustment programs across Europe, however, unit labor cost convergence has moved center stage. Yet this is not a joint effort – i.e. via wage restraint, reforms and export-orientation in the South combined with wage increases, fiscal expansion and domestic consumption in the North. Instead, the benchmark has been set by Germany and Northern Europe, and the others are asked to adjust. During the past years, Southern economies have undertaken enormous efforts. Greece, above all, is the star pupil (OECD, Economonitor). But to little avail. And even if the recent recovery across Europe (except Greece) proved sustainable – when every Eurozone member strives to become ‘competitive’, who will act as counterpart? The German ‘Sparpolitik’ in the 2000s was offset by Southern expansion. Who is buying now, when everyone is saving?
The structure of the Eurozone and the European Central Bank
Divergences of unit labor costs, clouded by the boom, were further reinforced by the ECB’s single nominal interest rate. Paul de Grauwe and Notre Europe argue that increasing inflation in booming Southern economies lowered real interest rates, thereby rewarding further economic expansion. The reverse was true for the North, which still profited of huge export-gains. Additionally, due to increasing real exchange rate spreads the prices of comparable products across member states diverged, making Northern manufacturing more and more attractive (Vistesen, Dadush, Wyne). Hence economic dynamics pushed states further into imbalances, not merely the often denounced human fallacies. Where is the public discussion about these curious, and obviously significant, dynamics?
A second issue identified by de Grauwe is the lack of a lender of last resort. Since the late 19th century, any central bank’s mandate has included the provision of unlimited liquidity in times of financial panic; not so in the Eurozone. When the financial crisis hit Europe, each member had to clean its own doorstep. Capital fled to presumably safer Northern countries and Southerners dried up. The lack of affordable refinancing forced spending cuts, thereby inducing immediate austerity programs. The cuts diminished GDP, which made servicing debt even harder. And only then the European austerity programs were devised and implemented. The question arises: were state budgets ultimately unsustainable and Southerners righteously punished for profligacy? Or did they simply look weaker relative to Northern neighbors, which were favored by investors in times of uncertainty? Evidence points to the latter. Nevertheless, these are the discussions we Europeans should hold.
The Eurozone is not ready for the challenges ahead
Despite improvements in financial governance, such as the banking union or the ECB’s perennial setting of precedents, the economic structure of the Eurozone has seen little of the desperately needed changes (e.g. Hans Tietmeyer, Euractiv). As long as there is not some kind of fiscal union, as long as there are not some kind of common Eurozone debt instruments, the inherent fragilities persist. Furthermore, the majority of European policymakers remain bound to their national constituencies – why should they care for the whole of Europe, when their electoral mandate stems from a fraction of the people?
We need a European debate. A debate about the flawed narrative that the Greek government’s profligacy is said to have caused the economic and political crises; a debate concerning the interpretation of the crisis as a mere lack of competitiveness (what about the European welfare state by the way?); and a debate with regard to the absurd claims about “cultural” limits to economic growth.
Vincent Dreher is a PhD student at the Berlin Graduate School for Transnational Studies. He works on the Political Economy of International Money and Finance, with a focus on international institutions.