Chart of the Day: Stereotyping in Europe

From a poll conducted by Pew Research.

I don’t believe in stereotyping, but it must be emphasized that social policies (such as the welfare state or various forms of government interventionism) plays a significant influence on people’s value scales and preferences which consequently shapes work habits.

As former chancellor of West Germany known for his leading role in the "German Miracle" or West Germany's postwar economic recovery, Ludwig Wilhelm Erhard (1897–1977), once wrote,

Social policy must not damage national economic productivity even indirectly, and must not run counter to the basic principles of the market economic order.

If we desire to guarantee a permanent free economic and social order, then it becomes essential to achieve freedom with an equally freedom-loving social policy. That is why, for example, it is contradictory to exclude from the market economic order private initiative, foresight, and responsibility, even when the individual is not in a material position to exercise such virtues. Economic freedom and compulsory insurance are not compatible.

Is the Enthusiasm for Democracy Sustainable?

Because of the ongoing revolutions in the MENA region, Pew Research attempts to distill on the sustainability of enthusiasm for democracy using past experiences.

In a recent study, using the East Europe’s experience, the Pew Research finds that enthusiasm for democracy has declined.

Pew Research’s James Bell writes,

These findings do not mean that East Europeans were inclined to abandon democracy. Publics across the region broadly endorsed the demise of communism. Rather these opinions point to the gap between what East Europeans hoped for and what they perceived in terms of political change. On one hand, East Europeans generally agreed that two decades of political and economic change had disproportionately benefited business owners and politicians, rather than ordinary people. On the other, many East Europeans felt democratization had yet to match expectations. In 2009, the median percentage in each country who said a fair judiciary, multiparty elections, uncensored media, freedom of religion, freedom of speech and civilian control of the military were very important significantly exceeded the median percentage who claimed these institutions described their country very well.

Reflecting on Mr. Bell’s statement, the issue isn’t about the loss of interest on democracy but rather the mismatch between people’s expectations on their definition or their concept of democracy and that of economic prosperity.

So when economic distribution has had “disproportionately benefited business owners and politicians” this only means that the political economic framework has segued from communism to one of crony capitalism based on a social democratic form of governance.

Furthermore, expectations for more freedom have not been met perhaps due to the same reasons.

This phenomenon seems to reflect on the Philippines too. After two People Power revolts, Filipinos have still been waiting for Godot.

Filipinos appear to be impassioned on democracy as demonstrated by the eagerness to vote. However eventually they get frustrated again. That’s because their expectations clashes with the reality: Filipinos largely see economic salvation from political distribution rather than from their own efforts.

We, Filipinos, seem to have little understanding that political distribution is a zero sum game (one gains the other losses, i.e. picking on Pedro’s pocket and giving to Mario), while economic distribution is a net value added.

Yet this doesn’t mean that any nation aspiring for democracy isn’t fit for it. It takes time for people to learn, understand and embrace the concept of economic freedom and civil liberties as this is a process of discovery.

And it all starts with the “right” education.

SEC-Goldman Sachs Row: The Rising Populist Tide Against Big Government

Professor Arnold Kling writes,

``perhaps it is not so crucial to bolster a financial sector that was misallocating capital or to bolster a state and local government sector that has been captured by unions. Perhaps these heroic efforts undertaken in the name of saving the economy only served to reward the looting classes. Perhaps we have arrived at a point in this country where looting is the most rewarding economic activity. In that case, it will not take many years before the wealth available to loot starts to shrink." (emphasis added)

He scorns the transformation to cronyism, which we totally agree. And that's why I see the latest Goldman controversy as part of the ploy to camouflage the "looting classes".

I guess some charts of Pew Research captures prevailing public sentiment.

From Pew Research, (bold highlights mine)

``By almost every conceivable measure Americans are less positive and more critical of government these days. A new Pew Research Center survey finds a perfect storm of conditions associated with distrust of government -- a dismal economy, an unhappy public, bitter partisan-based backlash, and epic discontent with Congress and elected officials.

``Rather than an activist government to deal with the nation's top problems, the public now wants government reformed and growing numbers want its power curtailed. With the exception of greater regulation of major financial institutions, there is less of an appetite for government solutions to the nation's problems -- including more government control over the economy -- than there was when Barack Obama first took office.

``The public's hostility toward government seems likely to be an important election issue favoring the Republicans this fall. However, the Democrats can take some solace in the fact that neither party can be confident that they have the advantage among such a disillusioned electorate. Favorable ratings for both major parties, as well as for Congress, have reached record lows while opposition to congressional incumbents, already approaching an all-time high, continues to climb.

``The Tea Party movement, which has a small but fervent anti-government constituency, could be a wild card in this election. On one hand, its sympathizers are highly energized and inclined to vote Republican this fall. On the other, many Republicans and Republican-leaning independents say the Tea Party represents their point of view better than does the GOP."

In contrast to those who see and think in terms of their political party lines, the polls suggest that there is ballooning discontent about bi-partisan polity.

And it's why perhaps both the Democratic Party and the Republican Party have felt the backlash from the public and thereby has seen their approval ratings plummet, which has mostly been a reflection of the performance of the US congress.

And it is also why the Tea Party has spontaneously emerged.

Yet some would stubbornly argue that more government activism is likely the answer. For instance more regulation in the financial sphere. This camp never seem to realize that in politics, what you see isn't what you get.

As Heritage's Conn Carroll comments on the proposed financial reform bill, ``So whenever Sen. Chris Dodd (D-CT) says his Wall Street Bailout Bill "would have prevented that kind of events from happening" he needs to explain how. If anything, the Dodd plan will only make future Wall Street bailouts more likely and more costly while also stifling consumer choice." (emphasis added)

This only goes to show that the proposed "new" regulatory reforms are being shaped to even benefit MORE (and not less) the looting class!

Not to mention that the controversial John Paulson who helped inspired the Goldman brouhaha, has been a generous political contributor.

According to Ben Smith of the Politico, ``Though many hedge fund managers lean Democratic, Paulson has split his giving, offering maximum six-figure contributions both the the Democratic Senatorial Campaign Committee and to the Republican National Committee. Paulson, ranked 45 on Forbes' list of America's richest individuals, made maximum contributions to the presidential campaigns of Mitt Romney, John McCain, and Rudy Giuliani in 2008, but has also given to key Democratic senators for the finance industry, including Chris Dodd and Max Baucus.

``Paulson hasn't given directly to Schumer, though he maxed out to Schumer's committee. But he did host a fundraiser for the senior New York senator earlier this month, describing him in the invitation as "one of the few members of Congress that has consistently supported the hedge fund industry." (bold emphasis mine)

And all these (lobby groups, contributions, biased laws, regulatory capture etc...) seemingly add to the reasons on why the public's attitude on politicians seems to have tipped over. Instead of big government, which they had earlier hoped to work, they now seem prefer "smaller" government.

Again from Pew, ``Despite the public's negative attitudes toward large corporations, most Americans (58%) say that "the government has gone too far in regulating business and interfering with the free enterprise system." This is about the same percentage that agreed with this statement in October 1997 (56%)."

The point is that the polls suggest that there seems to be a growing public recognition that the previous "big government" or "activist government" experiment has noticeably been a failure, from which is being manifested in politics, as shown in the intratrade.com prediction markets chart courtesy of Bespoke Invest.

And this gives even more motivation for the ruling political class to use the Goldman caper as a likely prop as the "fall guy" role for political ends.

We just don't oversimplistically regulate cartels out of existence, not when the cartel itself is lead by the government via the Federal Reserve.

To quote Dr. Antony Mueller, "There can be no honesty in a dishonest monetary system".

Pew Research: How The World Sees Free Trade

Post 2008 financial crisis, a chart below from Pew Research exhibits how the world perceives of free trade in 2009.


Free trade is seen as favorable by a majority of subjects surveyed for most countries except for Argentina, Japan and Indonesia. Nonetheless, this remains a big plus factor...yet.

Will The US Technology Industry Function As The New Economic Driver?

Pew Research gives us some interesting clues in the changes of consumer habits or consumer preferences of Americans in today's crisis dominated environment.

Seen from the the investing dimension, if we are to bet on a new economic paradigm emerging from today's crisis, some of the "recent" trends may portend or serve as prologue to the future.

According to Pew Research (bold emphasis mine), ``In hard times, the Pew Research survey finds that many Americans are changing their minds about which everyday goods and services they consider essential and which ones they could live without. The survey also shows that "old-tech" household appliances have fared the worst in the public's reassessment of the line between luxury and necessity in their daily lives.

``Of 12 items tested1, six dropped significantly in the necessity rankings from 2006 to 2009, while the other six basically held their own. All of the "old-tech" household appliances on the list dropped in their necessity ratings. For example, the proportion of people who rate a clothes dryer as a necessity fell by 17 percentage points in the past three years. There are similar declines for the home air conditioner (16 points), the dishwasher (14 points) and the television set (12 points).

``A few of the "middle-aged" household appliances and services also declined. The microwave, a kitchen staple since the late 1980s, is currently viewed as a necessity by less than half the public, a 21-point drop in the past three years. The proportion who rate cable and satellite television service as a necessity fell 10 percentage points since 2006, nearly matching the declining value of a television set."

Adds Pew, ``In contrast, none of the newer information-era gadgets and services has fallen in Americans' assessment of what they absolutely need to have. Cell phones and home computers continue to be seen as a necessity by half of the public, unchanged from three years ago. High-speed Internet access is seen as a necessity by about three-in-ten adults, also unchanged from 2006. Two items that came onto the consumer scene in this decade -- iPods and flat-screen TVs -- are still seen as a necessity by a very small share of the public, but that share hasn't declined during the recession."

Why is this important?

First, it shows that the weight of consumer activities or consumer preferences appears to be shifting towards communications in the form of high end TV, iPod or the internet. Despite the recession, while other appliances are suffering from consumption retrenchment, positive growth is still seen on technology based devices or equipments.

This gives further validation to some studies alluding to the ongoing explosive growth in non traditional media as social networking, see our previous post, Wikinomics: The Exploding Growth In Social Networking Media

Next, note that today's crisis won't last forever which possibly means that some of the recent trend shifts may accelerate when economic growth will be restored.

Third is the issue of demographics.

The cellphone and landline usage depicts of the technology "generational gap" trends between youth and the elderly.

Again from Pew, ``The survey also finds that some consumer products, including some high-tech devices that have entered the marketplace relatively recently, appear so far to be "recession-proof." About half of respondents in the current survey (49%) and a similar proportion in 2006 consider a cellular telephone to be a necessity. That overall finding obscures a considerable generation gap: Currently 60% of adults under the age of 30 say a cell phone is a necessity, compared with 38% of those 65 years old or older. But this generation gap is not significantly larger today than it was three years ago; in fact, views on the need for a cell phone have not changed significantly among any age group since 2006.

``An equally dramatic generation gap opens when Americans are asked whether landline telephone service -- the familiar home phone -- is a luxury or a necessity. But this gap runs in the opposite direction. More than eight-in-ten (84%) adults ages 65 and above say a landline phone is a necessity, while only 49% of those younger than 30 agree. And younger adults are nearly four times as likely as older adults to say an in-home phone is a luxury (51% vs. 14%)."

Our point is that the younger generation appear to be more adaptive in utilizing applications from technological innovation, although even the elderly seems to be fast catching up.

And considering that in 2020, demographic trends as seen from the chart above by nationmaster.com indicates of the probable shift in the weightings of the population distribution in the US, where its bulk is expected to comprise the age levels of 25-39. This effectively extrapolates to today's biggest technology users as the core market for the technology industry.

In short, we may expect a huge surge in industry growth in terms of penetration level or in the diffusion of users.

Barring the risks of imposition of extreme regulations which may restrict and choke off innovations, my predisposition is for unexpected or underappreciated technology originated economic recovery for the US. Albeit I think any solid recovery may not be seen anytime soon as the US could be faced with growing risks of hyperinflation.

Nonetheless, the present outperformance of the technology rich bellwether the Nasdaq relative to the broadmarket as signified by the S&P 500 seems to provide some foundation for such thesis.

As Don Tapscott and Anthony Williams wrote in Wikinomics, ``The future, therefore, lies in collaboration across borders, cultures, companies, and disciplines. Countries that focus narrowly on "national goals" or turn inward will not succeed in the new era. Likewise, firms that fail to diversify their activities geographically and develop robust global innovation webs will find themselves unable to compete in a global world. Effectively it's globalize or die."

Blogs Versus Traditional Media: Divergent Weights of Issues Covered

Pew Research shows how topics diverged in terms of coverage by blogs against traditional media. Read the rest here.

What seems interesting is that since social networks have been actively competing with traditional media, the divergent weightings of topics could possibly reflect on the niches of audiences or of the interests of publishers. To which media the market evolves to could win more ad spending.

Obama's Job Approval: Different Polling Agencies, Different Results

From Rasmussen Reports

From Gallup

From Pew Research

The firm's ideology or political affiliations could be driving these divergent poll results.