Behavioural science behind making vacation plans, and Monday links

Business

China needs a service-sector revolution
project-syndicate.org– Employing workers in sectors where their productivity is stagnant would not be a recipe for social stability. 
Environmentalists as battered spouses
american.com– Greens keep returning to their abuser after another promise to do good, but nothing in President Obama’s oil spill speech should offer them any hope that the administration is really going to change. 
Flight of the desktops
slate.com– The shift to portable machines fits larger social trends. More Laptops, netbooks, and tablets fit into the new lifestyle. Desktop don’t. 
Pleated pants watch: Don’t you want to be “clean”?
slate.com– Marketing men’s fashion is tricky because, for the majority of male clothes-wearers, the goal is to convince them that it is not fashion. 
BOOM: Big issues
gq.com– Lost in the catastrophic aftermath of the Gulf of Mexico oil spill is the gripping tale of the rig workers and the Coast Guard crewmen who rescued them. 

Finance & Economics

Germany’s super competitiveness
VoxEU.org– German wage restraint has led to a real depreciation of Germany’s fixed nominal exchange rate vis-à-vis its Eurozone members, helping Germany to win market shares at the expense of Southern Europe. 
On the lessons to be learned from the elimination of the Canadian federal deficit in the 1990s
worthwhile.typepad.com– If you’re going to count on exports to sustain aggregate demand while your government cuts back, you have to figure out which foreign economy is supposed to absorb all that extra production. 
Why it’s different this time for housing
online.barrons.com– For the economy as a whole, and housing in particular, restraint in borrowing will keep housing well below past cycles, no matter the level of interest rates or house prices. 
Gartman: Gold is good but Euro is doomed
Credit Write Downs– With the euro crisis and European credit easing, people have awoken to the fact that the euro is also a fiat currency and that the Europeans may be willing to depreciate the value of their currency as well. 
On your Marx
nplusonemag.com– It would add a nice dialectical twist to the future history of our period if it could be said that, around the time the post-Maoist Chinese took up shopping, the post-bubble Americans turned to studying Marx. 
Alan Greenspan v. Paul Krugman
Capital Gains and Games– The fiscal debate has become so polarized that combatants on both sides are glossing over what they don’t know. 

The rest
The breeders’ cup
WSJ– As you weigh your options, don’t forget that the costs of kids are front-loaded, and the benefits are back-loaded. …
The best vacation ever
Boston.com– Research looking at how people actually feel about their vacations suggests that, by and large, they remember them warmly — more warmly, in fact, than they feel while taking them. 
Tea and coffee ‘protect against heart disease’
news.bbc.co.uk– Drinking several cups of tea or coffee a day appears to protect against heart disease, a 13-year-long study from the Netherlands has found. 
Healthy at any age
services.newsweek.com– Medical science has generated vast amounts of data, and laypeople have more access to them than ever before, but look closely at that information, and it starts to seem disturbingly incomplete. 

Criticism from inside the EU

Harsh criticisms over this non-optimal currency zone is now emerging from within the EU.

Here, president of the Czech Republic talks about the conflict that many Eastern European countries faced after the fall of communism: the need for closer integration with the west, in this case, western Europe, while shying away from the statist aspirations spear-headed by France and Germany that only reminded them days of Soviet rule.

People like me understood very early that the idea of a European single currency is a dangerous project which will either bring big problems or lead to the undemocratic centralization of Europe. My position was clear: With all my reservations, we had to apply for EU membership, but at the same time we had to fight against projects such as the euro.

His criticism separated the idea of European cooperation, from the euro project itself, which for all intents and purposes, has failed.  Klaus the economist says:

The huge amount of money that Greece will receive can be divided by the number of the euro-zone inhabitants, and each person can calculate his or her own “contribution.” However, the “opportunity” costs arising from the loss of a potentially higher growth rate, which is much more difficult for a non-economist to imagine, will be far more painful. I do not doubt that for political reasons this price will be paid and that the euro-zone inhabitants will never find out just how much the euro truly cost them.

Unsurprisingly, as the leader of a country that’s suffered dearly in the hands of communism, Klaus the politician minces no words in his critique of opaque bureaucracy centered in Brussels.

The recent dealings in EU headquarters in Brussels—literally behind closed doors—about the aid package for Greece demonstrated that there is no democracy there. The German-French tandem made the decision on behalf of the rest of the euro-zone countries, and I am afraid this will continue.

Not everyone heeds to this view, of course.  As late as March, many eastern and central European states still aspire to join the euro party, many already pegging their own small currencies to the euro.

Euro malaise continues: politician down, businesses worried, and rat race re-assessed

While Horst Köhler’s resignation cannot be directly attributed to the euro crisis, it certainly epitomizes the clash between the post-war political configuration in Europe and the increasingly impatient Germany.

In the past, Germany has always provided the passive sheet-anchor stability that allowed Europe to work. Occasionally a Schmidt or a Kohl would find partners and a surge of European integration would take place. But now Germany has no idea of what to do next. It will not admit that its economic weltanschauung, based on relentless exports and damped-down internal demand, is now part of the European and world crisis of capitalism.

The new Germany would like to behave as a normal nation and certainly has national security on its mind.  Both domestic and European-wide politics have yet to catch up with it, even when the question of military interest is framed within the scope of expanding and protecting its economic interest.

Köhler made the point that German military capability was relevant to German interests, including German economic interests. As the world’s second biggest exporter after China, Germany has a self-evident interest in keeping the world as open as possible for the free flow of trade and commerce, and to help defeat the growing scourge of piracy. This is so worrying Nato policymakers that an entire session at the Nato parliamentary assembly’s spring session this weekend in Riga was devoted to the question of how to ensure peace and free traffic on the high seas.

Some political and business leaders are quietly applauding the continual slide of the euro as one of the tools to stimulate exports in the region, others argue that a weak euro do more harm than good in eroding business confidence in the region, which may prove to be the worst legacy resulting from this ongoing fiasco.

The biggest worry for European business, however, is not so much the decline of the euro itself but rather what it says about the European economy. European governments will have to reduce public spending dramatically to allay the market’s fears. Spain has already announced that it is cutting public-sector wages by 7% and Greece by 16%. This will inevitably remove spending power from the European economy and so dent its short-term prospects.

… The introduction of the single market and the single currency were supposed to spark a glorious period of innovation and productivity growth. This has not happened. The European economy remains dependent on long-established corporate champions such as Daimler and on public-sector jobs. The old continent has dismally failed to create local equivalents of America’s Microsoft and Google.

The FT has an interesting piece that questions the impact of fiscal austerity on a continent that, for the past few decades, consistently prioritized lifestyle and the ubiquitous work-life balance ahead of economic growth.

But while taking a more relaxed attitude towards the pursuit of wealth may make sense as a personal philosophy, it is an uncertain guide to public policy. It is relatively easy for the comfortable middle classes to play down the need for economic growth. But absolute poverty still exists, even in western societies, and adjusting to a stagnant national income can be a painful process, as many European countries may soon discover.

It would be a curious irony if the spiritual east embraced the ruthless pursuit of wealth just as the western nations that invented modern capitalism went for a Zen-like repudiation of materialism. If the pursuit of rapid economic growth became a largely Asian pastime, the global balance of power would also change in ways that might make life in the west considerably less comfortable.

For better or worse, it seems unlikely that many western politicians, outside the environmental movement, will repudiate the pursuit of economic growth as one of the goals of public policy. Some have occasionally toyed with this thought. In 1979, US President Jimmy Carter made a speech in which he argued that “owning things and consuming things does not satisfy our longing for meaning”. A year later, he went down to defeat to Ronald Reagan, whose most effective electoral tactic was repeatedly to ask Americans if they felt better off than four years previously.

The fact is that people like piling up material goods. Mr Sarkozy may argue that there is more to life than economic growth – but, on a personal level, he seems to be quite fond of flashy watches and holidays on millionaires’ yachts.

It is also clear that for China, now the world’s second-largest economy, high rates of growth remain an absolute imperative – both to buy social peace and to drag hundreds of millions of people out of poverty. Even among Indian intellectuals, the Gandhian disdain for materialism is becoming less common, as economists, politicians and a burgeoning middle class embrace the pursuit of wealth as both a personal and a national goal.