Posted by: Dirk | September 27, 2012

Cultural Learnings of Europe for Make Benefit Glorious European Union

The European Commission has launched a ‘new strategy to boost growth and jobs in cultural and creative sectors‘, according to this press release from yesterday. This is what it is about:

According to the 2010 European Competitiveness Report and other sources, the cultural and creative sectors account for between 3.3% and 4.5% of GDP and employ between 7 and 8.5 million people. Evidence collected at European, national, regional and local levels confirms the economic importance of the sectors, which have shown a relative resilience in the current economic downturn.

Independent research has shown that firms spending twice the average amount on creative inputs are 25% more likely to introduce product innovations. Other spin-offs include a positive impact on tourism, fashion and high-end industries as well as traditional manufacturing industries.

I find this very weird.  Surely, there are many jobs cultural and creative sectors. The last paragraph says that spending more on creative inputs increases the likelihood of product innovations. So? What should follow from this insight is not clear to me. Clearly, firms that spend more money on research and development (R&D) have a higher likelihood of innovating. And that should lead the European Commission to do exactly what?

At a time when austerity forces countries to cut down culture budgets at all levels, why should the European Commission jump in? Nevertheless, in their key document they realize that ‘access to finance remains a major difficulty: the banking sector does not have the necessary expertise to analyze business models in these sectors and does not adequately value their intangible assets‘. The solution is, of course, the following:

Improving access to finance

[..] Therefore, financial institutions need to increase their awareness of the economic potential of these sectors and develop their capacity to assess businesses relying on intangible assets. In parallel, entrepreneurs in these sectors should be helped in better understanding the requirements of business planning and allocation of funds to finance their activities and growth.

Well, there is more advice, like this:

Cultural and arts institutions and services need to strengthen their audience development capacity, seize new opportunities (in particular across borders), and respond to changes audience behaviour and expectations.

I’m not convinced. The strategy is part of the EU’s 2020 strategy, which it describes in the following terms:

Europe 2020 is the EU’s growth strategy for the coming decade.
In a changing world, we want the EU to become a smart, sustainable and inclusive economy. These three mutually reinforcing priorities should help the EU and the Member States deliver high levels of employment, productivity and social cohesion.

Concretely, the Union has set five ambitious objectives – on employment, innovation, education, social inclusion and climate/energy – to be reached by 2020. Each Member State has adopted its own national targets in each of these areas. Concrete actions at EU and national levels underpin the strategy.

Europe has a problem. Political reality and the European vision do not fit. The European economy has, with the policies of the last decade, become (more) dumb, unsustainable and exclusive, instead of smart, sustainable and inclusive. Investment booms in Spain and Ireland were neutralized in terms of inflationary impulse by the wage restriction in Germany, leading to the build-up of an unsustainable debt structure. When this was understood, the bail-outs of banks shielded the responsible actors, while the poor are those hardest hit by reform after reform. Adjustment in the form of austerity programmes only takes place in the deficit countries, while Germany is shirking her responsibility. This widens the income inequality inside the EU, too.

Unemployment now stands at a record 11.3%, according to Eurostat. Innovation can’t happen since investment is not forthcoming, even with record low levels of the ECB’s interest rate. Education can’t happen while we have something like 50% youth unemployment in Spain. Social inclusion with those record unemployment numbers is impossible. Climate/energy seems to drop from European conversations, too.

There are many problems that Europe are facing. Trust in the ability to solve their own problems is probably key to recovery. Many fields are now open where solutions are badly needed, beginning with the euro crisis and then tackling middle and longer term concerns like education and climate change. Although things are bad, the upside is that Europe’s problems are completely European. Hence we can solve them.

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Responses

  1. Are they trying to solve the “paradox of productivity”? http://blogs.hbr.org/cs/2011/11/americas_productivity_paradox.html

    • That Harvard Business Review article is old (Marxist!) wine in a new bottle. The author writes: “We all love the shiny new products that make our lives easier — and the new methods of doing business that help us earn more — but those same technological and business innovations come at the expense of jobs.” Here is the original: “The instrument of labour, when it takes the form of a machine, immediately becomes a competitor of the workman himself. The self-expansion of capital by means of machinery is thenceforward directly proportional to the number of the workpeople, whose means of livelihood have been destroyed by that machinery.” I beg to differ.

  2. European optimism well explained. But recently we read that Spain because of internal financial problems is likely to be split into parts.


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