Modern times on the Old Continent

In thirty years, the industry has lost two million jobs and trade balance moved from a surplus of three billion Euros in 2002 to a deficit of sixty seven billion Euros in 2012. During the same period, the share of industry in France's added value shrunk from 18% to 12.5%, putting France in the fifteenth position in the Euro zone.

During the last decades, we have seen a global trend and a financial lobby, mainly driven out of the United States and the United Kingdom, that have developed an extraordinarily powerful speculative activity around the globe. Much more money has been earned through hedge funds and fast trading than through financing the real economy. Basel III for banks and Sovency II for insurances are a supposed response, but their construct is such that the banks no longer have any interest in financing the economy, and insurance companies no longer have any interest to invest in shares!

We must end the regimes that give absolution priority to shareholders who are short-term focused with a speculative mindset. We must reinvent capitalism, transform shareholders into long-term stake-holders, avoid hedge funds and equivalent short-term speculative financial mouvements, and stop agressive take-overs and crawling controls that break down organisations, and, in fine, only pay for a fraction of their capital.

It is the industrial and energetic export that accounts for a country's foreign trade. Not its services export, and this holds true for the United States also. Japan, Korea, China, Germany, but also Switzerland, Sweden and Norway are showing the way. When looking at the added value distribution of Apple's iPad, 10% are for manufacturing in China, 15-20% are for software engineering in the United States, 30% are profit, 20% are for Japanese exports and 20% are for Korean exports... that's a bulky 40% industrial exports shared by Japan and Korea. And the bulk of industrial exports are done by the larger organisations — 60% in France.

The aforementioned countries are leading the way. By the governance they have setup to address consumer versus producer controversies, by their innovation frameworks to develop new businesses and by the social dialogue they have setup. The american primacy for startups is indisputable, starting with their university system and all the way through the management of new enterprises which is done by technologists and not by bankers.

In the Euro zone, Germany has been doing exactly this. When Germany decided to shut down its nuclear programme, in favour of Russian gas it was because they never really succeeded in setting up a nuclear programme (Siemens) — nor did the various attemps to build a joint Franco-German nuclear programme, and because, in the deal with the Russians, they obtained very strong guarantees on in-return purchase of their capital goods. Likewise, when they refused a European taxation on photovoltaic elements, it was because they never succeeded in kicking off a photovoltaic activity in Germany — Siemens and Bosch both tried and stopped, the latter disbursed two billion Euros in the programme, but also because they feared Chinese reprisals.

Germany's changing attitude can probably be traced back to after the crash of 2008 when, after the bankruptcy of Lehman Brothers, Angela Merkel declared that the virtual guarantee extended to other financial institutions should come from each country acting separately, not by Europe acting jointly breaking apart by this very statement the foundations of the Maastricht Treaty.

When looking at France, the Germans are terrified at the idea that if the Euro breaks, the Deutsche Mark would then rise significantly, the French Franc would be devaluated by an odd 30% and Germany would then be faced with cheaper industrial production capabilities at its very door, hindering their competitivity. This scenario being equally frightening for France in that is is doubtful whether it could compensate its industrial exports with its energy imports.

German authorities, notably the Bundesbank and the constitutional court, have started guarding against a breakup. As they do so, all other countries of the Euro zone will have to do so. While Mario Draghi may have saved the Euro last year, he as simply bought time. Time is not sufficient to handle the Euro zone problem. And this so long as the German authorities are dead set on enforcing laws that have been proved to be unworkable. "This has turned statutes that were meant to be stepping stones into immovable rocks that stand in the way of finding a solution".

Quoting Perry Mehrling (Professor of Economics, Barnard College, New York), we all face the same existential situation: the necessity to act under conditions of radical uncertainty. We must choose which fantastic objects to carry in our journey over the void and which we will leave behind as so much dead weight. We have to act. We have to place our bets.

Our discussion today is on choosing that fantastic object that will bridge the void into a better future. And to start this panel discussion I will propose a definition of a such fantastic object: a new European confederation, built on a liberal and financial model, with a balanced foreign exchange and focused on long term economical outcomes, that integrates the whole of Europe, with an established legislative and executive political power, and constructed from the grounds up as an open society.