When 600-year old French word entrepreneur replaced capitalist

Ballyheigue, situated on the County Kerry coast between the mouth of Tralee Bay and the Shannon River Estuary, was the birthplace of Richard Cantillon, the 18th century economist and controversial Paris banker. He died in London in a fire at his home in 1734, where he may have been murdered. It is believed that the ancestors of Cantillon had left Northern France to accompany William the Conqueror in his 1066 invasion of England [genealogy: de Cantelon, Cantillon, Cantlon, etc.; Norman 'de Cauntelowe,' Latin 'de Cantulupo,' i.e., of Chanteloup in France (Seine-et-Oise)]. The name Ballyheigue comes from the Gaelic 'Baile Uí Thaidhg,' the town of the clan of Tadhg or Timothy. It is believed that the reference was to Tadhg Cantillon and in the 1300s, the family had a local castle when it was said to have been held by Ric de Clahull (Richard de Cantillon).

The word entrepreneur was first included in the ‘Dictionnaire de la langue française’ in the 1437 edition and it had been derived from the verb entreprendre, which has been in use from at least the 12^th century.

Entreprendre means to undertake or set about doing something and the word entrepreneur was defined in the dictionary as “celle qui entreprend quelque chose” (in both 1437 and in Émile Littré’s edition in the 1870s; See here.) According to Bert F. Hoselitz (1913-1995), the Austrian-born economist who sourced the earliest record of the word, the entrepreneur in the early centuries was typically a contractor for the king, involving big projects, and of course, there was a risk in seeking profit from a fixed-price job.

High growth firms as the Holy Grail or fool’s gold?

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In 2006 Finfacts reported that Xsil, an Irish firm producing innovative laser micro-machining systems to the semiconductor industry, had won the top prize in that year's Deloitte Technology Fast 50 awards. The company had achieved an impressive aggregate growth in revenue of 17,333% in the previous 5 years. Three years later Peter Conlon, the co-founder, told The Irish Times that Xsil Ltd had no assets to speak of except stock, which had been valued at “a couple of hundred thousand dollars, but we’d be lucky to get a cent on the dollar for it” — note that the superlative performance was based on revenue, not profitability.

Economic Facts of Week: Brexit videos and Ireland's low science base

FT Whitehall editor James Blitz looks at the mounting frustration of leading UK companies — Siemens and John Lewis — over the Brexit process and the UK's future trading relationship with the EU.

Irish 2017 per capita standard of living again below Italy and EU-28 average

Update December 2018: Eurostat's latest data in December 2018, on individual consumption of public and private goods and services in 2017 adjusted for pricing differences, has the EU average at 100: Germany is at 122; UK 114; France 108; Italy 98; Ireland 93; Spain 89.  

Actual Individual Consumption (AIC) is a useful proxy for material standard of living and is based on goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit organisations. In international volume comparisons of consumption, AIC is often seen as the preferable measure, since it is not influenced by the fact that the organisation of certain important services consumed by households, like health and education services, differs a lot across countries. Data are adjusted for price differences — Purchasing Power Standards (PPS) — and the AIC is more reliable than gross domestic product (GDP) per capita which tracks more than household welfare. Eurostat reports that in 2017 Ireland was again below the EU-28 average and also below Italy.

Irish broad rate of unemployment at 17% in March 2018

The Irish broad rate of unemployment was at 17% at the end of the first quarter of 2018. The Central Statistics Office (CSO) on Wednesday published the latest Labour Force Survey showing that the seasonally adjusted headline unemployment rate was 5.8% for Q1 2018 and the seasonally adjusted number of persons unemployed decreased by 12,900 to 137,300 (133,000 actual count) — the headline rate is based on employment of at least one hour per week according to an International Labour Organisation definition.

150 years for poor Irish child/ descendants to earn national average income: 60 years in Denmark

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The average disposable income of the richest 10% of the population is about 9.5 times that of the lowest 10% across OECD countries, compared with 7 times, 25 years ago. Wealth inequality is even more pronounced with the top 10% holding half the wealth while the bottom 40% have only 3%.

The United States has had greater social mobility than large European economies such as Germany, France, and the UK, according to the Organisation for Economic Cooperation and Development (OECD) — a think-tank for 35 mainly rich countries including Ireland —  but the US has higher levels of income and wealth inequality.

Economic Facts of Week: US 2017 Balance of Payments surplus with EU at $14bn- EU says it had surplus of $170bn with US

Figure 1 above, shows that the US current account/ Balance of Payments with Europe has been approximately balanced since 2008 and has been in small surplus since 2009. It is the result of a substantial increase of the net income of companies (balance of primary income) and the surplus in trade in services with the EU. These gains are more than sufficient to outweigh the trade in goods deficit, and ultimately lead to a positive bilateral current account from the perspective of the US. Source: ifo Institute based on data from the US Bureau of Economic Analysis.

In Ireland we are familiar with distorted data resulting from massive tax avoidance and Eurostat, the European Union's statistics office also has a big difference in estimates of the Balance of Payments/current account balance with the US that is also related to the earnings of American companies.

Plan of Italy’s new Europe minister to exit euro includes 50% debt haircut

A plan to exit the euro drawn up by Paolo Savona, now Italy’s new europe minister, “seems to confirm Germany’s worst fears,” according to a recent analysis by Daniel Gros, EconPol (European network for economic research) expert and director of the Center for European Policy Studies (CEPS). “But what is particularly astonishing about the ‘plan’ is […] the open intention to stick it to the rest of the world, particularly Italy’s euro partners,” writes Gros

Brexit video reports May/June 2018

How does Brexit rank among Germany’s concerns? Mark Urban speaks to President of the Bundestag and Germany's former finance minister, Wolfgang Schäuble, on the issues facing Europe. June 2018

The EU and UK will soon launch the latest round of Brexit talks next week, and one man will be speaking for the 27 remaining countries: Michel Barnier.

Profits of US firms in Ireland at 800% of payroll costs

Profits of foreign firms in Ireland (mainly of US global multinationals) are almost 800% of their payroll costs in the country, according to a new academic paper that also says “close to 40% of multinational profits are shifted to low-tax countries each year.”

Thomas Tørsløv (University of Copenhagen), Ludvig Wier (University of Copenhagen) and Gabriel Zucman (University of California Berkeley and National Bureau of Economic Research) in their June 2018 paper, ‘The Missing Profits of Nations,’ write that “Between 1985 and 2018, the global average statutory corporate tax rate has fallen by more than half, from 49% to 24%. In 2018, most spectacularly, the United States cut its rate from 35% to 21%.” The authors say that the redistributive consequences of the process of shifting huge paper profits rather than actual productive capital “are major, and different than in the textbook model of tax competition. Instead of increasing capital stocks in low-tax countries, boosting wages along the way, profit shifting merely reduces the taxes paid by multinationals, which mostly benefits their shareholders, who tend to be wealthy.”

Economic Facts of Week: Rise of corporate giants & New Gilded Age June 10, 2018

‘The Gilded Age’ was a satirical novel written by Mark Twain and Charles Dudley Warner, which was first published in 1873. The book’s title became synonymous with graft, materialism, and corruption in American public life in the years after the end of the Civil War. The International Monetary Fund (IMF) asked at a recent conference titled ‘Digitalization and the New Gilded Age’ “Are technological advances leading to greater market concentration in firms such as Google and Facebook and, in turn, creating what could be described as a New Gilded Age?” — see video below.

The IMF says that the rise of corporate giants extends beyond Big Tech and has raised fresh questions about whether this trend might continue and, if so, whether some rethinking of policy is needed to maintain fair and strong competition in the digital age. However, corporate market power is hard to measure and common indicators such as market concentration or profit rates can be misleading.

The chart above is based on an upcoming IMF working paper using data for publicly listed companies from 74 countries. It tracks average markups on goods and services across all companies, comparing pricing in advanced and emerging and developing economies. A markup — the ratio between the cost of a good or service and its selling price — provides a measure of market power.

Ireland has very low employer firm startup rate- UK is 4 times bigger

Ireland has the second-worst employer startup rate among mainly rich 29-member countries of the Organisation for Economic Co-operation and Development (OECD). Belgium has the worst rating while the United Kingdom is the best with a rate that is almost quadruple Ireland’s.

Ireland’s employer firm birth rate as a percentage of active employer firms was 4.1% in 2015 compared with Belgium’s 3.5% rate and Britain’s impressive 15.7% rate of birth. Ireland’s rate was at 3.7% in 2014. The death rates for 2014 and 2015 were 3.7% and 3% — meaning that the net growth rate of employer firms was stagnant in 2014 and very low in 2015. See table below

While the term ‘startup’ has become synonymous with the tech industry, we use it here as interchangeable with enterprise births, which is used by the OECD and Eurostat — the statistics office of the EU — in respect of the area of business statistics known as Business Demography.

The focus on employer firms with at least 1 employee at birth is important in terms of potential economic impact compared with a 1-person operation which may never grow even though many surviving employer firms also don't grow. Most new employer enterprises in OECD economies are created with between one and four employees. The average number of persons employed in employer enterprise births is typically higher in industry than in services, reflecting economies of scale.

Currency devaluations alone do not magically provide growth

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John Maynard Keynes, the renowned British economist, wrote in 1919, “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.” The quote comes from Keynes’ book ‘The Economic Consequences of the Peace’ – the searing indictment of the vengeful Treaty of Versailles. In April of that year the London newspaper, The Daily Chronicle, and The New York Times (see image above) had published a story from Geneva, in which the author claimed it was based on “authentic notes of an interview with Vladimir Ulianoff Lenin, the high priest of Bolshevism, which were communicated to me by a recent visitor to Moscow.” Ulyanov was Lenin’s family name.

Germany had 159 country trade surpluses in 2017; EU world’s top exporter

Germany had goods trade surpluses with 159 countries in 2017 (using a threshold of €150m) compared with 56 for the United States (using a threshold of $160). While German surpluses come from all regions of the world, the American surpluses are both smaller and are mainly concentrated in Latin America (excluding Mexico, Ecuador and Venezuela,) the Carribean and the Middle East.

The United States last had a goods trade surplus in 1974 while Germany has had a surplus every year since 1952 and it has had a combined goods + services trade surplus every year since 1993.

German export value (goods + services) in 2017 as a ratio of GDP was 47%; France was at 31%; Italy's ratio was 32% — up from 26% in 2006, while Spain rose to 35% of GDP compared with 25% in 2006. The US rate was 12%.

China’s export value/GDP ratio was 19% in 2017 compared with over 35% in 2007.

Italy: A century of annual budget deficits and high public debt

Prof Giuseppe Conte, Italian prime minister-designate, arrives at Palazzo del Quirinale May 31, 2018

Italy's anti-establishment coalition partners reached a new deal on Thursday with a revised list of ministers, and Sergio Mattarella, the Italian president, will swear in the 66th Italian government since 1946, today Friday.

I wrote this comment on an Irish Times op-ed on Thursday. Below, I have added additional material including some positive news!

A populist alliance is likely to form the 66th or 67th government since 1945, and the president may well have been wise in seeking clarity on plans about the euro.  The published draft programme of the Five Star Movement and the League is unlikely to address the serious problems of the economy but the alliance should govern. As banks' retail customers often invest in bonds, the alliance doesn't wish to see them burned.  

Italy has a long-term problem with an annual budget surplus achieved only once in about 110 years and in its 157 years as a unified country, Italy has had a debt-to-GDP (gross domestic product) ratio below 60% in less than 30 of those years.

Economic Facts of Week: Tech giants killing young rivals and more June 02 2018

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Eurostat reported Thursday that the Euro Area (EA19) seasonally-adjusted unemployment rate was 8.5% in April 2018, down from 8.6% in March 2018 and from 9.2% in April 2017. This is the lowest rate recorded in the Euro Area since December 2008. The EU28 unemployment rate was 7.1% in April 2018, stable compared with March 2018 and down from 7.8% in April 2017. This remains the lowest rate recorded in the EU28 since September 2008.

Italy and the euro: Sergio Mattarella has opened a window of opportunity to save the single currency

Carlo Cottarelli, Interim-PM, arrives at Palazzo del Quirinale, Rome, May 29, 2018

Panicos O. Demetriades, University of Leicester

Crisis looms large over the eurozone yet again. And this time it’s swirling around Italy. If Cyprus was a tropical storm for the euro in 2013 and Greece a hurricane in 2015 what will Italy turn out to be in 2018?

Italy’s public debt is 132% of GDP. This is the second highest in the euro area (Greece is still out in front with 180.8%). In absolute terms, however, Italy’s public debt at €2.3 trillion dwarfs Greece’s €320 billion. Meanwhile, the eurozone’s third-largest economy contains a rising tide of populist, anti-EU sentiment.

Trump makes racism respectable again in America

One hundred years after Woodrow Wilson, a racist who restored segregation to the federal civil service, won re-election in the 1916 US presidential election, Donald Trump, another racist who in the 1970s with his father had been charged with housing discrimination against blacks by the Department of Justice, was elected president. In recent decades while overt racism had become a social taboo, Trump won many fans by propagating the lie that Barack Obama, the first black president, had been born in Africa not the United States – suggesting Obama was an illegitimate president.

This week Roseanne Barr, an actress and Trumpian, wrote in a tweet that Obama administration aide Valerie Jarrett was the baby of the “Muslim brotherhood & planet of the apes.” The odious cretin also tweeted that 87-year-old Hungarian-born Jewish billionaire George Soros, had collaborated with the Nazis to send fellow Jews to the gas chambers and steal their wealth – he was a child/teen during the Second World War.

Can technology solve Brexit NI border issue? - BBC Newsnight May 2018

BBC News: Published on May 11, 2018- Brexit: Five steps to understanding the EU customs union - How the UK's future trading relationship with Europe is going to work is one of the biggest Brexit questions.

The New Silk Road: China's Route to Europe? | DW English

Radio Free Europe: China’s “New Silk Road” is a multibillion-dollar project, linking it to European markets via a corridor of trade and investment across Central Asia. Kazakhstan is a major partner, and the two countries speak glowingly of their cooperation. But beneath the veneer of warm words, corruption, bureaucracy, and old antipathies sometimes get in the way.

DW Germany: China is investing US$900 billion in the New Silk Road – possibly the biggest infrastructure project in history. Is the goal to foster trade and development? Or does China have a neo-colonial agenda?

Who was Karl Marx? | Videos: DW Germany Documentary & Economist

Karl Marx (1818-1883) was a German-born philosopher of the 19th century whose works covered economics, sociology and political theory and later revolutionized politics in large parts of the world.

Born in the city of Trier, Karl Marx fled to England and became stateless in 1849, after he became considered a political threat in Germany. Known as the "Father of Communism," he wrote the political pamphlet "The Communist Manifesto" (1848) with Friedrich Engels, and is the author of the founding theoretical text "Capital: Critique of Political Economy" (1867-1883).

Was Karl Marx right? | The Economist — Karl Marx remains surprisingly relevant 200 years after his birth. He rightly predicted some of the pitfalls of capitalism, but his solution was far worse than the disease.

Martin Wolf: how Italy became Eurosceptic and why it matters

FT's chief economics commentator looks at the potential for upheaval for the euro and the eurozone as a new populist Italian government edges closer.



Italy in crisis again but average incomes higher than Ireland’s

Claim Dutch East India Company most valuable in history not credible

This statue of Jan Pieterszoon Coen (1587-1629), the VOC (Dutch East India Company) governor-general for Asia, was erected in his native Dutch town of Hoorn in 1893. In 1621 Coen had organised the genocide of about 14,000 inhabitants of the Banda Islands, a group of small volcanic islands within the Moluccas archipelago, Eastern Indonesia. In past centuries the Bandas were called the Spice Islands in Europe and elsewhere. Nutmeg was native to the Banda Islands. 

The statue had been knocked off its pedestal in 2011 when it was hit by a car. There was controversy about restoring it and the local council put brief notes in  Dutch and English on a plaque affixed to the pedestal (see below) with an invitation to visit the nearby Westfries Museum covering the so-called Golden Age of 1600-1650 and Coen.  Image source: Google Street

In 1602 the States-General of the Dutch Republic chartered the Vereenigde Oost-Indische Compagnie (VOC) — United East India Company in English, but commonly known as the Dutch East India Company — with a monopoly of trade with Asia. In 2012 it was claimed to be the most valuable company in history and in December 2017 multiple media outlets including Dutch ones, reported on a current-day valuation of $7.9 trillion, equivalent to a market value of 20 global corporations, headed by Apple Inc.

The claim is fake news as it is not based on evidence from the extensive surviving VOC documentation. The company was dissolved in 1799.

Brexit, stagnant earnings and globalization

The British vote to leave the European Union was motivated by several factors and in nearly two-thirds of the seats held by the Labour Party (and in no less than four-fifths of those located in the North of England and the Midlands) a majority of voters voted to leave the EU − but across Britain as a whole, 63% of those who voted Labour in 2015 and who cast a ballot in the EU referendum, voted to Remain.

The Economist was more specific on how immigration impacted the vote: "Where foreign-born populations increased by more than 200% between 2001 and 2014, a Leave vote followed in 94% of cases. The proportion of migrants may be relatively low in Leave strongholds such as Boston, in Lincolnshire (where 15.4% of the population are foreign-born). But it has grown precipitously in a short period of time (by 479%, in Boston’s case). High levels of immigration don’t seem to bother Britons; high rates of change do." 

More than half Irish indigenous exports go to 4 Anglo-Saxon countries

Ryanair’s annual revenues in the 12 months to March 2017 were at €6.65bn. According to Enterprise Ireland indigenous tradeable exports in 2016 to Europe-excluding UK, Africa, Middle East, Russia, Central Asia and India, were valued at €6.95bn. UK exports were at €7.75bn and to US/Canada were at €3.74bn.

In 1973 when we joined the EEC about 55% of total exports went to the UK. Today the same ratio of indigenous exports go to 4 Anglo-Saxon countries: UK, US, Canada and Australia.

Even though there are more direct jobs in indigenous exporting firms, 201,100 at end 2016, compared with 199,900 in IDA Ireland foreign-owned (FDI: foreign direct investment) exporting client firms, it’s striking that the onset of Brexit has not focused attention on the narrow base of indigenous firms.