ECU'nomist 1 2016-2017 by Economie Combinatie Utrecht 1992

Western Neglect

The ECU’nomist

Does culture matter? Referenda: democracy’s antidote? An outsider’s view on markets Does the economy matter anymore?

December 2016, YEAR 25, ISSUE 1

The Twilight of Hollywood

The World is not Flat!

Letter from the Editor

The ECU’nomist, December 2016

Dear readers, 2016 IS SOON COMING TO AN END. It was a year during which ever-increasing international integration has been seriously threatened. As students at U.S.E., a quintessential example of a highly internationalized institution, we should take those threats at heart, because the key to solving many of the world’s problems of tomorrow will be international cooperation. This can only flourish if people from different backgrounds come in contact with each other, but will disintegrate once people let patriotic selfishness take the best of them, pushing countries back towards protectionism and isolationism. The articles in this ECU’nomist were all more or less finished before the surprising election of president-elect Donald Trump. Therefore, many articles were written with this year’s other political trauma in mind, a trauma, at least, for those who see that the global community will foster under tighter integration; Brexit. Brexit came as a surprise to many, because would it not be ridiculous for any country to renounce an international cooperative block such as the EU? Surely our world is currently too globalized for any country to simply fall back into isolationism without regretting it afterwards? An explanation for the surprising choice of the Britons might be found in this issue’s cover story ‘the World is not flat’, written by Filippo Ricci, in which he argues that we might severely overestimate the degree of globalization the world has achieved today. As a result, a breach might have come into being between people like us, members of an international community to whom international contacts are a day-to-day fact of life, and people in working-class quarters whose international experience might not go further than an annual holiday to a French camping site, and therefore still treat international contacts as contact with strangers. James Dunstan, a new asset to this year’s editorial committee, will also remind us that the world is larger than we might tend to think it is, telling us how little we actually know about the situation in the Middle-East. No explanation for Brexit is unequivocal however, and in this issue, our second new committee member Haydn Wiles takes another approach; an approach just as important to us economists. He asks if economic effects of policy matter at all in current-day politics, or if people throw the economist’s opinions in the wind, disrespecting the opinion of experts. In my own article I take a different perspective. Rather than assessing the opinions of the British electorate, I will assess the instrument that has been used to poll them. Are referenda the way to really assess what the people want? There are, however, other explanations to explain why scepticism on international integration is on the rise. Maybe economists have overestimated the benefits of free international trade? As a guest writer, Camille Gevers informs us on the way other disciplines look at free market policies, which will help us see the idea of a market in a broader context. Aleksander Tase will also help the reader cross boundaries. He will explain us why culture, a factor that economists often tend to dismiss, matters. Finally, Linda Kunertova will inform us about an important change in Western culture; Whereas going to the movies used to be an important aspect of our cultural life, nowadays illegal downloading and on-demand streaming services make sure people stay at home. This has dramatic consequences for the way we experience cinema and consequently, the business model of Hollywood. The whole committee worked hard on this first issue of the year and I hope you will have as much pleasure reading it as we had making it. If you have any suggestions for the next issue of the ECU’nomist, or have an article you would like to have printed, feel free to send an e-mail to ecunomist@ecu92.nl

Sincerely,

Sjoerd van Alten

Editor in Chief 1

Letter from the Board

The ECU’nomist, December 2016

Dear readers, FIRST OF ALL THANK YOU for reading this year’s first edition of our quarterly magazine: the ECU’nomist. Each period our ambitious and talented ECU’nomist team, the ‘Editorial’, will provide you with economic insights, opinion articles, and updates about all that happens at U.S.E. I can recommend reading the ECU’nomist, for which you will have more than enough time now that the exams are over.

All the fresh ECU’92 committees of 2016-2017 have started up well and are very busy organizing many activities for all of our members. Successful activities that already took place include the beginning of the year party, the Economic Career Day, the Escape Room with the freshmen, and many others. I hope you enjoyed them just as much as I did and I hope you will join us again with the future ECU’92 activities. Since I am very happy with all the new active members, I can assure you these activities will be worth your time!

The first period was over before we, as the Board of ECU’92, knew it, and we hope you had the same experience! With a lot of (fun) things to do and a lot of awesome people, we are confident that the rest of this academic year will be just like this first period.

To end with, I would like you to know that you are always very welcome to drop by the ECU’92 room for a cup of coffee, a chat, to ask any questions you might have or just to relax. I hope to see you soon!

On behalf of the XXVIth Board of ECU’92,

Jesse Boeve Chairman ECU’92

Contents

The ECU’nomist, December 2016 6

Cover Story

The World is not Flat

The World

The Media

Western Neglect

After Brexit

Beyond Economics

Guest Article:

12 18

Since long, people have ceased to think the world is flat. Filippo Ricci investigates another wide-spread believe about the world.

10 16 20

Why do Nigel Farage and Donald Trump look so cheerful? Haydn Wiles will tell you on page 18.

Does Culture matter?

An Outsider’s view on Markets The Twilight of Hollywood

University Life

Exchange Article:

10 Things I discovered in Sweden

4 14

People are more often asked to queue for their local polling stations, since referenda are an instrument increasingly used by parliaments to poll the opinions of the electorate. Are they a good idea?

Referenda: Democracy’s Antidote? Does the Economy matter anymore?

Presenting the Editorial Committee ECU’92 photo page

Interview:

The Degree Programme Committee

Hollywood is struggling: Cinema revenues are declining because people have become couch potatoes: preferring the comfort of on demand home cinema to cinema theaters.

www.ecu92.nl ecunomist@ecu92.nl Published by Issuu

Presenting: the Editorial Committee 2016-2017

The ECU’nomist, December 2016

Presenting: Sjoerd van Alten I am Sjoerd and happy to be the Editor of the Editorial commitee. I am a third-year student at U.S.E. In my spare time I like to play the guitar, expressing my passion for music, watch movies and hang-out with friends. I also love to travel, since it is great to discover new places. Because to paraphrase Jim Carrey: That’s why people go places, because they have never been.

Filippo Ricci I’m Filippo and this is my 3rd year in the editorial committee! I’ve completed my bachelor here at USE and now I’m following up with the research master in Multidisciplinary Economics. I’m also working as a student-research assistant for Economics of the Public Sector, in tax evasion and money laundering research. So what I’m saying is what you can expect is a lot of articles of inherently arbitrary topics which I probably covered and will cover in the course of my master and work! I’m really looking forward to still being part of the committee and I hope you will enjoy this year’s ECU’nomist as much as we will.

James Dunstan Hey there! I’m James and currently a first year bachelor student studying in Utrecht. I love sports and nature, hiking through the mountains of England was always my favourite passtime back home. I also enjoy music, particularly playing my guitar and piano. I look forward to exploring the most interesting topics of the year within the editorial commitee! If you catch me at the bar, I’d love a classic British ale.

Haydn Wiles Hi! I’m Haydn, I’m a first year bachelor student from the United Kingdom and I’m looking forward to writing and designing for this years ECU’nomist. When I’m not studying (so that’s most of the time) I enjoy good food, playing guitar, and tennis. However my true passion, and part of the reason I’m here, is travelling. Anything to culture myself further! Whilst I’m at UU I hope to visit every European country at least once. So if you have any recommendations for places that I should visit, please let me know!

The ECU’nomist, December 2016

Presenting: the Editorial Committee 2016-2017

THE EDITORIAL COMMITEE Linda Kunertova Hey everyone, My name is Linda and I’m a third year student coming from the Czech Republic. I love the noise the cork makes when someone opens a bottle of wine. Especially when it’s red wine, since I am a red wine person. I love Woody Allen movies and I dislike Frederico Fellini’s movies (I am sorry, they creep me out!).

Alexander Tase I’m Aleksander Tase and I’m a third year student of Economics and Business at UU. I love swimming and all things related to the sea, cooking/tasting good food and winemaking, making beautiful photos and constantly embarking on new hobbies. I dislike the Dutch weather sometimes, and writing bios for myself. If someone wanted to order a drink for me, I’d go with a glass of Bordeaux.

Tim Hadders My name is Tim and as a member of the XXVIth Board of ECU’92, I am not studying this year. This means I will (hopefully) complete my bachelor next year. What I will be doing is coordinating the wonderful committee that will produce the ECU’nomist! After this edition, they will make 3 more magazines during this academic year. As you will find out while reading this very first edition, this committee consists of some hard working students who will try their hardest best to provide you with some fun and interesting reading material. See you soon at the ECU’92-room!

DO YOU WANT TO BE PART OF THE ECU’NOMIST TOO?

We are always welcoming guest articles! Are there pressing issues you think people should know about? Any topics related to economics, or which you think (future) economists should find interesting are suitable. Please send your piece to ecunomist@ecu92.nl. Happy writing! 5

Cover Story

The ECU’nomist, December 2016

Opinion Editorial

The World is not Flat

Why we aren’t as globalized as we think

Filippo Ricci

N THE 1850S, as Dr. Livingstone explored East-Africa, his expedition brought him to famously write how the railroad, the steamship, and the telegraph were integrating East-Africa perfectly with the rest of the world. It’s clear that Dr. Livingstone was ahead of his time since 155 years later, in 2005, Thomas Friedman famously claimed that “the [economic] world is flat.” Friedman’s arguments seduced readers with the idea that globalization is ubiquitous; the global playing field had been leveled, national borders really didn’t matter anymore, and international integration was almost complete. We are citizens of one world. The flaw of his arguments is that they are largely inaccurate. This essay will argue how globalized we are, but more importantly, how globalized we aren’t. Friedman’s looks at three homonymous stages in global

development: globalization 1.0, globalization 2.0, and 3.0. In globalization 1.0, countries, governments and institutions were the main protagonists in shaping globalization. In 2.0, multinational corporations led the way in driving global integration. Finally, in 3.0, the flattening is a product of the rise of technology, the personal computer, the internet, and workflow software. It is critical to stress accuracy in assessing our world. And while Friedman isn’t entirely incorrect about the processes by which the world developed and grew, this essay will argue that he was making a gross overestimation of the current level of globalization (just like Dr. Livingstone had done). By directly challenging each version of globalization (1.0, 2.0, 3.0), we will be able to better understand how our ‘globalized’ world actually developed. The essay will adopt a historical-economic perspective on the first two, and fact based view for the last.

Cover Story

The ECU’nomist, December 2016 Globalization 1.0: Biodiversity and Colonialism

multinationals paved the road to global integration? Globalization 2.0: the Financial revolution

The level of economic growth and development up until the 16th century can be explained by biogeography and adaptation to the malthusian trap. After the 16th century, current levels of growth and development are explained primarily through the type of institutions colonialism brought to its colonies. We start our analysis at the dawn of human civilization in the fertile crescent. The high abundance of biodiversity (availability of plant and animal species useful for humans) combined with perfectly temperate weather conditions and seasonality, made the fertile crescent the perfect place for the neolithic revolution (agricultural revolution) to take place. Increases in the food supply, arising from the revolution, implied more than proportional increases in population and marked the beginning of the first civilizations. This is an adaptation of the malthusian trap; the level of pre-colonial development is explained by the estimated number of people living somewhere. The number of people is in turn determined by the supply of food, and the supply of food depends on, as we’ve seen, biogeographic factors. Mesopotamia (or modern day Iraq), having won the biogeographic lottery, was the birthplace of civilization. It wasn’t too long before continental Europe saw its own civilizations. The mediterranean and continental Europe were also extremely biodiverse and temperate; whilst being not too far from the fertile crescent. This meant that agriculture could be transferred with relative ease. Agricultural knowledge and customs could move horizontally rather than vertically, that is latitudinally rather than longitudinally. This was of crucial importance because climate within the same latitude is often the same or similar. Civilizations and Empires thrived in Europe and their legacies last until today through the level of development the continent has maintained. And while colonialism leveled off the playing field in some lucky, biodiverse lands (the U.S. Australia, South Africa, etc.), the large majority of colonies were on the gradient between natural paradise and tropical hell. The natural paradises, i.e. those places which had the right biogeographic factors, got the best out of colonialism (in terms of institutions), and their level of growth and development is reflected in today’s world. These were places like the North American continent, in which temperate, seasonal weather allowed for Europeans to settle. On the other hand, tropical hells usually boasted large biodiversity and mineral riches, but none of the former was useful or accommodating for humans. These would be like the Belgian Congo, in which high settler mortality and tropical climate made it so the colonizers would exploit. In other words, European colonists would die of disease or the geobiology was unfit for sustaining civilization. Once more, most ex colonial countries lie on a gradient; this implies that there are different starting points for all ex colonial and non-colonial civilizations, directly contrasting the Friedmanian argument. Institutions and government did level the playing field for some, but this is grossly inaccurate on the global scale. But what about the level of growth and development in the pre-modern era? What about globalization 2.0 in which the first

The effects of MNEs on an economy’s development and growth are at best ambiguous. This Foreign Direct Investment (FDI) has no doubt gross macroeconomic benefits but the economic “spillover” into the subsequent strata of society are never clear, and seldom is the lowest getting any part of the cut. It is therefore up to the financial systems in the country to ease transactions and the flow of money in an economy as much as possible. It is no surprise that without a solid financial foundation, MNE are able to make investments which rarely benefit the worst off in society. The problem here is that for the most in society, the costs of information and economic transactions are too high. Most people in our society who don’t invest, don’t invest because of the effort it requires, i.e. the information and transaction costs associated with investing capital. The primary purpose of a financial system is to facilitate the allocation of these very financial resources. Let’s look at the history of the English industrial revolution as an example for the importance of a solid financial system. Like most revolutions, golden ages, and renaissances we’ve heard about in history, the events that marked its beginning always sound peculiarly coincidental. As if people in the renaissance, on an arbitrary day, started asking themselves “what is this ancient Roman column here?” and then simultaneously decided to initiate a neoclassical movement in all the arts. Or in Victorian England, where sporadic technological innovation just happened. This is what we inaccurately call the Industrial revolution. The truth is the “technological innovation” manufactured during the first decades of the revolution had been invented much earlier. It was not innovation which sparked sustained growth. Rather, existing innovations required a large injection of long-run financial capital commitment. The financial system in Victorian England was the first with the ability to efficiently liquify capital. The capital market improvements that mitigated liquidity risk were primary causes of the industrial revolution in England. In other words, savers and households can hold assets, like equity, bonds, or demand deposits; let us call these financial instruments ‘savings’. With a solid financial system in place, savers and households can easily access these savings and capital markets can transform these into long-term capital investments into illiquid production processes. Without this liquidity transformation, i.e. without financial systems, the industrial revolution may have never occurred. Therefore, the industrial revolution had to wait for a financial revolution. But where did these financial systems arise and how do they perform this liquidity transformation? Like other institutions, the financial system either evolved slowly in areas unaffected by colonialism, or it was carried over and then underwent subsequent developments. A well-functioning financial system abates transaction and information costs through five important mechanisms. It mobilizes trading, allocates resources, exerts corporate control, facilitates risk management, and eases the trading of goods, services and contracts. These five functions are channeled by the financial system into growth and

“Like most revolutions, golden ages, and renaissances we’ve heard about in history, the events that marked its beginning always sound peculiarly coincidental. As if people in the renaissance, on an arbitrary day, started asking themselves “what is this ancient Roman column here?”

Cover Story development via capital accumulation and technological innovation. Recall the Victorian England example; it was the liquid transformation that allowed for capital accumulation and in turn technological innovation to reach markets. The main intuition here is that the financial system is able to, due to scale and specialization, minimize the cost of information and transactions by pooling risks and redistributing minimized versions to savers and households. This way, more and more people are able to hold savings and investments in society; this in turn is converted into large capital investments by the financial system, the investment needed for growth. Given all these considerations, it is not the MNE which defines the level of integration, but rather, the quality of the financial system in place at the given time. Once more, Friedman was looking at the surface, where a more in-depth look was needed. Next we will look at the status quo, globalization 3.0. The Friedmanian claim here is that the rise of hi-tech such as the personal computer, the internet, and workflow software have successfully flattened most of the world. Since history is little help to us in the current day, this esGlobalization 3.0: Facebook connection say will show a fact based world view, using simple data from the last 5 years. A lot of people share misconceptions about how integrated the world is. The world can surely seem flat when we have Facebook, Skype and low cost international flights. What is important to account for is that most university students living in a developed country such as the Netherlands, come from a relatively privileged background. For us, it may very well be that the world is flat. But for the vast majority of people on earth, this is not the case. Let’s take a look at some inter-border/intra-border transactions that commonly happen on our not-so-flat planet; i.e. phone calls, people, investment, and goods and services. An inter-border transaction being an international one, whereas an intra-border is a domestic one. Our first inter-border transaction is phone calls. Let’s take the inter-border calling minutes as a ratio of total worldwide calling minutes. In a study conducted by the University College of Northern Denmark, researchers estimated that 12,4 billion phone calls were made each day, worldwide. The same study reported 248

The ECU’nomist, December 2016

million inter-border calls. Thus, on average, only 2% of the world’s phone calls are accounted for by inter-border calls. This is lower than what most people think. Next, we can look at immigration; i.e. the inter-border movement of people. Let’s take the ratio of first generation of worldwide immigrants to the world’s total population. The United Nations (UN) estimated that there were 210 million first generation immigrants. The world population that year was just over 7 billion. Therefore, only an approximated 3% of the world’s population was made up of immigrants. Let’s take a quick look at investment. Let’s take worldwide, real investment and compare it to worldwide Foreign Direct Investment (FDI). The World Bank estimates that the current level of FDI lies around 2.111 trillion USD. On the other hand the aggregate, global level of investment is estimated at 23.455556 trillion USD. FDI makes up 9% of total investment. By looking at the numbers we derived in this section it becomes abundantly clear that we are very far from the no-border effect Friedman writes about. If the size of these numbers has not surprised you ex post, I encourage you to ask peers, colleagues, and scholars to estimate what they think the ratio of international phone calls to global phone calls is, or what the level immigration worldwide or let alone in their country might be. It makes intuitive sense that most of us would love to live in a globally integrated world. It sounds beautiful to most of us; to be finally united and our opportunities to be leveled. While I am an optimist myself, we must be critical of statements on global

integration. We are far from the flat earth we’d like to live in. Biogeography and colonialism shaped the level of development and growth until the 16th century and its effects can still be seen today. The countries which either won the biogeographic lottery or the colonial one (or both!), are the ones that are most developed today. . In turn, since the financial system was dependent on colonial institutions or their ‘natural’ evolution, not all countries are on the same level. This is critical for the growth response countries have to MNEs entering their economic paradigms. We showed that biogeography and colonialism shaped financial systems and in turn the levels of growth and development; levels which are on a gradient, meaning that the starting point for these countries are all different. Even if we assumed that the postcolonial starting points were leveled, we used simple facts to disprove common first world misconceptions of our round earth. For instance, when people in France were asked about what they thought the percentage of first generation immigrants living in France was, they answered 24%. In reality, this number is far closer to 8%; which at the end of the day, is only a 300% overestimate. Racist, anti-immigration, political rhetoric surely has a say in these biases. Has the world become more globalized in the last 100, 50, 25 years? Certainly; but we are not observing the Friedmanian level of global integration. “Dr. Livingstone, I presume[,]” was really looking into the future, far more than Thomas Friedman is. Notwithstanding their inaccuracy, the question of whether we should strive for a globalized world seems obvious. We need their optimism, but we also need to be accurate.

Western Neglect James Dunstan

VAST, INTERCONNECTED, SEEMINGLY BORDERLESS WORLD. This is the reality we have come to take for granted. Our ability to travel the whole expanse of the globe, to learn the never-ending intricacies of every aspect of life at the touch of a button, to readily receive the breaking stories of the day with negligible effort. However, is the world really as integrated as we have been made to believe? The illusion of our western society,

World

The ECU’nomist, December 2016 permeated by our news outlets, is this ideology of a global community. We are subjected to endless streams of information every day, international news and breaking headlines. All of which lure us into the false presumption of knowledge regarding the contemporary state of the world. Yet western media may not be as honest as we perceive it to be, moreover can we openly trust our media outlets if this is the case? Simply put, there is a propensity within our domestic media to not only be biased towards certain political parties, but also to exhibit a much larger nationalistic bias based off of sentiments such as big business imperatives and patriotism. This contradicts the democratic expectation that liberal countries should possess independent news sources. Western media predominantly focuses on western issues and can be seen to neglect the majority of news coming from non-western countries. Even when coverage of non-western society is reported, the prevailing focus can be categorised into three topics: migration, terrorism, and war. This blatantly supports pre-existing prejudices within our society causing us to view any “foreign” countries in a negative light. This may not be universal, nevertheless there is evidence which suggests this has become a major problem in the developed world. In order to truly understand the plights of other nations we first need a reliable source of information which highlights their problems. For example, the majority of readers will be

quite familiar with the terrorist organisation ISIS (the Islamic State of Iraq and Syria). I imagine less readers will be as similarly well versed with the activities of a different terrorist group, Boko Haram. Perhaps because Boko Haram garners around only a fifth of media coverage compared with ISIS, which feels absurd considering both groups were responsible for near identical death tolls within the year of 2015. Not by coincidence, the majority of attacks carried out by ISIS are targeted at western countries, while Boko Haram is mainly located in Nigeria and West Africa. This further reinforces the claim that western media is predominantly focused on western issues. Another way in which our media remains skewed towards particular affiliations is the abundant interconnections between the media and the government. The bulk of our media is inclined towards differing political outlooks, this creates an uneven playing field in the political landscape of a nation. In this modern era, it is incredibly difficult to find an objective source of news, which becomes dangerous during times of critical political decisions. The politicisation of our media helps proliferate false information with which ordinary people may blindly follow, a recent example of this can be seen within the UK’s campaign to leave the European Union. From the perspective of the media, an overreliance on government officials as news sources created an unprecedented polarisation between the leave and remain campaigns. Furthermore, with the tendency of western media to couple

“foreign” countries and their citizens with topics such as migration and terrorism, the leave side became almost antithetical to the remain side, becoming entrenched with populist sentiments such as nationalism and xenophobia, all of which broaden the gap between our media and the reality of the actual world. All this being said there does exist another option, the rise of social media has been exponential within the last decade and with its new found popularity there has also arisen a fresh source of news. This source has the potential to be incredibly diverse, the social media platform allows anyone to post information and this information is then universally available. This generates a scenario where the biggest flaw of social media as a news source actually becomes its biggest asset. In other words, the sheer scale of information which can be posted to sites such as Facebook or Twitter could be seen to destroy all integrity of the news sources being shared. How can there be any trust in such an expansive network? Albeit, it is this exact reason which allows for a potentially less biased and rapid source of news, simply the news propagated through word of mouth. As long as a system of identification is properly enacted to give certain profiles validity, then the potential for endless commentators to provide news from across the globe is surely evident. Even better, this news could actually originate directly from the country in which the story occurs, removing the costs in which media firms incur for field reporting.

Economics and beyond

The ECU’nomist, December 2016

News presented by social media is incredibly appropriate for the future of western media, this is apparent just by looking at the current layout of our modern news outlets. In America there exist a mere six corporations who control around 90% of the media coverage, when news becomes concentrated in this way it leads to a divergence from the unbiased reporting that we would expect from a democracy. Concentration of news sources leads to the delivery of social programing within our society, or even the spread of propaganda relating to the political processes of the country, propaganda which has become conspicuously apparent in the Trump/Clinton presidential election race. Although the world in which we live becomes smaller and smaller each day, there still remains extensive gaps in our knowledge of the world. Coming from a western society in which any news that originates in less developed areas of the world, specifically Africa or Asia, subsists in its meagre content. The information we absorb through our media may not be entirely false however it may also leave out other stories which are deemed too far removed from our current issues. If we want to live in a truly global community, this has to change. Only once we become aware of the plights of other countries can we truly enforce the kind of social pressure which can help to fix it.

Does culture matter? The importance of culture in economic development

Aleksander Tase

F YOU LOOK AT THE BACK OF YOUR PHONE, chances are it will read manufactured in China. The tag on your shirt can range from Brazil to Bangladesh, the magazine you read may hail from the states and the wine you drink from Italy or Spain. The world is at your fingertips. Long gone are the days of a two week journey needed to bring silk to Europe or empires being built upon the riches of selling spices like pepper and cinnamon. It seems we’re living the era of incarnation of Milton Friedman’s quote “The world is flat”. His claim is that in this modern age of globalization, when capital can cross national borders so easily, when investment funds can be pulled from one country to another instantaneously to respond to new business opportunities, economic development is attainable in the most surprising of places. Today, as never before experienced in the past, economic growth should be within the reach of any

country anywhere in the globe. It would seem that all that is required to guarantee long-term prosperity and development is the fulfillment of a few “ground rules” such as a stable government, credibility and an investor-friendly climate. The plot thickens when realizing that not all developing countries are able to meet these conditions. As if a parasite residing only in some parts of the world, slowly leaches away at the host’s economy while leaving others totally unharmed. Maybe the world isn’t as flat as we’d like to believe. Economists analyze many social and national variables which they claim to affect the wealth of nations. Although simplified and in many cases utilizing many assumptions, their theories often manage to reach useful conclusions, but have failed to explain the inequalities of nations previously mentioned. Possibly there are ingredients for economic development, more far-reaching and subtler than the

Economics and beyond

The ECU’nomist, December 2016

conditions usually described, that touch on the national values and its traditions. In other words, economic development might be affected by those intangibles that are collectively known as culture. It seems economists might be affected by tunnel vision and don’t quite know how to deal with a concept as vague as culture. In its earliest days, economic theory had plenty of room for the fickleness of human behavior. Adam Smith argued that although people may act individually in order to pursue personal interest, personal interest involved much more than simply making money. Stewart Mill expanded on the point, stating that cultural constraints on individuals could have a stronger impact on them than the pursuit of personal financial gain. Max Weber, the German social scientist, offered more specific insights into how cultural or even religious values could impact on economic output. He argued that the Protestant work ethic, supported the virtues needed for maximum economic productivity. For this reason, Protestants were more productive than Catholics throughout Europe in his day. These schools of thought seem to come to an abrupt stop after industrialization and rapid economic development in Europe and USA in the 19th century. After many nations experienced an unprecedented boom in their economy, it seemed that the

world was safe from the looming Malthus trap. Focus should be aimed towards making sophisticated explanatory theories and less towards the underlying mechanics of human behavior. The result? All people are governed by more or less the same principles. But we know very well that’s not true. Why do some countries do very well, while others fail to develop, even when all the economic factors seem to be in place? It seems that the underlying importance of culture comes to play. China may be a major power now, but it was the world’s most developed country in the middle ages, and stagnated, or even went backwards, for centuries. Part of this was cultural. A pride and sense of selfsufficiency that led to a closing of China’s borders, effectively putting a wall between it and the rest of the world proved detrimental to its development. It seems that for generations before the implementation of a leftist government, China’s economy was dictated by its own values and beliefs. Today, the Chinese minority in the Philippines accounting for less than two percent of the population, control 60% of the nation’s private economy, including the country’s four major airlines and almost all the country’s banks, hotels and shopping malls. It’s the same cultural attributes manifesting themselves differently and

leading to such different results. “It wasn’t a coincidence that the industrial revolution happened in Great Britain”, states American economic historian Gregory Clark. He claims that Britain’s development was not a sudden leap forward that was propelled by the invention of a few power-driven machines. It was gradual, taking place over the course of several hundreds of years prior to the 19th century. In this way of thinking, the Industrial Revolution would have never occurred had it not been for the changes in values that were happening for centuries before. But mere changes in value can’t give rise to such economic progress. They did, however, lead to the gradual development of a set of deep cultural changes, especially a sense of competitiveness and a strong work ethic, that was required if sudden technological breakthroughs were to have any real impact on the society. By contrast, when India was introduced to the technology later in the 19th century, the results were far different. The power-driven cotton mills that had caused such an amazing economic burst in Britain were introduced to India but never offered the country the same competitive advantage. In the end, it was people and the values they had absorbed over the years, not the futuristic technology or modern gadgets, which had made the difference. The first writer to propose a cultural explanation for underdevelopment was Edward Banfield. He attributes the slow economic growth in southern Italy to the excessive pursuit of narrow self-interest by people who have never learned to trust much outside their family. The development of trust outside one’s family is a crucial aspect here in the better functioning of economic institutions. Although these examples may be generalizing beliefs and individual cultures, they do paint the picture to how previously thought-of-as-irrelevant aspects of a society can have a great effect in its development. It seems that economy’s gradual divergence from culture has caused it to run into difficulties explaining its own discrepancies and inner workings. To understand the world we live in better we must first understand ourselves and the network we are part of. The values we adhere to, what food we like, how punctual and hardworking we are. These are all traits subtly contributing to the bigger picture of the economy, but in themselves molding together to form our collective culture.

After Brexit

The ECU’nomist, December 2016

Referenda: Democracy’s antidote? Sjoerd van Alten

MAGINE YOURSELF as the leader of one of the big traditional political parties in any European country. Be they the Tories in England, Parti Socialiste in France, CSU in Germany, or whatever party it is you feel like leading. It being 2016, you are likely to be in a precarious position. Although elected in office, you are likely to have less political support than many of your predecessors. A large part of those that used to support your party will now be inclined to vote for newer, more extreme and often populist movements. Many citizens in your country will have turned their backs to the political process all-together.When the democratic process is crumbling apart from underneath you, your pedestal might feel rather flimsy and therefore you will be inclined to get your hands on any cure that might help. Our democracies are ill, and although not every illness has a medicine, each persistent malady is at least surrounded by witch doctors who claim to have one. In the case of democracy, a tonic that has become more popular last years is the referendum. Holding a referendum seem like a great method to revive the democratic process. In a situation in which voters feel more distanced from their governments than ever before, getting them engaged by asking them to approve or reject any given policy seems

like a brilliant way of bridging the gap. It is therefore no surprise that referenda are being held increasingly more often. Many proponents feel that representative democracy is becoming a way of the past, direct democracy is the future, and the referendum is the way to make it happen! However, looking back at 2016, it should be clear that referenda are no panacea. Too often has it happened this year that a referendum has blown up in a government’s face, because its results were inconsistent with the plan the government had set. In such a case, referenda do not solve a democratic crisis, but escalate it, with political instability as a result. Examples are legion. In April, Dutch voters denied its government to rectify the EU trade agreement with Ukraine. In October, Columbian citizens declined a peace agreement between its government and the FARC, against all odds. But the most toxic example of a referendum gone wrong for a government must be the Brexit-referendum, a referendum that has driven a whole political union in crisis. David Cameron had hoped that a majority vote for remain would muzzle EU-critics once and for all. However, the referendum led to the prime minister’s resignation and a prolonged situation of political instability for the UK and the rest of the continent.

I think there are two main reasons why referenda are often not as tremendous as they might seem. First of all, when policy issues are presented to voters in isolation, it is likely that people make their voting decision differently compared to a general election. This might lead to inconsistency in policy, especially when referenda are used as a regular tool. Secondly, when the results of a referendum are in opposition to the course the government initially set, as is the case in the referenda I just listed, that does not mean that it is clear to governments how to interpret the result of the referendum. A rejection of proposed policy can be interpreted ambiguously. This might engender political instability and give voters a feeling that the referendum results are misinterpreted by politicians, which in turn aggravates the democratic conflicts. In a referendum, voters are asked to indicate if they approve or oppose a certain course of action in which the government has already taken stance. For example, during the Brexit referendum, the official standpoint of the government was ‘Bremain’. In a perfect world, voters would inform themselves as much as possible and make a rational decision. But the costs of informing can be high. One of the most appealing characteristics of a representative democracy is therefore the

After Brexit

The ECU’nomist, December 2016 fact that representatives are chosen who are supposed to make certain complicated decisions for you. Because these representatives can devote more time and resources to the decision making process, they are likely to be better at choosing the optimal policy. In referenda, however, the voter has to make a decision himself. When the perceived costs of information are too high, other cognitive processes might capture the decision making process, and voters might no longer directly evaluate the question at hand. In such a case, voters may base their decision on matters completely unrelated to the policy question. Very often a referendum is not really about the policy issue at hand but more about giving approval or disapproval to the sitting government, especially when it concerns a matter that is important to government credibility. Many voters in the Dutch Ukraine treaty-referendum might have been completely indifferent about the treaty itself, but might have just loved to see the cabinet, currently unpopular amongst the electorate, struggling with the result. In this light, Italy’s Prime Minister Matteo Renzi has already made a classic mistake with regards to the prospective referendum later this year on constitutional reform: He has committed to resigning if voters will reject the reform, making the referendum about himself rather than the policy proposed. Emotion is thus likely to take over when a referendum is being held. The opportunistic campaign preliminary to the Brexit referendum is another example. But even when voters behave responsibly and evaluate the policy question in a coolheaded manner, inconsistency in policy is likely to result when multiple referenda are being held within the same window of time. Suppose two referenda

only two ways. Usually, a whole spectrum are being held in one year. The first one of options is available. If the results of asks voters if an inheritance tax should a referendum show a rejection of the be imposed. The second one, held a government’s stance, the government couple of months later, asks if health care can basically cherry-pick any option as coverage should be extended. Of course voters would be expected to reject the first long as it is not the one they had chosen initially. After the referendum on the policy proposal, but accept the second one. However, you can’t reap public sector Ukraine trade agreement, Dutch Prime Minister Mark Rutte interpreted the results benefits without being willing to bear the costs. Policy making is not about showing in the following way: People wanted a deal, but wanted a different agreement, preference on a case by case basis. Every an agreement that incorporated “the main question that should be answered is part of a bigger whole. Even issues that do not concerns” of those who voted against. What those concerns were? Who knows? seem causally connected can influence People did not have the chance to list them each other. Therefore voters should not on the ballot. evaluate policy case by case, but judge the government based on its total merit, A referendum is supposed to bridge which is exactly the objective of a general election. the gap between political institutions and its citizens, but when people vote against the course of their government, the only Another headache that often arises thing that is achieved is a feeling of after a referendum is how the results embarrassment amongst politicians in the should be interpreted by the government. cabinet. This embarrassment is of little If the will of the electorate is in line with use, apart from providing government’s the position of the government, there opponents a sense of bliss. On the is of course no problem at all, since the government can just continue on its initial contrary, these kind of referendum results course. If the people signal that they want only tend to bring political instability. They are also unlikely to initiate any things differently, however, this signal major change in political direction, since is likely to be ambiguous. After Brexit the government can cherry-pick freely it was completely unclear what course from a spectrum of alternative options. should have been taken. Did people want Naturally, it can be expected to choose an Britain to leave the common market? Did alternative that is as close to their initial they just want a ban on immigration? course of action as before. Did they want to become a member of Referenda do not bridge gaps, in EFTA instead or should Britain be isolated practice it seems like they only make from Europe? If all these alternatives to existing tensions more salient, with EU-membership would have been listed separately on the ballot, would the British political instability as a result. Can we have chosen any of them collectively over really claim that the Brexit-referendum has reunited politicians and voters in the EU-membership? UK? Has the implementation of direct It happens very rarely that democracy been of any value to the p policy questions can be answered in democratic process as a whole? No serious observer could answer these questions wholeheartedly with a ‘yes’.

The ECUâ&#x20AC;&#x2122;nomist, December 2016

Economics and beyond Guest Article

The ECU’nomist, December 2016

An outsider’s view on markets

Camille Gevers

S ECONOMISTS, WE TAKE MANY, MANY PRECONCEPTIONS FOR GRANTED, which might actually seem odd for an outsider. I am thinking of our fellow colleagues from social sciences, law, or even philosophy. We, in our vast majority, tend to consider anything as a potential source of revenue. We do not really question this, nor does it even affect us. I mean, since we focus on how to allocate scarce resources, we naturally think that putting a price on anything is indeed a quite reasonable solution to that matter. It is the law of offer and demand, we justify, the sempiternal argument of the invisible hand. Yet, in other disciplines, this idea raises suspicion. It is regrettable that boundaries between these disciplines are not more transparent, as we could only but become more discerning from mutual exchanges. So let us, shall we, put off our costume of semigod money makers for a moment and consider some of these objections. In this article, I will refer in particular to Michael Sandel, professor at Harvard university in political philosophy, whose online lectures have exceeded millions of views (the link to his channel is at the end of the article). I will go straight to the point. Here is his claim: We do not have a market economy anymore. Rather, we have become a market society. In other words, Man has been swallowed up by the market. Sandel’s last book, What money can’t buy (2012), is a denunciation of this shift of nature: from ‘having’ to ‘to being’, from something that was external to us to what we have become. There is a nuance, however. A market economy is a tool of a certain efficacy, that is in charge of organising the market activity. A market society is a society where everything is for sale, it is a sort of lifestyle. Market values, Sandel observes, have started to dominate all aspects of life, namely personnel relationships, family life, healthcare, education, media, civic life, etc. His question is then the following: is it preoccupying, and if yes, why? For what philosophical reasons can we determine which goods and other social practices must be governed by noncommercial value?

Before going further, let me paint a better portrait of the man. Sandel’s work falls within the scope of distributive justice. Historically, this reflexion is articulated around three approaches. First, utilitarism, which aims to maximise welfare of the greatest good for the greatest number. Second, liberalism promotes the respect of freedom and individual rights, in order to prevent the majority from violating anyone’s rights. Third, communautarism is concerned about favouring virtue and good life. This latter option is the path that Sandel attempts to rehabilitate. Rehabilitate?Communautarism, especially within the walls of economic faculties, has been largely despised. Not serious enough, too hedonistic. Considered at best as a mere fantasy, at worst as a dangerous deadlock, this name has often been dragged through the mud. Rawls and Habermas, two prominent authors who

shaped the debate on distributive justice over the last decades, rejected communautarism on the pretext that the reflexion on justice and public reason should not rely on the controverted meaning of ‘good life’. Liberalism, for example, envisages good from a neutral point of view, as if this notion would be better put into brackets. Liberalists, who fear above all the tyranny of the majority, strive to keep moral argumentation out of the economic activity, retaining only the lowest common denominator of principles, bestowing the rest to individual rights. This is not surprising when we know that liberalism, in the 19th century, emerged in complete rupture with the intervention of the religious discourse into the political sphere. But for Sandel, one of the consequences of this separation between justice and good was that it paved the way to a blatant lack of criticism towards markets. Yet, except if we have a public

Economics and beyond

The ECU’nomist, December 2016 discussion on which goods (perhaps corrupted by the market) must be legislated, it is difficult to define what the moral limits of markets should be. So, contrarily to the precepts of liberalism, Sandel urges to take into account these various criteria of good life, and insert them back into the public debate, even if it is a difficult venture, because we may not agree on what it means. As we have just seen, for the communautarist, the link between good and justice is constitutive. One implies inevitably the other. The problem is then the following: how to agree on a single notion of good, if we want to take into account and confront the multiple opinions of our society? If we strive to set up common justice principles, we should first reach a consensus on what good life implies, which seems paradoxal. For Sandel, here lies the real challenge. His aim is not to impose his personal criteria for a good life. Rather, he prefers to redefine what is in loss of meaning (I am talking about the values that have been disregarded by liberalism), to foster a debate on what would be good for the majority, to clarify the terms of this debate in order to have a better discussion. He does not want to come up with a unilateral proposition, but hopes to provoke a public reflexion on the moral limits of marchandisation. Here we come, moral limits. According Sandel, market capitalism entails two kind of limitations: inequality and corruption. The first one is best explained by what he calls the ‘ethics of queue’: in a society where we can use money in counterpart for anything, wealth has become synonymous of privilege, for example to the ‘right to speed’. The second refers to the deterioration of value. A good illustration of this is the solution adopted by Namibia to preserve black rhinoceros: the government auctions every year the right to kill one of these animals, which allows to raise huge funds for its protection. This sounds like shooting oneself in the feet. By applying a market logic, the philosopher argues, we have arrived to a schizophrenic attitude, pushing us to go against the value of wildlife protection by selling the right to kill an animal that we precisely aim to protect. There is a clarification to make here. If the advent of market capitalism has come to corrupt certain values, Sandel does not call for a kind of de-evolution. This is not about nostalgia. We have never really embraced this virtue, he claims (e.g. the re-

spect of the environment), and capitalism takes us even further away from it. There is no need to return to any kind of golden age (the simplistic ‘it was better before’). What is at stake here is simply to identify the values, in concurrence with capitalism, that we want to reaffirm. Furthermore, for the philosopher, Man is not good to the point that if he would ponder, he would necessarily come up to an ultimate understanding of values. Man has created institutions and systems of values that are for some good, for some less so. And if we now start to question them, Sandel does not reckon that one society

stressed the fact that levying taxes for this was a violation of the taxpayers’ freedom to make use of his duly earned money. But the real criticism would have had to be the following: we have a shared moral obligation, and we have to ensure that no one suffers from health problems just because he does not have the means to go to see a doctor. This is an argument about civic virtue. No wonder, Sandel argues, that the obamacare, with all its technical superficiality, had so much trouble to be passed. It was not addressing fundamental issues, but merely attempted to ‘fix’ some inefficiencies.

“Markets are not neutral towards value, and economics itself is not a neutral (yet how often praised!) science of human behaviours and social choices” will eventually find out the best answer. But questioning what we take for granted is nevertheless the imperative prerequisite for getting a democratic citizenship of better quality. We should ought to determine where the market serves the common good and where it harms it, even though there is not any guarantee to this debate. However, Sandel predicts, if the public discourse is as empty and superficial as the one that we encounter in most democracies today, if we cling to public discourses of a technocratic or purely managerial type; in this case, it is quite obvious that democracy will only but keep sinking like today. To show how pervasive the market logic is within the public discourse, the professor points out the rampant use of the neologism ‘incentivise’ by politicians, which conveys a comprehension of the world through the economic lens. The obamacare, for example, is a policy of economic inducement. What Obama has tried to do is encourage hospitals to provide better services by orientating the whole healthcare system towards a market-based attitude: hospitals receive some bonuses if the patients they treat are healed right away and need not to be readmitted. Yet for Sandel, this is a purely technocratic position. It fails to consider the deeper, moral issue, that is: ‘What are our obligations to one another as fellow citizens? Do healthcare services have to be distributed according to one has in its wallet, or according to his medical need?’ Fervent opponents to this reform

In the same time, trying to reintegrate moral within this kind of discourses might sound like a doomed enterprise. Indeed, a technocratic political speech is certainly more concrete, more realistic, actually, more pragmatic. It is also less dangerous than could be the imposition of a monolithic set of values, by some despotic power. However, Sandel points that this same technocratic language has brought us to an impasse: people are frustrated by the growing disconnection between political decisions and their reality. It has lead to a great insatisfaction/ disaffection towards politics because, instead of providing us any guidance to ethical matters, common good, the meaning of citizenship, etc, it legislates like mad on complex, daunting issues. People have the feeling they have been dispossessed form matters of general interest, that technocrats told them they where too stupid to understand, that they should not engage a substantive discussion, and this is a pressing phenomenon in occidental democracies. You might think that this is quite a harsh attack towards capitalism. I agree it is. Can we really blame the markets for all the vicissitudes of our society, for the disinvestment of people in democracy and for the rise of populism? For Sandel, our market economy is not inherently bad. Rather, our problems all stem from our assumption that markets are neutral with regard to value. We tend to rely on markets, not because we think they dispense goods and allow for growth, rather because we con-

Populists on the Rise vince ourselves that since they are neutral agents, they can decide instead of us on important matters. We have delegated too much of our critical duty to these markets, but it more and more evident that this blind faith is erroneous, and that we need to overcome it. Markets are not neutral towards value, and economics itself is not a neutral (yet how often praised!) science of human behaviours and social choices. In the classical origins economic reflexion, whether it is Adam Smith or Karl Marx, despite their tremendous ideological divergence, both share the understanding that economics is not a neutral science, it is not a discipline more objective than the others, floating bubble; on the contrary, it is a branch of social and moral philosophy. It is our task now, not to try to ease our mind and keep our conscience clear has we have done in the past, but to ravive this precious link between economics and ethics. And if we can generate a public discourse of good quality, perhaps in the end will we arrive to seize what good life means.

The ECU’nomist, December 2016

Does the economy matter anymore? Understanding Authoritarianism in the Wake of the Brexit Vote. Haydn Wiles

YEAR AND A MONTH BEFORE THE BREXIT VOTE, in one of the most dramatic nights in British electoral history, the UK elected the Conservative government that would deliver the referendum. Most analysts agree that the main reason the opposition lost was that they simply weren’t trusted with the economy. Former Prime Minister David Cameron spent weeks on the campaign trail emphasising that Labour ‘had been the party who crashed the economy’ and the Conservatives were the ones with the ‘long-term economic plan.’ It was a message reminiscent of Bill Clinton’s ‘It’s the economy, stupid’ coined by his campaign manager James Carville for the 1992 election, and this message; that the continuation of the UK’s fragile recovery following the 2009 financial crisis, depended upon voters returning the Conservatives to power, ultimately won Cameron his surprising parliamentary majority.

So if the economy was so important to British voters a year ago, that they’d reelect an unpopular government, why did many of the same voters decide to leave the European Union, when they were told that doing so would jeopardise the recovery? Was it simply that the British public were ‘sick and tired of hearing from experts’ like Leave campaigner Michael Gove suggested? The story of Brexit is one that, unfortunately cannot be explained simply, and will be discussed for years in the future. Many have already tried to explain Brexit as a protest vote by those who felt left behind by globalisation, a regional divide while others have argued it’s generational, with the old voting to leave and the young voting to remain. These theories go some way to explain the result but to get right to the heart of the Leave-Remain divide, we can look at, what was up until now, a niche field of political science; authoritarianism. You may be familiar with the term authoritarianism, it is, somewhat incorrectly used synonymously with ‘dictatorship.’ In this case, authoritarianism

Transatlantic parrallels? Nigel Farage campaigns with Donald Trump, Jackson, MI, 24th of August 2016

Populists on the Rise

The ECU’nomist, December 2016 is a term that political scientists use for a worldview that values order and authority and, distrusts outsiders and social change. To understand the way it is changing our world, we must first understand that this issue is not just confined to the UK or Europe. Canadian psychologist Bob Altemeyer pioneered this research in his book Right-Wing Authoritarianism in the 1970s, and it’s now being used by American political scientists to explain the Trump phenomenon. So just what do authoritarian’s believe and how far can this concept be applied to Brexit?

“[Authoritarianism] can go a long way to explain how, in a normal election voters might be focused on the economy, and elect the party that they identify as the most likely to manage fiscal policy effectively, however in a referendum, they can be more likely to support a choice which seems counterintuitive to their desire for economic stability.” According to Altemeyer’s research, authoritarianism is defined by three attitudinal and behavioural clusters which correlate together: Authoritarian submission; in which an individual exerts a high degree of submission to authorities who are perceived to be legitimate, authoritarian aggression; in which an individual exhibits a general aggressiveness against outsiders and, conventionalism; where an individual exhibits a high degree of adherence to tradition or social norms. The key takeaway from this is that authoritarians fear change more than your average voter, and in response to this they seek the imposition of order, and hence will turn to candidates or options that in their mind will restore said order, even if they seem somewhat extreme and regardless of where these candidates fall on the

left-right political spectrum. Generally this means that authoritarians tend to support policies like reducing immigration or prioritising safety over civil liberties. So just how well can this be applied to the UK? Well, academics at the University of Exeter analysed data from a number of YouGov polls ranging from 2011 - 2015, and found that roughly half of the UK population exhibits authoritarian views, a figure disturbingly close to the tense 52-48 majority that decided the referendum. Similarly, Eric Kaufmann, Professor of Politics at Birbeck College, University of London found, by analysing a 2015 survey, a strong correlation between those who intended to vote for Brexit and those who support traditionally authoritarian measures like the death penalty. In an article published by the London School of Economics’ political blog he wrote: “Brexit voters, like Trump supporters, are motivated by identity, not economics. Age, education, national identity and ethnicity are more important than income or occupation. But to get to the nub of the divide, we need to go even deeper, to the level of attitudes and personality.” Looking at voters this way, can seem a little too easy but I’m not simply labelling half of the UK as ‘authoritarian’ and claiming this is the sole reason for the UK’s decision to leave. To understand how this can be applied, however, we need to understand one final point about the theory of authoritarianism itself; that psychologists believe it can be dormant until it is ‘triggered’ in individuals by rapid change that induces greater insecurity. This implies that where a large degree of social change occurs in a country, for example, an increase in immigration or where minority groups are the focus of affirmative action, authoritarians can be triggered, and their normal voting preferences can change inexplicably. This can go a long way to explain how, in a normal election voters might be focused on the economy, and elect the party that they identify as the most likely to manage fiscal policy effectively, however in a referendum, they can be more likely to support a choice which seems counterintuitive to their desire for economic stability. Now this may seem odd. Surely leaving the EU constitutes a massive societal change for the UK, the kind of change that authoritarians tend to react negatively to? To an outside observer this may seem

to be the case, but to understand why not, you have to bear in mind 2 factors: one, the UK’s, often strained, relationship with the EU and two, the British media’s hostility to the EU. If you take the view that Britain was never fully onboard with European integration, you can understand why authoritarians voted the way they did. Waves of immigration and societal change have increasingly triggered reactionary attitudes in the UK, regardless of whether or not British citizens have been effected by this (or whether they simply believe they have been, because of what they’ve read in right-wing tabloids.) It’s not that leave voters truly believed that the UK was more likely to prosper outside of the EU, it’s that they were voting against what they perceived to be 40 years of social change. It’s about identity, not economics. By analysing the Brexit story as a story about identity and psychology we can better understand just what motivated citizens to vote to leave, despite the dire economic warning signs. Even as the pound plummets to new lows, in the UK, there is a sense of smugness among the victors, despite the fact that their groceries cost more. In truth then, the economy does mater, but it is more of a subjective issue than we previously believed it to be. Voters with authoritarian attitudes will prioritise national order over economic issues, when triggered by social change. To confine this to the UK though, is to miss the point being made. I have already mentioned how aptly this once neglected field is being applied to the Trump phenomenon in the US, while in Asia demagogues like Rodrigo Duerte explain away the unpleasant with the involvement of the ‘foreign hand.’ It used to be that the key to winning an election was proving you were capable of managing the economy, but findings like these signal dire consequences for politicians who focus merely on economics to the exclusion of the more uncomfortable aspects of the electoral psyche.

World

The ECU’nomist, December 2016

The Twilight of Hollywood Linda Kunertova

IVING IN A HIGH-TECH WORLD overloaded with unlimited information and resources shapes the way we learn, see the world around us, date and think. It becomes harder and harder to distinguish whether it is us who define the social media age or if it is the social media that defines us. Think of the last time you watched a movie. Was it yesterday night, two days ago or last Sunday? Now think of the last time you went to watch a movie in the cinema. Huh? Months? The Internet era has replaced and formed many of our habits and movie-going is undeniably one of them. To find a movie or series in fairly good quality to watch online is just as easy as swiping right or left. No investment needed, within few clicks anyone can full-screen the latest Jason Bourne movie in comfort of their home. Even though movie downloads, online watching or streaming are still phenomena mainly characteristic for our younger generation and don’t necessarily reflect the aggregate behaviour of the population, it has already made an impact on the movie industry so severe that we might soon be witnessing a collapse of the traditional box-office scheme as we know

it. It has been known for long that the golden age of cinema is far-gone. In 1940, 80% of households in the U.S. went to cinema each week, barely comparable to today’s 5%. But with the recent rise of quality

TV, the “big six” Hollywood studios are suffering from lousy film profits more than ever. In 2012, Time Warner revenues from film saw only a 20% increase, while company’s TV production went up by more than 84%. Even though the rates keep following the decreasing trend by each passing year and continue hurting the profits, it is not the main issue. MPAA, Motion Picture Association of America, reports less than 10 percent of their income comes from selling movie tickets. Film studios do not make most money on box-office performance, but on subsequent DVD and Blu-ray sales, pay-per-view or cable channels. Also, facing higher costs of making films, the big studios cannot afford any losses and thus rather focus on investing huge budgets in corny blockbuster movies, reboots and sequels that don’t offer anything new for the audience in terms of creativity, but translate into certain earnings for the producers. As a result, only rarely can we see in theatres a truly good story with smart dialogues that would not make us regret the money we spent on the ticket.

The ECU’nomist, December 2016 himself, Stephen King.

Even the most optimistic prospects say that the future of film industry is at best gloomy. Streaming services and TV productions are taking over the market and popularity of digital networks such as Netflix, Amazon Instant Video or HBO is growing exponentially. According to PricewaterhouseCoopers, the digital segment will in two years become the main source of the whole industry’s revenues. The key to networks’ radiant success is however very obvious. Gradual downfall of Hollywood’s standard created an important niche market, a group of people desperately craving revolution in entertainment. It did not take long until HBO producers saw this opportunity and attempted to answer. The result was latetwentieth century series The Sopranos, pioneer of today’s quality TV. This crime drama show featuring, possibly the first TV antihero ever, Tony Soprano and his struggles to balance family life with running a criminal organization set bars for subsequent television drama shows so high that it still considered the best quality TV series ever made. Since then HBO has become one of the leading TV productions focused on targeting the niche audience, soon followed by others. The true revolution however came with the emergence of Netflix. Netflix with its easy-to-use and relatively affordable content inverted all existing paradigms in the field. We don’t buy, we stream. It is easier, it is cheaper, it is legal. The quality of its own production is comparable (if not better) to any other professional studio and has reached the absolute top this summer with the release of Stranger Things, a mysterious drama show that got highly praised by the master of science fiction

As producers succeeded to recognize that good ratings are crucial for the picture’s survival, it is the originality and quality of the script that plays the key role. Furthermore, they started attracting sound names in order to build a good reputation and solid fan base. Once a medium that movie elites looked down to, today TV represents a lucrative field that offers relatively big budgets and, more importantly, almost unlimited creative freedom. David Lynch with his recent statement ‘’Cable television is the new arthouse,’’ defined the new era of entertainment by saying something unprecedented, especially when looking back to times when no intellectual would dare to own cable TV at home. It is not surprising that more and more famous movie talents start abandoning Hollywood and switch to TV or digital network productions where they can work more freely, counting Woody Allen (Crisis

happened. The digital entertainment market is blooming and the genre fatigue of the languishing movie industry is more than compensated by brilliant and extraordinary shows like The Wire (2008), Black Mirror (2011) or Mr. Robot (2015). It is a vicious cycle. The further Hollywood gets from making original and cutting-edge pictures, the stronger grows the demand for a high-quality content to which TV and streaming companies respond quickly and the traditional concept of film decays. The movie industry should stop blaming it on the fault in their stars (or maybe yes) and take measures, because soon enough, The Academy Awards might have no pictures to award.

in Six Scenes, 2016), Martin Scorcese (Vinyl, 2016), David Fincher (House of Cards, 2013). It is a win-win situation from which both directors and producers benefit. Compared to Hollywood studios where nowadays even the most influential figures of cinematography such as Steven Spielberg have difficulties with getting their pictures funded, in television and networks opportunities are almost limitless. From a consumer’s point of view, it could be the best thing that has

University Life Exchange Article

10 Things I Discovered in Sweden Fenna van Selm

AM WRITING THIS FROM COLD AND DARK SWEDEN. In two hours, three of my Dutch friends will land at Copenhagen airport and during the next few days I will show them around in Lund, my home for this semester. Now halfway in my exchange, I’m taking some time to reflect. Where the first week didn’t seem to have an end, because there was so much to see and do and wonder about, the weeks and months now seem to fly away and almost without realising it, I’m already done with my first two courses. My feelings about this are ambiguous. I look forward to January, for it means seeing the Dom tower again (no joke, yesterday I dreamt about the Dom tower) – and of course everything and everyone else I love in Utrecht. Oh, and Dutch cheese. On the other hand though, the pace with which my time here is flying away scares me, because I still have so much I want to see and do. As a (probably) wise person has told me: “once your home has been in more than one place, you will never be completely home again.” Well, I know that Lund is definitely one of my homes now. I have learned several life lessons here, with varying importance. Since we students love transferring knowledge, I will now share some of them with you:

1. Fika is the best thing ever (and we should definitely all

include it in our vocabulary!) The swedes are known for loving fika. It’s amazing because it combines “gezelligheid” with coffee and something sweet. It’s social and you can have it at any time of day (and it’s a totally accepted excuse if you just want a break from work or studying).

2.Swedish people in traffic are so…NICE. (and secretly it’s

really annoying) Coming from Utrecht, I usually ride my bike assuming that everyone else on the road is in a hurry and wouldn’t care if they ran over me. Going to Sweden meant a pretty big culture shock; everyone stops for each other. The cars pause even if I’m not trying to cross the road. As I am perpetually in a hurry, I get really annoyed if we have this “I stop for you” “I stop too” “you go” “no you go” “just go” “really? No you can go” - waste of time.

The ECU’nomist, December 2016

3. Don’t try to eat pizza in Sweden. Two words: garlic sauce. On pizza. Massive amounts.

Government regulations about minimum student room size really are quite nice Lund has the same shortage of student rooms that we know in Utrecht and Amsterdam, however here that does not mean that the rooms are 6m2 and cost a kidney, since there are laws about the minimum size of rooms. And they are not parsimonious; at least 20m2.

5. The whole stereotype about Swedish people being socially

awkward is absolutely true (when they’re sober at least) And before you ask it: yes, they stick to the 4-meter-personalspace rule when waiting for the bus, and yes, I do that too now. “Oh, somebody is waiting inside the bus stop? Better go stand outside of it, even if it rains.” I must admit though, that at parties Swedish people are really easy to befriend, and if you have managed to break through their walls, they go all-in for the friendship.

6. I never expected it, but I miss blackboard and course

manuals and professors who actually answer their e-mails within two days

7. I understand why my foreign friends in Utrecht don’t speak

Dutch yet It’s pretty hard trying to learn and practice a language when everyone around you speaks perfect English and is eager to do so.

An all-student town has its perks… It feels like living in a kingdom of students, where rarely a day goes by where I don’t meet somebody dressed up as a unicorn.

…but also its disadvantages It’s hard to find things that are not student-related. Luckily however, Malmö and Copenhagen are within a stone’s throw, if I want to see some different faces for once.

10. My last life lesson is going to be an awful cliché: take

chances when they show themselves, and get out of your comfort zone. Diving in the deep like this is already one of the best things I have done, and I still have more than two months ahead of me.

SKÅLL!

University Life

The ECU’nomist, December 2016

more professionalization, something that we are working on at the moment. This year all our members will have a training day, something that we are doing for the first time. In this way all members should get sufficient knowledge on the laws that are relevant to the DPC and in addition our meetings should become more effective.

What have been recent changes at U.S.E. that the DPC helped initiate?

University Life

The Degree Programme Committee

Interview with Annette van den Berg and Joost Gadellaa

ECU’nomist sat down with Annette van den Berg and Joost Gadellaa, chair and student representative of the degree programme committee at U.S.E. respectively, to discuss its function and added value within the studies. he

What is the DPC and what does it do?

The DPC is U.S.E.’s participation body. As required by Dutch law one half of its members are students and one half are teachers. We gather 10-12 times per year and have an advisory function to the director of education. The student representatives, eight in total, are the eyes and ears of the council and are selected so as to represent a broad spectrum of the studies, with at least one student from every year being a member.

What is the DPC currently working on to improve education at U.S.E.?

This year the restructured master programmes have started for the first time at U.S.E. Whereas in earlier years each master course had a value of 7,5 ECTS, nowadays each course is only worth 5. This means new master students have to take three courses per period instead of two. This transition was not as smooth as we initially hoped. The DPC is currently investigating if the total workload

for master students has not increased excessively. It might also be the case that students are simply not sufficiently prepared to handle the workload, so we are also looking into that. In the bachelor, we are currently scrutinizing the approved optional minors. Some students have indicated that certain minor courses are too easy or have too much overlap with other courses in the bachelor programmes. We compare students’ complaints with course evaluations too see if the problem is structural. If we find out that the complaints are indeed warranted, we construct an advice and hope the faculty will follow it. Also, each year in March, we give our opinion on all course descriptions of the following year. Comments for alterations that we make are usually adopted, therefore courses are improved before they have even started and the DPC is able to prevent complaints.

Does the DPC itself has any voting right in these matters?

At the moment not, but by next year the law will change. If that happens the DPC gets more rights, one of them being a veto vote on education and exam regulations. Politicians want programme committees to get more power so students can participate more in faculty policy. They also want

Changes are always made in collaboration with different bodies within the faculty, but of course the DPC sees some of its advices transformed into actual policy. Most of DPC’s achievements are related to the courses, education or facilities at U.S.E. For example, a few years ago, students were very happy that opening hours of the buildings were extended. We also push forth good practices that we see happening. A good initiative we have spotted, for example, is the introduction of a student panel in courses. These student panels sit together periodically with the coordinator or lecturer of the course and can therefore give direct feedback during the period that the course is taught. In this way, some weak points can be improved immediately while the course is still running . We consider these student panels a success and will definitely advocate that they will be introduced in more courses.

How can students reach the DPC?

If students have an issue they want to raise they can contact the representative of their year (see box), or send an e-mail to dpc. use@uu.nl.

Who is your DPC representative? Bachelor DPC 1st year: Ruben Tuithof

Bachelor DPC 2nd year: Filippo Martini

Bachelor DPC 2nd year: Joost Gadellaa

Bachelor DPC 3rd year: Bojken Gjoleka

Master DPC (IM/BDE): Jakob Selinger

Master DPC (EP):

Adriaan van Velthoven

Master DPC (L&E): Jesper Ots

Master DPC (BF/FM): Duco Dekker

The ECUâ&#x20AC;&#x2122;nomist, December 2016

The ECU’nomist, December 2016

WITH ECU’92 LUSTRUM

The ECUâ&#x20AC;&#x2122;nomist, December 2016

Jouw studievereniging wil het je zo voordelig en makkelijk mogelijk maken. Dus hebben ze een boekenleverancier die daarbij past.

Bezoek ons op studystore.nl