Free Online Academic courses from MIT

So apparently, Yale is not the only university posting free courses and materials online. Here's the equivalent from MIT.

Mr Herman van Rompuy, President of the Council of the EU

This is why Van Rompuy might be a good president of the Council of the EU. Summary: Consensus builder; from a small, core EU country; Why does this matter? Because the EU does not need a big ego. The EU system is not about one country or institution imposing its will but rather about the ability of political actors to reach consensus. This is obviously a problem for a country like the UK, used to majoritarian decision making typical of its FPTP electoral system. Tough luck though. You can't accommodate 27 different countries by giving them a president that tells them what to think. A Belgian might just be the best thing that happened to the EU. After all, if you can manage Flemish and Wallons, that's probably as good a practice for a EU job as there is. Regarding Turkey? No worries. He is not the only one with a word on the issue as the HRUFAS also has a vote on the matter. Regarding Van Rompuy's ability to stand up to Hu Jintao and Obama, I believe that the weight of 500 million EU citizens and 13 trillion $ of GDP ought to do the trick. After all the EU is the biggest trading partner of both of those countries.

Bad but the EEA is the reason why this is not scary

Ok! So, Tony barber has the following thing to say: "If Cameron - or, more likely, William Hague, his Rottweiler foreign secretary - causes the relationship to deteriorate too much, then it is certain that calls will mount in mainland Europe for the UK’s departure from the EU. And, of course, there will be many in the Tory party - and the UK Independence party and elsewhere - who will say, “You know what? Why not?” Now I've put forth this idea at least twice, but I'm not particularly happy to get confirmation. I maintain, that if this were to actually take place, that half witted eminence would find himself at the end of a very uncomfortable political and economic environment. But as a UK graduate and a fan of the country, I believe it would be an enormous (but bearable) loss to the EU. And this is where I move on to the next step, and believe that sounding the alarms is unwarranted. The UK may hurl uninformed and bigot insults at the EU, however it can do very little to stop the EU except from withdrawing its contributions to the EU budget (which since Thatcher are not enormous). Otherwise the number of fields on which it holds a veto power is very limited. This is actually where the opt outs from the UK are useful. The EU can't impose its rules on it, but it is also unable to veto those proposed rules. On the other hand, the EU can do a lot of damage. Most of it would be indirect and even passive. Some at least theoretical could be direct and malicious in intent. Lets see: The first category implies by its mere existence the EU could damage the UK, if that country were to leave the union. How? Two interconnected reasons: financial markets and trade. The UK is enormously dependent on the financial sector, whose agentstend to be quite sensitive and fond of the EU (bigger markets=more money!!). If the UK left the EU (to become unassociated with any other European integration project than the OECD and the OSCE)it will be exposed to suddenly having to pay tariffs on exports to the EU. Don't get me wrong, I have no illusion that the EU would lose a lot from it. But in this, as in many other things, size matters and as it stands the EU is a giant in comparison to which the UK is small. Not tiny, not minuscule, not meaningless, but small enough that it would suffer a lot as exports and imports would decrease. Where as Europe would suffer a little bump, the UK would fall down a ravine. As the it loses access to the EU investors will start abandoning it, as products manufactured in the UK no longer have access to the rest of the EU market and are thus more expensive. Who would benefit? Probably Sweden, Finland, Ireland and Denmark who would split the chunk of market share that UK firms would loose, and Paris and Frankfurt who could then become the uncontested centers of European finance. In conclusion to this discussion, this is a situation that can be quite easily understood in the following manner: if, Y=C+I+G+X-M and Y=C+S+T, where Y is the GDP, C is consumption, I is investment, G is government expenditure, X is value of exports, M is value of imports, S is national savings, and T is government revenues, then I-S + T-G = X-M, If the UK leaves the EU, it automatically means that "X" decreases and "I" decreases, which implies, under the "crazy" assumption that the British will not suddenly want to tighten their belts and consume less, that in order to maintain present levels of consumption the UK government will have to start spending more (G increases) without forcefully raising taxes. Conclusion? If the UK leaves the EU, it is forced to run a deficit. Given its present fiscal situation I don't believe that is not quite advised. And remmember, this is all without the EU moving as much as a malignous finger. Imagine if the EU was to become vicious about this: That's unlikely scenario number 2. EU governments and the ECB could do 2 things. First they could start selling UK Treasury bonds, thus causing a decrease of the credibility of the pound. Secondly they could start selling as manny pounds as they hold. Both would be bad, in conjunction ,and with the caveat associated with lack of quantitative data, I would estimate it would be lethal for the UK. But then again, this is not only an extremely unlikely scenario. It is one which could jeopardise the EU. A trauma for the UK, the back days of the George Soros created monetary crisis are still a vivid memory for the Brits. However this was caused by bad governance which brought about an inevitable event. The close pegg of the pound to the Deutchmark, with open financial markets and no capital controls, was according to the "unholy trinity" of exchange rate agreements, doomed to fail. Germany stopped helping the UK buying pounds because otherwise it would be sunk with the it. What I am proposing here, simple though it may sound is pure evilness in terms of economics and completely abhorrent to the consensus typical of the concerns and approaches of the EU. So really I cannot contemplate a reality where Scenario 2 comes into being. But then again, my imagination is limited while the realm of possibility is infinite with decreasing probability. It would take the coincidence of an enormous amount of human stupidity for matters to reach this climax. This really is an apocalyptic vision as far as economics is concerned. In consequence I propose that if the UK is to make too much of a fuss, the other members of the EU ought to ask it to leave the area. In so doing they should stir some much needed debate at home which at least should highlight the arguments above. If the government responsible for this antagonizing mess is not booted out of office and the UK actually choses to pursue this line of action, then a much less complicated alternative, that in my opinion is becoming much more optimal for all parts concerned, would be for the UK to leave the EU and join the EEA. The EEA is the European Economic Area, heir to the European Free Trade Agreement, and has such illustrious members as Norway, Lichtenstein and Iceland and the other 27 members of the EU, who set the rules of economic activity. Basically non EU members of the EEA have to abide by the rules in order to get access to other European markets, but do not have a word in determining those rules. Everybody gets the economic benefits, the UK does not have to follow any "Foreign" or "European" encroachment on its (nominal political) sovereignty rules while the rest are able to happily pursue political integration. Finally, Spain will still receive its fair share of drunk British tourists. Why would I still prefer the UK to stay in the EU? Because despite its most childish of attitudes towards the project, there is a place for the UK, as long as it is a constructive and honest partner. Skepticism is not a bad thing and the EU is a huge undertaking one which benefits from the occasional slowdown and brainstorming which such a partner could stir. However it is a fragile project and it is dangerous to undermine it with ignorance and nationalist slur. Either way I still wonder where this will all have led to in 10 years time...

It's starting to become silly...

It is starting to feel silly. Here are my latest findings on silly witted ( to not call him perceptively utterly uneducated on European matters) David Cameron, and they are pearls of ignorance. Please check it out(here, here and here). In his efforts to sound tough on the EU Cameron seems to go out of his way to say all the wrong things. Either that or he is serious about repealing most of EU legislation in the UK since Thatcher. Might as well do the right thing and use the provision of the Lisbon treaty to leave the Union, and join the EEA. It is getting to the point where the costs in terms of attrition caused by UK membership are outweighting the benefits from its contributions... The UK on the other hand will be giving up actually economic wealth for emotional benefits of being a stubborn naughty boy. Sure lets vote for the guy!! What's really bad is that the media really does a terribly bad job in the UK when it comes to covering the EU and they get away with it.

Lisbon Treaty and the road ahead

So it turns out that the Lisbon Treaty really is going to come into force (here, here and here), probably by the end of December or January, latest in February of 2010. That's nice! It means that the decision making in the EU will be simplified, that the European Parliament will have a stronger voice in that decision making, thus reinforcing (albeit only marginally the EU electorate would say) the democratic legitimacy of the EU. This will be done by decreasing the threshold for the approval of directives (EU legislation approved by the European parliament and by the European Council, tantamount to ordering countries to pass legislation that achieves a certain end, leaving it to the countries to find out what the most appropriate way is). Countries will be given a de jure opportunity to leave the EU and individual citizens of the EU will be able to present petitions to the European Union, for the proposal of new legislation. The EU will get 1 representative for foreign policy (and security BTW...) with rather wide ranging powers, although he will not be the boggey man that Eurosceptics would make him/her out to be. He will be no where near the president of the USA, but more like his secretaries of state or defence. Nonetheless there will be nothing resembling an imperial presidency of the EU, along USA lines. Indeed, the role of the permanent president of the council of the EU is still very much unspecified and there seems to only be some consensus that his or her influence will be shaped by whoever becomes the first permanent (only 2 and half years mandate renewable only once). Thus if a Blair type becomes the first president, he will try to shape it into some wide ranging position. If however a Juncker type would take over it would be a more discrete political role, building consensus and setting the agenda, which would be a good idea. As a matter of fact all that this treaty really does is to give more coherence to European institutions, and decrease the noise around the voice of Europe (by simplifying decision making and defining the division of labour within the EU better, once we'll know what the president does). Member states are still able to make a fuss, to posture and more importantly, to defend their constituents' interest.However, and until the next generation of EU treaties comes along, they will not be able to freeze European integration; at least not without a far reaching support for their position. Hopefully, by providing this new framework for decision making it will allow the EU to be a more determined government. Hopefully by decreasing the threshold for legislating it will make the EU more responsive to political concerns. "Hopefully", because there's a ton of things to take care of and the end of this constitutional soap opera eliminates a most distracting excuse. As Barber puts it, now is the time to turn to the daily business. Here is a prior discussion and beneath are some ideas: Fiscal policy - The SGP (stability and growth pact which regulates the size of deficits <=3%) is likely to be a rather deficient tool, although only the recovery from this economic crisis will tell. How can the EU sort its fiscal policy out? It needs to decrease fiscal deficits, while allowing for a system where in the face of economic contraction, it allows for deficits to rise in order to permit tax smoothing. The present SGP permits such a thing to happen, but it has three problems and one advantage: first, it is likely to be too lax, there are too many excuses for running a deficit. Secondly, it is a system where the states police themselves. For anyone who knows human nature and anyone who's studied delegation (eg: to central banks) or principal agent problems, it is obvious that humans very easily tend to follow an atomistic, myopic short termist behaviour, and as a whole or as a group we should not be trusted to regulate ourselves, as there will always be an incentive to break promises ex post. Moreover due to alliances in the EcoFin committee it has created an environment where legislation is not applied equally and where smaller countries endure and larger countries do what they please. Finally, the present arrangement of the SGP does not have much in the way of (European) parliamentary supervision. This may be right (given that national budgets are scrutinised by their respective national parliaments) or not (given the fact that there are externalities and spillover effects from one country's budget to the next), however somebody ought to seat down the economic thinking heads and figure out what could be done to make this process better and then someone ought to seat down the political thinking heads and ask them to figure out what the best course of action in order to approve that preferred process. The advantage that the SGP has is that it is flexible (enormously so). At the moment this has been good. Keynesian economics are very useful during a crisis. However, once the economy picks up it will be interesting to see whether the EcoFin committee will be able or even willing to coerce member states to decrease their deficits. A concluding remark on fiscal policy should say that in the present context of recovery economics it is better to run a little too high deficits than to run too little ones. Pollution - I know little about this, other than that if we don't decrease carbon emissions we'll cook ourselves to death like frogs and that if we don't find a sustainable and reliable way to diversify our sources of enegy, Russia will eventually reprivatise it's industries along national lines and we won't be able to do anything about it except pay the natural gas bill at the end of the year. (this is a very far fetched scenario until Russia develops anything close to a sustainable form of economic growth and development based on anything else than exports of raw materials) Foreign policy - Will the HRUFAS be able to create a better more coherent and far reaching foreign policy for the EU? Will there be a coherent approach to USA, Latin America, China, India, and (most doubtfully) to Russia? Will some countries prefer to abandon their diplomatic missions abroad and delegate this task to the EEAS? Or will it become more and more apparent that the national diplomatic missions are fundamental lobbies for the maintenance of contracts and export agreements from smaller European nations to non EU states. Will this mean that the nations will further decrease their diplomatic missions and specialise them in their trade targets? On another topic, how loud will the HRUFAS be in the defence of Human Rights? Security and Defence policy - What will happen to European military and security cooperation? One of the biggest problems is that different EU states have different weapons and military gear. This means that in the unlikely even that we go to war, French and British pilots will not be able to fly each others planes, or operate eachothers tanks. It decreases the size of the market and thus the economies of scale that can be derived from it. This is caused by the fact that military industries are still considered to be strategic national industries and that despite their security cooperation, European states still want to be able to develop armament independently of the USA and of each other. The biggest military contractors are german, british and belgian companies which face some competition from Belgium (I think) and Sweden ( or scandinavian conglomerate). Moreover, the majority of these industries have a monopoly-monopsony type of relationship with their national governments. Will we finally get a proper European procurement? Only if one way or another, these industries are given some protection, ie only if the EU and the national industries are able to come to an agreement where profits are not threatened and job losses are minimised, while countries still feel comfortable and safe in their defence. There is thus a triangle of interests, which must be protected in order for military integration to happen: National security - profits to investors in the arms industry - workers in this industry. What will the HRUFAS do? We shall see...

What Western Leaders seem to think of David Cameron

According to The Guardian, Nicolas Sarkozy is "insensed" by Cameron. He"upsets" Angela Merkel who finds him "untrustworthy" and José Luis Zapatero ( prime minister of Spain) does not seem to be very impressed either.Finally, and probably most importantly for the British audience, Barack Obama finds him to be a political "lightweight", according to the magasin "New Statesman". These are the results of Euroskepticism. Why? Because it makes no sense to be a Euroskeptic and hold on to old rationales based on the old assumptions that European nations were absolutely sovereign, independent and able to do as they please. These logics make no sense nowadays, as no single European state able to stand its ground against the influence that can be projected by China, USA, India or Russia. The vision of the UK held by Cameron seems to be an abyss defined by a misled belief in his country's ability to remain a political island. He may prefer to become the 51st state of the USA. I don't think is such a good idea. Alternatively, if he so prefers, he could become yet another member of the EEA (European Economic Area), abide by the majority of EU legislation and have no say in it.