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Tuesday, 22 April 2014

London and the 200 skyscrapers; how architectural renewal could turn a classic city panorama into a monster of concrete, glass and steel.

A few months ago, the Mrs. and I had the pleasure of visiting two of the most impressive cities in Europe within a short period of time: London and Paris.

The last time when I visited London, had been around 1986: although many things and many famous objects remained virtually the same, I was nevertheless flabbergasted when I saw how London had evolved and through which changes the city had gone, in the meantime. 

What especially ‘shocked’ me, was how the area around the London Tower, the Tower Bridge and St-Paul’s Cathedral had morphed into a ‘skyscraper extravaganza’. It was impossible to ignore how these aforementioned famous historic buildings were visually overpowered by the newly-built high-rises, like a.o. the Gherkin. 

Even if you don’t know London by heart, you get the picture when you watch the following ‘night shots’, which I took from the Tower Bridge and Waterloo Bridge:
Skyscraper Extravaganza around the
London Tower and St-Paul's Cathedral
Picture copyright of: Ernst Labruyère
Click to enlarge

Skyscraper Extravaganza around the
London Tower and St-Paul's Cathedral
Picture copyright of: Ernst Labruyère
Click to enlarge
When I visited Paris a few weeks later, it struck me how much more this city had been able to separate the high-rise office buildings in its various business centres from the historical heart of the city around the Seine, the Eiffel Tower and the Elysée. Although time had not stood still in Paris either, the new office buildings blended in much better and never detonated in the heart of the city.

This feeling was emphasized, when I once again saw the leader for the wonderful, classic UK series ‘House of Cards’, which originated from 1990: a helicopter view on a London that has vanished into history.
I had to think about this, when I learned this morning that London planned to build 200 skyscrapers (of which 50 office buildings and 150 residential buildings) in the coming years. I don't know exactly where these high-rise buildings will emerge and if there are already high-rises in those areas.
I do hope, however, that the architects in London will have the discretion, the modesty and good taste to not further ruin the city panorama and leave the heart of London intact. And what a heart it is…
Nevertheless, when I take the current situation around St-Paul’s Cathedral into consideration, I have worries that the whole city panorama might soon turn into a monster of concrete, glass and steel and that London’s historic buildings will soon look like anachronistic pimples on a modern, emotionless face.
Of course, I do understand the need for more residential and office space in a city that grows so quickly and hosts so many people as London. However, this must happen with the utmost precision and with an understanding for the history of this beautiful city.
Now we still have the time to prevent historic architectural blunders from happening, but if we don't beware, the chance might be gone forever. 
So please, people in London: save your city from being ruined by architects with wild ideas and without a sense of historical understanding! Take the lead and say no against plans which are bad for your city!

The European Parliament and the European Commission: why it is time to send the best people there, instead of the political “stickers” and “good-for-nothings”, that we became used to

If I hire people who are better than I, we become a company of giants
If I hire people who are worse than I, we become a company of dwarfs
David Ogilvy – Founder of Ogilvy & Mather

One of the most inspirational books that I read in my life, was the autobiography of David Ogilvy: the founder of the Ogilvy & Mather advertising agency.

This book, called “Ogilvy on Advertising”, was like “The secret of my success” for intellectuals: streetsmart, thorough, thought-provoking, witty and with loads of good examples of concepts, campaigns and (personal) behaviour that did AND did not work.

One of the most inspirational quotes in this book was the aforementioned quote about the company of giants... Inspirational, because it demands a lot of guts to contract someone, who could theoretically be your own worst enemy: someone who is better and / or more talented than you.

This is exactly the reason that only the best and gutsiest leaders dare to do this: the true leaders. They are not afraid to be overpowered by new people that they contracted, because they are indeed true leaders.

This Ogilvy quote is unfortunately a quote that comes to mind, when we think about the new candidates for the European Parliament and the European Commission.

On May 25th, the elections for the European Parliament will be held in most countries (May 22nd in The Netherlands). A few days later the European Council will decide upon the new European Commission and its chairman, who will succeed José Manuel Barroso.

Of course, there are countries in Europe, who think that their candidates for the European Parliament (and the European Commission) should be the best of the best. However, The Netherlands is certainly not one of them and I presume that many other countries think likewise, unfortunately.

From the Dutch members in European Parliament, only Sophie in ’t Veld of (liberal-democrat) D66 is really an outstanding politician, with a good and distinctive "voice" and good ideas. D66 is almost the only party in The Netherlands, which takes Europe very seriously; their main candidate shows this.

Bas Eickhout of GroenLinks (environmental party) does not do so bad either, as at least he is visible (a.o. at Twitter) and he seems to have an opinion that you can (dis)agree with.

However, the leading MEP’s, of the traditionally most influential parties in The Netherlands, seem to be a bunch of political nitwits, “stickers” and good-for-nothings.

Wim van de Camp (CDA; christian-democrat)  and Thijs Berman (PvdA; labour), as well as their henchmen, have been nearly invisible during the last four years. 

Hans van Baalen (VVD; liberal-conservative), on the other hand, was very visible in a negative way, as he has been identified as the MEP, who performed the least ballots in the European Parliament, due to being absent all the time

These three people and their fraction members had opinions that were exchangeable, unimportant and never out of the ordinary. And I’m afraid that this is also true for many other European representatives, representing other countries.

Is it any wonder that an eloquent, intelligent and mean political streetfighter, like UKIP’s Nigel Farage, could sink one MEP after another with his infamous verbal barrages in the European Parliament?! Farage has been too often Lemuel Gulliver in the Land of Lilliput. I don’t like the way in which Farage operates and I reject most of his opinions, but boy…, did he give the other MEP’s a good spanking sometimes.

In The Netherlands, the European elections will attract close-to-nought attention, because we almost NEVER hear something from and about the European parliament and from the people, who represent us there. I wonder if that is different in the other European countries and I bet that a substantial number of Europeans knows more representatives in the American Congress by name than in their own European Parliament.

Nowadays, it is ‘en vogue’ to repudiate Europe, as the institute that brought peace, stability and prosperity to shell-shocked, post-war Europe. The European Parliament is the ‘required element’ of Dutch and (perhaps) pan-European politics and nobody sees it anymore as the indispensable institute that it should be for years and years ahead. That is very undeserved and unwise.

And then we come to another objectionable topic: the members and Chairman of the European Commission. The members of the European Commission are nominated by their countries and every country in the European Union may appoint one.

The result is that there are about six to eight significant commissioner’s positions and the rest (20) is mostly futile. Of course, this leads to much “wheeling and dealing” between the government leaders, about which commissioner is getting which position. 

Countries, who settle for a less important position within the European Commission, can have a lot of pork in exchange in the process. Nevertheless, in the end it are France, Germany, Italy and the United Kingdom, who deal the cards and the rest must follow their lead.

Unfortunately, many European countries are putting more energy in getting an important Commissioner’s position than in getting the best, most talented and charismatic candidate for this position. 

Too often, being appointed as commissioner is either a token of gratitude towards an influential political dinosaur or a means to get ‘the competition out of the way’ for political "leaders". This is the reason that many European Commissioners seem just as insignificant and exchangeable as the members of the European Parliament.

Alas, this is also true for the next Chairman of the European Commission. The end result of the European Parliamentary elections must be officially weighed in, during the selection procedure for the chairman of the European Commission, when it comes to his political colours. Nevertheless, there is little doubt that the selection of the EC chairman will again be a matter of “wheeling and dealing” between the government leaders, with the final, decisive votes for France and Germany.

And unfortunately, there is also little doubt that the candidate for the position will indeed be cooperative and intelligent, but also weak and uninspiring and laden with the charisma of a doormat. 

A political nobody as the chief of a whole bunch of political nobodies...

The new “chief commissioner”  will be a political apparatchik, who won’t attract too much attention, away from the national leaders. These can keep on celebrating “their” European achievements as national victories, while blaming the chief commissioner for everything that goes wrong within Europe.

To prove my case, I will mention the people who are in the lead for being appointed as chief commissioner:
  • Jean-Claude Juncker – Former Prime Minister of Luxemburg and former chairman of the Euro-group is the leading Christian-Democrat candidate and German chancellor Angela Merkel’s favorite; 
  • Martin Schulz – The chairman of the European Parliament is the candidate for the Social-Democrat party within Europe; 
    • Martin Schulz: what can we say more about him than that he gives some people “the willies” with his speeches; 
  • Guy Verhofstadt – The former Belgian Prime Minister and a strongly pro-Europe liberal-conservative is the liberal candidate;
    • Guy Verhofstadt is chosen by a.o. Dutch PM Mark Rutte, in spite of the fact that Rutte totally disagrees with Verhofstadts 'Grand Visions' on the Federal Europe of the future. How is that for being taken seriously?! 

As long as ‘Europe’ chooses lightweights like these people as their official leaders, nothing will really change with respect to the appreciation for the European Union in the European countries and abroad.

David Ogilvy would be ashamed of this, but hey… he passed away in 1999 and this is how we do it in Europe after all... 

Saturday, 19 April 2014

Are domestic prosperity for lower and middle class citizens and successful exports becoming mutually exclusive factors in the Dutch economy?

A few weeks ago, on the First of April, I wrote about the alarming fact that 60% of the Dutch Collective Labour Agreements (CLA), had matured without being prolonged in time.

The apparent reason for this almost unheard of event was the fact that the Dutch federation of labour unions 'FNV' had demanded a general wage increase of 3%. 

Such an increase was intolerable for the large employers in The Netherlands:

Readers, who are not informed about the Dutch labour situation, would probably argue: “Well, 3% is indeed a lot of money. And hey, it is crisis. Why does the FNV labour union make such high wage demands?!”

There is, however, a very good reason for this.

The Netherlands is famous for its ‘polder model’ of regular consultations between the employer’s organizations, the labour unions and the Dutch government. Due to this polder model, The Netherlands has not only been a country with very fewlabour strikes during the last three decades, but it also had a moderate wage development during the last thirty years. Some well-respected economists – including yours truly – are saying these days: ‘Perhaps a little too moderate…’.

You can claim that the Dutch still earn very decent wages in general and that The Netherlands is one of the richest countries in Europe. And then you are totally right about that.

Nevertheless, during roughly two-third of the last thirty years, there has been a situation of wage restraint. As a consequence, there has been very moderate wage growth of not more than 2.5% - 3% per annum in general (and often the percentage was much less). In a number of years during this period, the wage development was even well below the inflation percentage. This meant ‘de facto’ a wage decrease, instead of an increase.

In other words: one can justifiably argue that the wage restraint has been maintained for an excessive period, which surpassed the initial and justified reasons for it.


The only country, which endured more decisive wage restraint than The Netherlands during this time period [the last decade – EL], was Germany.

It is no coincidence that Germany and The Netherlands are both the export champions of Europe and one should realize that these countries do it at the expense of the other Euro-zone countries; this is called "beggar thy neighbour".

This excessive period of wage restraint in The Netherlands caused that the average Dutch worker didn’t profit sufficiently from the (excess) profits and large productivity improvements, which many companies made during the larger part of the last twenty years.

This week, the Dutch Central Bureau of Statistics (CBS), presented two ‘alarming’ press releases, concerning the Dutch exports and consumer confidence.  

In the first press release that I want to discuss, the CBS stated that roughly one third of all jobs in The Netherlands is dependent on exports.

In  2012, exports of goods and services generated the equivalent of 2.2 million full-time jobs in the Netherlands. This accounts for one third of total employment in the country. Some 62% of these jobs are in the export sector itself, while 38% are in the sectors supplying the export sector.

Most export-related employment is generated by exporting companies themselves. These companies account for employment totalling over 1.3 million full-time equivalents. In addition, companies supplying goods and services to exporting companies also employ staff as a result of these exports. Supplying companies account for around 800,000 full-time equivalents of export-related employment.

The export sector generates half a million full-time jobs in the trade sector. Exports by wholesale companies are partly the reason for this. Trade is also an important supplying sector for exporters in other industry sectors.

The export sector accounted for nearly half a million full-time jobs in other business services. Many of these jobs are in services provided to other sectors of industry. Temp agencies, for example, place people in agricultural or manufacturing companies, which subsequently export their products. And nearly 300,000 full-time equivalents in the transport and storage, information and communication sector can be linked to exports.

There you have it! Almost one third of Dutch jobs is dependent on exports. 

That is really a massive number and – although I didn’t investigate this – probably higher than almost anywhere else in the world. Consequently, a very large share of the gross domestic product in The Netherlands is earned with exports. This might sound very positive, but there are a few snags.

A large share of the exports in The Netherlands is re-exports of goods fabricated elsewhere; this means in practice that The Netherlands only takes care of the transport and distribution from the ports Rotterdam, Amsterdam (and a few minor harbours) to the other European countries. This is business with very low margins, as every cent counts.

And a large share of the other Dutch exports are goods, services and agricultural produce with (again) a low margin. Especially this can be seen in the following breakdown chart of the February, 2014 exports, based on CBS data from the Statline database.

The February 2014 exports, per category in Millions of Euros
Chart created by: Ernst's Economy for You
Data courtesy of:
Click to enlarge
Perhaps this is the biggest difference between The Netherlands and Germany:

A very large part of the German exports consists of high-tech, high-quality and high-margin goods, like trucks, cars, tools, technical equipment and household appliances, with the proverbial German quality. These are goods with generally a higher margin.

However, a very large part of Dutch exports consists of basic low-tech goods and semi-finished products, chemicals and agricultural produce, with generally very low margins.

The only way to remain successful with exports of the latter kinds is when the efficiency and cost-effectiveness is very high  (i.e. a high level of automation and robotization) and the costs of human labour – traditionally one of the biggest expenses during production, transport and distribution – remain low…; very low!

Of course, good craftsmen and well-trained and skilled knowledge workers still earn a very good salary in The Netherlands.

However, the hundreds of thousands  of workers in the exports and / or export-related industries, with a job requiring lesser skills and less craftsmanship, are less likely to earn a decent salary these days. For the exports (related) industries, low expenses are even more important than for the industries, producing for the domestic market. 

Consequently, these workers are involuntarily involved in the constant battle for the lowest margin among their employers.

In other words: they have to compete with production robots, robotized transport systems and computer systems, which can work 24x7. And for the jobs which can’t be done by robots yet, they have to compete with workers from the East-European low-wage countries, who work longer hours and against lesser wages.

The result is that especially the export (related) industries keep the wages of their workers as low as possible, in order to keep their margins as high as possible. They are not willing to hand out the generous wage increases that the Dutch people so desperately need, after years and years of wage restraint, as it would spoil the Dutch competitive (i.e. exports) position.

Thus, domestic prosperity for the lower and middle classes and successful exports become indeed mutually exclusive factors in the Dutch economy. I think that this point is proven by the great number of failed negotiations for the Collective Labour Agreements in The Netherlands.

The consequence are empoverished middle and (especially) lower classes in The Netherlands, due to longterm wage restraint, (government-spurred) inflation and near-zero interest rates. 

The effect of this is that the retail industry and SME companies – most of them domestically oriented companies traditionally – are seriously lagging, in comparison with the growth and profit figures of the large, quoted companies and the exports (related) industries.

Their customers are more and more WILLING to buy, but they are not ABLE to buy. The end result is indifferent: people don't buy!

That this statement isn’t just gibberish, is proven by the following quotes from the second CBS press release, about consumption and consumer confidence in The Netherlands:

Consumers were more optimistic about the economic climate. Their opinions about the economic climate in the next twelve months improved marginally, whereas their opinions on the economic climate over the past 12 months were far less negative than in March. The component indicator Economic climate climbed 3 points to reach 7. The last time consumers were so confident about the economic situation was nearly 7 years ago.

Consumers thought the time to buy expensive items, like washing machines and TV sets, was just as unfavourable as in the preceding month. Their opinions about their own financial situation were also just as negative as in March. On balance, the component indicator Willingness-to-buy remained stable at -13. Willingness-to-buy is still at a low level. 

And this willingness-to-buy will remain as low as it is, as long as the Dutch lower and middle class workers don’t feel the end of the crisis in their wallets.

For me, the enormous focus of The Netherlands on low-tech, low-margin exports is ignorant and imprudent, as it forces us to fight an eventually losing battle against the low wage countries, who can supply much more ‘bang for the buck’ with these low-tech goods.

Instead, companies should focus more on the domestic market and on high-tech, high-quality and  high-margin exports. 

These are the kind of exports that enable the possibility of paying better wages to our lower and middle class workers. After all, these people are the lifeblood of the whole Dutch retail and SME industry and consequently, of general prosperity in The Netherlands.