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Friday, July 9, 2004


This is the 5th article on the innovative capabilities of the US economy, comparatively viewed. Starting in mid-June 2004, the 1st and 2nd articles dealt with convergence theory: according to it, those follower countries with good institutions and enough human skills to import, adapt, and diffuse modern technologies will grow faster than the lead country, the main innovator on the technological frontier. A variety of complex convergence processes, each of them set out systematically, remember, in the first article in this mini-series, explain that faster catch-up growth. (Click here for that article.) How long will catch-up growth go on then? Until --- barring disruptions like wars or a great depression --- the follower countries end up converging on the leader in its levels of labor productivity and per capita income.

As we saw, the theory is generally sound . . . especially in a qualified version of what's called conditional convergence that needn't bother us in this series. The evidence here is clear.

In the EU 15, for instance, catch-up growth is very much alive today. Spain, Portugal, and Greece continue to narrow the gap with the rest of the EU in per capita income; come to that, Ireland --- once the poorest country in the region --- upped its rate of per capita income since the mid-1980s to the point that it is now the richest in the EU. . . roughly $32,000 (in purchasing power parity terms) compared to the EU average of around $26,000. Denmark, by the way, comes in second at $29,000.

In Pacific Asia, convergence is still going on at a fast pace as well. South Korea and Taiwan are still closing the gap with Japan; Singapore and Hong Kong have already surpassed its per capita income; and China --- at a much poorer level of per capita income (and hence growing especially rapidly) --- has been growing at about four or five times the Japanese GDP rate since 1979, when the post-Maoist reform era began. And then there's India. After market-oriented reforms in the 1980s again in the 1990s, it has also joined the convergence club in Asia, closing the gap with Japan and the others as well.



Bluntly put, convergence catch-up doesn't apply to the overall US lead over all the other rich, fully industrialized countries. In per capita income, it has been the leader now since the 1880s . . . about half the total time that's elapsed since the industrial revolution of the late 18th century. Explaining the causes of this exception is what this and the next article are about.

Consider the Evidence

More specifically, consider what has happened go Germany and Japan, the US's two main competitive rivals, in recent times. By the late 1980s, both of them had closed the per capita income gap from around 50% of the US in the early 1950's (35% for Japan) to around 85-90%. Many observers in those days touted them as more dynamic, better organized economies; they had superior forms of capitalism --- more human too, it was argued. On current trends, it was further argued, they would equal US per capita income by the end of the 1990s, then surpass it in the next decade.

Such views also underpinned the widespread notion of American decline, a related theme. Some observers urged the US to shift to one another of these superior forms of capitalism as a way to reverse American decline, with its poorly performing, market-oriented economy and atomistic forms of self-interested behavior:

  • Either Rhineland corporatist capitalism, based on a big welfare state and constant cooperation between government, organized labor, and big business and finance, all the agents here supposedly equal partners, fixated on the national interest and social harmony. The distinction between state and society, the public and the private sectors, was heavily blurred in such corporatism . . . as it is in all corporatisms. Germans and other West Europeans liked that blurring. It was purposeful; it contributed to greater cooperation between all organized groups; and it generated, or so the argument went, not just greater harmony but, as a direct result, a superior economic performance .

  • Or corporatist capitalism Japanese-style, based on a far more limited welfare state and lower taxation, but an even greater regulatory apparatus than that in Germany and the other Rhineland countries, including industrial targeting, a lavish use of subsidies for targeted industries, and trade barriers of an informal sort galore that limited foreign imports and multinational implants in the Japanese economy.

A few clarifying comments seem in order.

As in Germany, much of Japanese industry was and remains heavily cartelized. The interlocking ties that bind big banks and big corporate firms together in Japan also have their parallels in the Rhineland economies of Germany, Holland, Belgium, Switzerland, and (a slight way off) Austria . . . only in tighter, more formal ways, with the big Japanese banks owning most of the equity capital of the giant corporations like Sony or Mitsubishi or Toyota, and vice versa, those corporations simultaneously owning the banks' stock. The heads of the banks and corporate firms also sit on each other's boards. Both the Rhineland and the Japanese forms of raising and allocating investment capital, it went without saying, were superior to the helpless dependence of American corporations for investment capital on the fickle stock-market, with its built-in short-term profit concerns . . . . little else.

As for trade unions, though they are much weaker in Japan compared to their EU counterparts in the Rhineland areas or Scandinavia, as a compensation Japanese workers have enjoyed guarantees of life-time employment and lavish corporate welfarism and were therefore enthusiastic partners of Japanese CEOs and managers. In idealized form, so the proponents of the Japanese model claimed, the well-being of the corporate enterprise over the long-haul was what counted for the work force, not just promotions and pay increases. The cooperative relations between labor, finance, and corporate management were reinforced in other ways as well. In particular, Japanese CEOs and managers were as concerned as their German counterparts to develop consensual decision-making; they never let profit-motives or stock-market worries get in the way of their devotion to their employees well-being and that of the wider nation.

It was the well-being of their workers that counted most for the bosses, at any rate in the idealized version. (In reality, even in the 1980s believe it or not, repeated survey data showed that the Japanese work force was the single most discontented in the industrial world --- not that this bothered the admirers of Japan's economic system.) Then, so the version went, it was the well-being and satisfaction of their customers that mattered most for top management. As for the share-holders among the Japanese and German publics, they came in a poor third. By contrast, the allegedly short-sighted American corporate worlds reversed this order. Small wonder, then, that American firms not only were less competitive and innovative, or that the American economy was growing slower, but that in addition American products were inferior in quality to those produced by Japan or Germany

American Decline

Thanks to these superior forms of capitalism, not only would these two giant countries outpace the US in per capita income and levels of productivity within a decade or two, but no less important, they would zoom ahead of the US in the new emerging technology-based industries of the future: computers and information and communications. In the extremist forms, Japan with its strong mercantilist thrust --- huge trade surpluses on a global basis with the rest of the world year-in, year-own, but especially with the US --- would end up owning much of corporate America, starting with MGM and Rockefeller Plaza and moving on in blitzkrieg fashion to the rest of American corporations.

Then too, to compound all these worries, it was argued by some international relations specialists --- above all, Paul Kennedy of Yale and Richard Gilpin of Princeton --- that the US was tumbling into a global position that bedeviled all other former imperial and hegemonic powers: imperial over-stretch, excessive military spending that strained the economy while multiplying security commitments abroad. The clever Japanese were having none of these problems: they weren't spending more than 1% of their economy on defense compared to the US average in the four decades of the cold war to around 6%. Germany, a NATO ally, husbanded its spending and commitments too, and never allocated more than half the American percentage to defense.

Poor Americans. Either we changed our ways drastically and became ersatz Germans or made-in-Japan imitators, or we would be at best also-rans in the world economic league and at worst under the thumbs of Japanese owners and managers.

The Reality?

In the last 14 years, Germany and Japan have fallen way behind the US --- not all the way back to the gap that prevailed in 1950, mind you; but back to around 65-70%, essentially the gap that prevailed in the mid-1960s. Over that decade and a half, to be more concrete, Japan has compiled the worst economic record of any industrial country since the Great Depression; its industrial production by 2000 had actually fallen further than the US's did in the 1930 depression-era. Germany's performance has hardly been better. It has been the sick-economy of the EU, its worst growing country. The EU average in per capita income, by the way, is about the same as Germany's --- a little more than $26,000 in mid-2004, compared to the US's nearly $39,000.

As for the impact of defense spending, it too doesn't have the bad effects that declinists here and abroad insisted it did. Today, for what it's worth, Japan still spends a little more than 1.0% of GDP on defense, and Germany only slightly more (1.2%). The US, by contrast, is now is spending around 4% of GDP. Yet, despite this much higher % of spending, the US GDP has been growing the last decade at around 3.5-4.0% annually; the Japanese and Germans --- while continuing to roll up trade surpluses and keeping defense spending limited --- have grown less than a third that rate annually.)

And so?

And so, to repeat, figuring out why the US has again increased its lead is what this and the next article are about. More specifically, what is there about American capitalism and American society that have continued to defy the logic of convergence theory for half the time since the industrial revolution?

A Useful Table and Diagram

Meanwhile, before we tackle this question, here are two useful ways to systematically set out the US performance compared to others.

Consider the evidence in the following table and diagram, both of which appeared in an earlier buggy article last month. The table is the buggy prof's: note that per capita income is estimated through 2004 (based on OECD projections for the last six months of the year); most of the other figures are for the start of 2004. The diagram is from IMD, a prominent Swiss Business School that, for years now, has annually ranked dozens of countries in terms of their overall competitiveness, and on four composite sets of quantitative measures: economic performance, government effectiveness, business effectiveness (including labor markets), and infrastructure quality. Generally, it and the World Economic Forum --- another Swiss-based institute (with links to Harvard) --- put out the best overall rankings of comparative economic performance . . . including prospects for the future.

Untitled Document
  Population in Millions GDP PPP$ $Billions % of World GDP GDP per capita PPP 2004 Est. Defense Spending $Billions Defense Spending % of GDP
World 6300 $50,000 ------- $7, 900 $900 1.8%
USA 280 11,200 22.0% $39, 400 $390 3.8%
EU-15 380 9,900 19.0% 26, 300 140 1.4%
Germany 80 2,300 4.5% 27, 200 38 1.4%
France 60 1, 800 4.0% 27, 900 45 2.5%
Britain 60 1, 900 4.0% 28, 100 32 1.7%
Russia 140 1,400 2.5% 9,400 55 4.5%
Japan 129 3, 700 7.0% 28, 700 45 1.2%
China 1200 7100 14,.0% 6,000 100 1.4%
Sources: OECD, EU, The Economist, CIA WorldFactbook

Here's the IMD rankings: to save space, only the first half of the 60 countries evaluated are found in the diagram. Note how large the US lead is over the 2nd, 3rd, and 4th countries. Note too that Germany --- ranked 20th last year --- is now in 21st place; the UK is ranked just behind it, 22nd place; and Japan is ranked 23rd.


The main reasons were hinted at in the 1st article, then touched on further in the last two articles. Five causal influences stand out, all interrelated. Together, they add up to an economy in the USA that is both more innovative and adaptive to change than that of its rivals in Asia or Europe. Call it if you like a superior national system of innovation, a concept that will be clarified in a moment or two.

The Causal Influences To Be Analyzed

1) The institutionalized ability to repeatedly pioneer radically restructuring technologies that have erupted in long-term waves every 50-60 years since the industrial revolution . . . including unusual links between universities and businesses for R&D purposes and imaginative high-powered R&D;

2) The benefits of an unusually flexible set of economic institutions, backed by socio-cultural trends, that repeatedly enable Americans to carry out and weather the highly disruptive forces of creative-destruction . . . an essential part of bringing revolutionary technological breakthroughs successfully to the market-place.

Joseph Schumpeter, the Harvard economist of Austrian origins, was the pioneer theorist of both radical long-wave technologies and the related idea of creative destruction.

The latter, creative destruction, means that you can't generate wholly new profit-making industries that incorporate new revolutionary technologies without letting older industries run down or totally disappear. The aim here? To switch financial capital, managerial talent, skilled line-workers, engineers, scientists, marketers, and the like out of these old-line, standardized industries --- where innovation has generally slowed down and become limited mainly to incremental improvements in production processes --- and redirect them to these newer, more promising industries full of innovative opportunities and entirely new products. Efforts to block creative destruction in this sense will retard an economy's ability to innovate or adapt to globalizing forces.

3) Matchless entrepreneurial energies and risk-taking. As we'll see, 1 out 11 American adults start a new business every year; the equivalent in Germany and Japan is about 1 out of every 50 adults. Failures too are far more severely punished in Japan and the Continental EU countries, which makes risk-taking all the more hazardous.

4) The powerful work ethos and the mobility of American workers --- the latter reflected in an unusual willingness to move around the country in search of better jobs or livelihood that is rooted in the immigrant status and history of the US for centuries now. One British study in the late 1990s showed that American workers were 50 times more ready to move to other parts of our country for these purposes than were European workers. Yes, 50 times . . . however hard it is to believe.

5) The last influence? Globalizing forces have accelerated the speed of creative-destruction in the US economy: the growing obsolescence of old technologies and industries as new innovations in biotech and information and communication technologies multiply, freeing up capital and human talent ---managers, skilled workers, engineers, scientists, and entrepreneurs --- for bringing new bold ideas to the market place, first in the US economy and then quickly through trade and multinational activity to other countries.



Note that the key term we'll be using in Parts Four and Five here --- found in the next article in this series --- is a superior form of innovation-system, not overall economic well-being. It produces better economic growth, especially in per capita income. That is measurable and easy to work with.
By contrast, the concept of economic well-being is largely subjective, even if you could find proxy indicators to compare it across countries (such as survey data). It reflects culturally based notions of national values and preferences --- including trade-offs between leisure and work, or between individual responsibilities and entitlements, or between the workings of markets and the public sector, or between taxation and social security transfers, and so on --- that become institutionalized over time in sets of formal rules, organizations, and policies in each country. They are also reflected in dominant political ideologies. And needless to say, over time they have also become part of national cultures.

Note that the proper distribution of income across the citizenry --- usually divided into quintiles --- enters into the notion of economic well-being too, at any rate in the EU and other places. West Europeans, for instance, seem to prefer a more equitable distribution than Americans or others in the English-speaking countries. As you'll see soon, whether they are aware of the trade-offs that follow --- such as much higher levels of unemployment in most of the EU --- is another matter.


The Impact of History

In turn, if you ask why such national values, preferences, and ideologies in economic matters differ across countries --- say, between rich West European Continental ones, Anglo-American countries, and East Asians --- the complex answers would require you to go back into their histories over the centuries and analyze why, even if all the countries involved are now democratic, they developed different political, legal, administrative, and busines-financial institutions. If you did this, you would also soon find that almost all of Europe and Japan encountered far more difficulties --- laden with violent upheavals and ideological extremisms --- in modernizing into democratic wealthy countries than have the Anglo-American countries or Holland and the very small countries of Switzerland and Scandinavia.

Consider, to drive home the point, the political situation in Europe on the eve of WWII. By then, Germany, Austria, Italy, Spain, and Portugal --- almost all of East Europe too --- all had militarized fascist regimes. Germany (including Austria) was ruled by fanatical racist Nazis, all very popular with the masses; its well-supported system was totalitarian through and through. France itself entered the war heavily divided ideologically; and once it was occupied by Nazi Germany, it quickly developed a fascist-like collaborating regime. Further to the east in Europe, the Soviet Union was in the grip of Stalinist Communism --- the pioneering totalitarian system, another mass-murder ring regime on a horrendous scale. Only tiny Switzerland, Belgium, Holland, and the Scandinavian countries on the Continent --- a total of about 40 million Europeans --- joined Great Britain in being robustly democratic.

All told, the democratic countries of Europe in 1940 encompassed only about 10-15% of the total European populations, no more. All the rest were ruled by totalitarian or authoritarian regimes of the extreme left or right.

It is not a pretty record.

It was made all the more ghastly by six years of total warfare, a racist holocaust, and the deaths of tens of millions of people.

Similarly, in the Far East, Japan --- which had been a late industrializer like Germany, with a far more state-directed form of development --- had briefly flirted in the 1920s with a parliamentary system somewhat akin to the ill-fated Weimar Republic in the same era. And just as in Germany the democratic experiment crumbled before a Nazi-onslaught and totalitarianism, so in Japan it failed and was replaced by a rigorous form of militarized semi-fascist authoritarianism. By the end of its own horrendous war with the allies, its cities were smashed, its population demoralized, and --- as in Germany --- its country ruled by the victors.


What Can We Infer From This Shorthand Historical Record?

Simply stated, those European and Asian countries with such extremist ideologies as dominant political forces in the mid-20th century had experienced far more violence, internal warfare, class-based and ethnic conflicts, and fears of one another in their historical past than the small swathe of moderate democratic countries on the periphery of West Europe ever did. Small wonder since WWII, then, that the new democratic countries in Europe and Pacific Asia --- or in East Europe since the end of the cold war --- would place a much greater premium on social solidarity and redistributive policies in order to overcome these historical upheavals and murderous class-based and ethnic conflicts. These policies were and remain essential to their social stability.

In particular, for decades . . .

  • They stressed a rapidly growing welfare-state and a heavily regulated form of capitalism that ensured job-stability, marked by increasingly high taxes and transfer payments. Only recently, as stagnant growth as overcome most of the EU, have some efforts been made to reign in the growth of both taxes and transfer payments. The Japanese version played down the welfare-state side of the equation, it should be added, but reinforced the state regulatory and subsidy-side. The same was true of various forms of protection against foreign exports and multinational activity in the Japanese economy. Even so, Japanese governmental spending now exceeds that in the US.

  • They undertook sustained efforts to develop consensual decision-making --- made all the more imperative over time in Italy and France, where the Communist parties were the largest in their political systems after WWII. (The consensual endeavor, it should be added, was far more successful in Japan, Austria, Holland, Germany, and Scandinavia than in the Latin countries, Greece, or even Britain, where eventually Mrs. Thatcher's government broke the back of increasingly hostile trade-union bosses.)

  • They eventually made, above all after 1970, a strong commitment to narrowing the distribution of income across social classes. Until then, believe it or not, the USA and Britain --- now at the bottom of the industrial countries, along with Australia, in the equal distribution of income --- were at the very top: less unequal for historical reasons than even Scandinavia. Even in the early 1990s, comparative studies showed that the poverty rate in Germany --- before transfer payments were made in both countries --- was higher than in the USA. See J. Frick, F. Buechel, and P. Krause, "Public Transfers, Income Distribution, and Poverty in Germany and in the United States," The Personal Distribution of Income in International Perspective, eds. Richard Hauser and Irene Becker (Springer, 2000), pp. 176-204).

  • Only in these ways, so it came to be taken for granted in West Europe after WWII, would social stability and peace be assured. Only then would the specters of ideological extremism and violent upheavals be banished from West Europe's past . . . or, in the Japanese case, by means of its own form of corporatist state-directed economy.

The outcome? In all these domestic endeavors, the Japanese and the West Europeans have been unusually successful. They are now solidly democratic and prosperous; extremist nationalism has also faded; and similarly, ideological extremism --- if not entirely banished in Mediterranean Europe, Belgium, Austria, or Germany --- has noticeably declined in strength.

Whether, as a further upshot, their economies are as flexible, innovative, or capable of generating as much economic growth and job-creation as they would like is very much another matter.


The Current Outcomes of Different Historically Shaped Preferences and Values?

The latter point deserves to be briefly spelled out.

If, for instance, West Europeans prefer more leisure over work than Americans, then that is the kind of economy they now enjoy. (Only fair to add that there is some good research that traces most of the EU preferences for leisure to two other influences besides culturally shaped tastes and preferences: high marginal taxation on every extra hour of work, and the declining participation rate of adults --- people 18-65 --- in the work force . . . the latter due to the lack of available jobs. Oliver Blanchard of MIT argues --- after looking at these alternative explanations --- that cross-country comparisons in the EU seem to support the claim that growing leisure in the EU since the 1970s reflects mainly preferences and tastes: it's voluntary.
European Growth Over the Coming Decade ] In the process, the EU populations may sacrifice about 30 -35% of disposable income that Americans earn, but they also work on an average about 250-300 hours a year less . . . in the German case, almost 400 hours less! (In the last section of this article, you'll find a chart that captures the specific hours worked yearly.)

Of course, there are always trade-offs. The regulations, fairly high minimum wages, and high taxes in the EU may entail more vacations and holidays for the West European populations, but --- along with restrictions on lay-offs --- they also entail a much higher level of long-term structural unemployment than in the US . . . roughly two to three times higher. That's been the case for over two decades now in the EU. More and more of the unemployment in the EU, note further, is also long-term. It's especially acute among young West Europeans looking for a career job, and among the immigrant minorities.

In Japan, workers and the larger society have preferred much greater stability and social harmony than Americans. Respect for hierarchical authority is one sign of this culturally based preference; knowing your place in the hierarchy is another. Life-time employment --- which incidentally only affected about 30-40% of the work force ---also reflects a different outlook and set of preferences; so do refusals to lay off redundant labor in uncompetitive industries until very recently. Nor is that all. Since the 1970s, lavish government subsidies and other forms of protection --- once employed in the early post-war period for trying to accelerate technological progress by means of industrial targeting --- have been used for more than two decades to keep such semi-bankrupt industries afloat, all in an effort to halt the forces of creative destruction.

In the upshot, the Japanese economy piled up one small mountain of market inefficiencies after another; and by the 1990s, as we noted, it was recording the worst performance of an industrial economy since the era of the Great Depression.

There are always trade-offs.


The Trade-offs For US Workers? They Are Numerous Too.

If, for instance, disposable household income is much higher in the US than in the EU by about a third, Americans also work much longer and --- as most observers who've lived in the US and West Europe would probably agree --- much harder. As in the rest of the English-speaking countries that use the Anglo-American form of capitalism, moreover, wage inequality is higher here too on a post-tax and post-transfer payment basis. (Transfer payments refer to unemployment insurance, welfare subsidies, and government paid social security.) And some Americans --- about 10-15% of the population --- have uncertain access to medical care.

Specifically, to return to the distribution of income, the Scandinavian countries and Holland rank highest in income equality, the US comes in 41st, Britain 63rd, and Australia 74th. See this link for the stats. All three countries, plus New Zealand, have purposefully cut taxes, welfare payments, and regulations the last two decades, in order to achieve more economic dynamism and job-creation. As a general thing, they've achieved it. Britain --- whose per capita income was about 10% lower than that of France or Germany in 1980 --- now enjoys about a 7-10% lead over them, and its unemployment is roughly half that of those two countries. Australia, which had looked like something of an economic basket-case by the early 1980s, is now ranked by the IMD as the 4th most competitive country in the world. New Zealand, whose economic performance has also improved notably since it scrapped its huge welfare-state and regulatory-system in the 1980s, is ranked 18th. Canada, ranked no. 3 in the IMD poll, has expanded its welfare-state system over the last three decades, but even so, it too has experienced a noticeable increase in income-inequality in the process as it seeks to recover its economic flexibility and dynamism.


And So?

And so, then, which is better --- more leisure or more work and income? Higher minimum wages and restrictions on lay-offs or more job creation and lower unemployment levels? Higher taxes and more social security transfer payments or higher levels of an underground economy --- roughly 7-8.0% in the US, and two to three times as high in West Europe? State-run medical services or private ones? A better railway system all over West Europe than in the US, or a much better and cheaper air-system in the US? Far more start-up businesses in the US or less commercialism and more knowing-your-place in the EU? Heavily structured channels of education and restraints on upward mobility in the EU or a far more flexible, forgiving, free-for-all system of advancement in the US? A bigger safety-net in West Europe if you're in trouble or far more bureaucratic regulation of your personal life?

No one can say objectively. Obviously. All a social scientist can do is trace carefully the trade-offs and note the consequences.

Ideologues, as you'll note, hate such claims.

Whether on the left or right, they are convinced that all good things go together --- an advanced welfare state or even socialism on one side and free-markets and individualism on the other. It makes them furious to find out that the world doesn't bend to their idealized aspirations. Something else too. National pride also intrudes in such comparisons. That's inevitable, and in a way --- as with Olympics or World Cups or the Davis Cup or the Ryder Cup --- such nationalist feelings sublimated into comparing economic performance, however measured, are a sign of changed times . . . maybe even a certain progress. At any rate, going wild when your country wins a sporting contest or rolls up a faster rate of GDP or longer vacations beats going to war as a test of national prowess, a far more primal form of expressing pride and aggressive tendencies.


That Said, Note One More Thing

We've referred to the trade-offs between leisure and income, or vacations and job-creation, several times here as examples. There's no way an American observer can tell West Europeans that they should change their preferences, any more than a European observer can tell Americans that we should slow down and eat leisurely three-hour mid-day meals that the most affluent Italians are able to indulge in, some of the French and others too.

A sidebar clarification here. Apart from these clusters of very affluent groups, most Frenchmen and Italians live in or around traffic-choked urban areas and don't enjoy lengthy mid-day meals; they couldn't afford such meals anyway, and they have to commute long-distances to and from home. What then? When the weary male workers arrive home, do they find some luscious regional fare waiting on the dining room table? You guess the answer. As it happens, their wives --- most of whom have been working too --- haven't been busy as depicted in idyllic films about Tuscany village-life going joyfully to open markets, buying fresh produce, chatting with the locals at a cafe, and then spending two hours elatedly cooking for the family. They're as exhausted as their husbands.

Revealingly, these fantasy-films --- and the books they're based on, from the days of Henry James or Edith Warton or their British equivalents --- seem mainly to feature rich Americans or Britons, unable to stop marveling at all the leisure and wonderful food around them in the very costly villas they've bought out in the vine-covered hills above Florence.

The sun's always out in these films; its rays ripen the lush grapes and send shadows moving playfully up and down the rows of vines. Whether they're toiling out in those vineyards or in the villa, retinues of happy-go-lucky peasant servants --- all those dedicated, worldly-wise gardeners, sexy maids, savvy cooks, and docile chauffeurs --- are ever present; they run over with devotion to their rich Anglo-American employers; they burst into lilting song as they go happily about their chores, or slyly goose one another with a giggle, at any rate when they can't find a hidden jug of vino to snort. The huge villa itself is almost always semi-dilapidated, but not to worry. The rich Anglo-American family that's just bought it meets daily with the savvy, ever-courtly architect to plan the next renovation that will restore the villa to its Renaissance grandeur. Then there's stiff-necked Maggie Smith or her stand-in as the nanny. Her job is to ensure that the ruddy-cheeked family children are learning proper English and good table manners amid all this spontaneous Latin frivolity. Most of the time, uptight nanny Smith has another busy-body duty. She's especially keen to spy on the children as they reach adolescence and see to it that they don't have a fling or two with one of the servants in a haystack.

Enter, usually, the leitmotif of the film or maybe it's main point: the innocent but chafing-at-the-bit beautiful young English or American girl, who's been repelled by her proper, stuff-shirted suitors back in dreary London or Boston --- or those that have accompanied her family to Tuscany (many of them lisp and play the piano without brio) --- and who, within days of arriving in the half-restored villa, turns out to be as randy as Sarah Jessica Parker and her trio of sexually predatory friends. Soon enough, she spots a handsome peasant boy working the vines, or maybe as the architect's carpenter, and --- hormones churning (it's all the fantastic regional food and copious vino she's just been exposed to) --- begins longing for lavish bang-action with these rough-and-ready Italian boys. The latter, of course, are right out of Dr. Kinsey's manuals; without exception, they take to sex as naturally as Labrador dogs do to swimming. They're strutting sex-pistols. And though they don't speak a word of English, who has time for speaking? (Never mind that one study published in the late 1970s found that the average sex act in Italy lasted about 75 seconds. Why bother about fussy details to ruin a script?)

Plenty of bone-to-bone bang-stuff follows, either in the haystacks or in the weedy rows between the vines and their lush, fast-ripening grapes. Strangely, nothing occurs in the boudoirs back in the villa itself. To judge by the primal love-making, it would be unseemly to find a proper English or American girl, no matter how sex-starved, in bed with a red-hot, let's-do-it-now Italian peasant lad.

What then?

Cut to London or Boston. The now fully ignited girl, her hormonal flow at boiling-point, returns with her ever-so-proper family to their dreary 20-room mansion, visited daily by mal-adept Bostonians or English gentlemen as suitors for her charms. Most of them, to judge by their awkwardness, have never even had successful solo-sex, let alone lavish slam-bam-thank-you-'man stuff in bed with the opposite sex that the Italian pistol-lads excel at. Small wonder that our aroused, always-on-fire beauty is now as much alienated from the stuffy bourgeois world around her as the exploited Marxist proletariat.

Cut to the next scene. Enter . . . well, ultimately, joy doesn't return to the girl until next summer vac and the long erotic awakenings once more in ever-sunny Tuscany and its ripe grapes and endlessly tasty regional dishes.

The End. R-rated. Two or three Academy-Award nominations in the offing.


Back to our larger theme: economic growth vs. economic and social well-being. Even if a social scientist has no more right to judge the proper trade-offs than the average citizen in Europe or the US, it doesn't follow we can't say something worth while that's up-to-date. First off, consider the following chart taken from the New York Times July 5, 2004.

An Aggravating Influence

Nor is that the end of the matter. These problems for the French, Germans, Italians, and the rest of the EU countries in West Europe of sustaining their preferences for leisure --- and big transfer payments --- amid a rapidly globalizing capitalist economy are compounded by the relentless aging of their populations. More and more pensioners have to be supported for more and more time by fewer and fewer workers, all on state-taxed pension schemes and way into the future; maybe forever . . . a long time, no? Will the Germans and others be willing to allow in far more immigrants from developing countries by way of compensation?

Not likely, at any rate as the New York Times article also shows.

Note quickly. In many ways, given that the likeliest sort of immigration would be out of the population-exploding Arab countries, who can really blame them . . . what with the increasing alienation and animosity found in the expanding Muslim communities throughout West Europe, more and more at odds with the larger secular cultures around them? Islamist fundamentalism is rife in those communities, after all; easy assimilation, another EU assumption until recently, seems increasingly a will-of-the-wisp --- one more culturally grounded assumption full of politically correct ideology. So, ok --- European countries are understandably reluctant to let in more Arabs or Pakistani or even, possibly, secular Turks. That's their right. To call it racism would be wrong. Japan too, another country that oppose immigration of almost any sort, has a right to protect its cultural homogeneity if that's what the vast majority of Japanese want.

But note another thing no less quickly. There are also millions of well educated Indians and others around the world who would be happy to work and live in West Europe at European wages. What explains the German hostility to their immigration? Or French hostility to the entry of democratic and secular Turkey into the EU, especially if it continues to improve its human rights record?


To be continued in the next article in this series.