Monday, June 9, 2008

Economist's Notebook: Americans, Europeans and Markets

It says a lot, I think, about the difference between how Americans and Europeans view the interaction of their governments and markets that the New York Times today reports on a truckers' strike in Spain to protest high fuel prices. [Here is a NYT picture of a blockade at a Spanish-French border crossing] Americans, trained from birth to respect the sanctity and power of markets, only complain when they feel that the outcomes they are seeing are the result of manipulation. Europeans, on the other hand, have an expectation that government will protect them from the harsh realities of supply and demand. A similar scene in the US would be unprecedented.

I remarked to a French friend once, as he was lamenting the vulgar display of the French flag by citizens celebrating the French victory at the European soccer tournament (the flag is the symbol of the state, you see and should only be displayed on government buildings, was his complaint) , that the relationship between the state and the citizens of France is quite different than in the US. In the US, I claimed, it is common for people to display the flag on private property because of the belief that the government is an extension of us. We send our representatives to Washington and they govern, but they are citizens just like us. In France, I felt, there was much more of an attitude that the government is a group of professionals whose task was to take care of the people. So the attitude is more paternalistic, if you will, and there is a higher expectation that the government will decide for the people and will protect the people.

I think this analysis, albeit a little crude, follows for markets as well. Both Europeans and Americans understand the basics of supply and demand, but Americans are much more willing to accept the outcomes of markets as they are. Europeans believe that the government should become active when the outcomes turn too unfavorable. Perhaps this is simply an artifact of a society founded on free market ideals versus societies that evolved slowly to markets occupying a central position. Perhaps it is a artifact of more homogeneous cultures. Who knows?

What is interesting is that the UK, which used to be the poster child for this type of protest and strike, is largely silent these days on such issues. An artifact of the Thatcher years followed by the "new labour" of Tony Blair who officially allowed free market acceptance as a part of the Labour platform.

Which is the better attitude or stance? I know not, but as fuel prices affect the less affluent much harder than the affluent (especially in America where affordable housing is often on the outskirts of big cities and public transport is scarce), I think it is an indication that we are reaching the limit of how much inequality society is willing to bear.

Scattered thoughts for a Monday morning...

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