They've Got It Sorted

Recently we were enjoying a delicious seafood lunch at a small harbour on the south coast of Brittany when I overheard a comment from a near-by British couple that just about summed up the wonderful, confusing contradiction of France.

In between slurping a dozen fresh oysters, munching a bit of duck paté and sipping a lovely white wine from the Loire valley the husband leaned back contentedly and pronounced to his wife, “You know, love, despite all their hang-ups the Frogs have got it (life) sorted.”


Seafood restaurant in Brittany

The minute you drive off the train that takes you under the English Channel and head south from Calais there is an indefinable sense that you are in a place where the quality of life is pretty good. Yes, the French economy is barely sputtering and the banks are in precarious shape. Yes, the welfare state model is near collapse. Yes, the maddening, sclerotic bureaucracy drives entrepreneurs out of the country. Yes, French politicians are exasperatingly hypocritical and often exaggerate their role in the world. And yes, French politics may be the last place in the world where definitions like ‘left’ and ‘right’ are actually taken seriously as terms of political debate. I keep waiting, vainly, for someone actually to define those terms in the modern political context.

But, and it is a very big but, somehow the quality of ordinary, everyday life continues at a very high level. And you don't have to be a hedge fund manager to enjoy it. Health care is good. A very good friend in London wound up taking her child to Paris for successful non-surgical treatment after doctors in Britain deemed the condition untreatable without major, risky surgery. The roads are much better than anything I have seen in the United States or the rest of Europe, and they are not blighted by huge billboards that only block whatever good scenery exists. The cultural life is rich and, unlike much of London, affordable. You don’t have to take out a second mortgage to go to a concert. The trains are the envy of the US and the rest of Europe. London – Paris is now just over two hours on the Eurostar. And it is just a few hours on the TGV (Trés Grande Vitesse) from Paris to any other city in France.

I used to get annoyed at the French attitude toward their outsized slice of the enormous European agriculture subsidies. Ignoring for a moment that much of the subsidy goes to large industrial farms, French officials would say that they are protecting a way of life that is central to France. One can almost hear 18th century theorists praising the noble agricultural life style over the supposed evils of commerce and, God forbid, manufacturing.

But the more I travel around rural France and spend time at local food markets the more I begin to think the French have a point. Of course France, like just about any country you visit these days, is filled with large supermarkets. But even theses giants have not displaced the local markets where the vast majority of the food on offer comes from less than 100 miles from the market. We were not far from Spain, but you can hear the locals comparing – unfavourably of course – the Spanish vegetables with their French counterparts. I used to complain about the inconvenience of the noon-time break when all the shops close for two hours. Now, I have begun to realize that kind of midday break is not such a bad thing. Maybe it's just because I'm older, but I no longer see the need to rush through the day. Take a little time and enjoy something besides work.


Just one of the selections in the Libourne market



Roof tops in historic St. Emilion

When you drive on secondary roads anywhere in la France profonde you see hundreds, if not thousands, of well tended farms producing everything from lavender to lamb. You are never far from a good local restaurant. Even if you have to travel the motorways you can find decent food in the stops along the way, and maps are available showing exactly what is available at each stop.

The qualitative aspects of life – food, drink, preservation of the countryside, national and local heritage, culture beyond Twitter -- remain central to one’s everyday life. Despite the real pleasure of this everyday life, you have to wonder if this way of life is sustainable in today’s economic environment. It’s not clear. Hundreds of thousands of young French people have moved across the channel to London where they believe the conditions are better for getting a job or creating something from scratch. Just walk around South Kensington and you quickly get the impression you’re in the 5th Arrondissement of Paris. French leaders may moan and groan about the perceived evils of the free-wheeling, often chaotic and cruel ‘Anglo-Saxon’ economic model, but many of their best and brightest young people clearly find it more appealing than what is available in France where bureaucracy can stifle even the most energetic entrepreneur.

In their drive to shift the French economy out of first gear, I only hope the leaders of that simultaneously wonderful and puzzling country do not sacrifice the very quality of life that makes France so unique.

The Joy Of The Harvest

Everyone holds his breath while the expert gently and painstakingly chews the grape. Does it have just the right amount of sugar? Are the tannins tasted in the pips and skins developed to just the right level? As the expert chews slowly, looking to see how long the astringency of the pips stays on the tongue, heads bob up and down almost in time with each chew.


Finally the verdict is in. “Let the vendange begin, NOW.” At that moment every friend the grower can find is called into duty to go carefully down each row snipping off bunches of the plump, deep purple grapes and dropping them into a bucket. As the buckets are filled, cries of “Porteur!” ring out and burly young men go down the rows emptying the buckets into large containers that are in turn emptied into machines that pump the grapes into the fermentation vats.

This goes on for most of the morning and then the assembled workers repair to the garden for a good sized lunch accompanied by copious amounts of wine and followed by several varieties of sweets. Needless to say production in the afternoon falls off just a bit.

We joined our friends Joep and Mireille Bakx and their daughter Audrey on their vineyard Clos Monicord in the small town of Verac, just east of Bordeaux for the last part of the vendange late in September. Last spring we spent almost two months there doing the basic agriculture to prepare the vines for the growing season. It was rewarding to see that all the pruned vines fastened carefully to new wires, supported by new stakes driven deep into the rich Gironde soil, had grown steadily and now were filled rich bunches of merlot, cabernet sauvignon, cabernet franc, and malbec grapes. Having spent so long last spring pulling the thick, pruned vines out of the wires I must admit to a slightly jaundiced view of the lush new growth. All I could think of was the mammoth task of pruning, stripping and fastening the pruned shoots waiting for us in about five months time.



Joep with a healthy bunch of merlot grapes

The weather had been unsettled for much of September, but the last week of September and the first week of October saw nothing but sunshine and summer-like warmth. Perfect for the harvest. While friends and family can be relied upon to pick the grapes in the small one-hectare plot, the remaining 25 – 30 hectares (about 65 acres) require a machine to gather the grapes. Once picked the grapes are pushed onto a conveyor belt where we would pick out extraneous leaves or twigs. We were assisted on this task by our friends Frank and Sunny Velie who joined us from New York. From the conveyor belt the grapes are fed into the 10,000-liter vats for the all-important fermentation.



Audrey and Mariella sorting the grapes

This is one of the key areas where the skill of the wine maker comes into play. How much yeast do you add to convert the sugar into alcohol? How rapidly is the juice extracted from the must, how much oxygen is allowed into the process, what is the temperature of the juice in the vat, what is the density of the must? How many times and at what speed do you circulate (pump out and then pump back in) the juice in the vats?

The answers to these questions depend largely on the taste that the wine maker is trying to achieve. It’s difficult to say there is only one way to make wine. Neighboring vineyards with almost identical terroir and grapes can produce very different wines depending on the preferences of the wine maker. What particular flavor is he looking for? How much tannin (a natural compound giving the wine a more astringent taste), how fruity, how ‘round’, and how much of the all-important ‘structure’ or ‘body’ is the wine maker trying to achieve?

Once the fermentation is completed, in about three weeks, most of the red wines in Bordeaux are placed in 225-liter barrels made from French oak where they will mature for a couple of years. The second fermentation, the malolactic fermentation takes place naturally in the barrels as the temperature rises and the acidic malic acid is converted into the softer, rounder lactic acid. The oak flavor found in so many wines can be somewhat regulated by the amount that the barrels are scorched – heavy, medium or light.

If the whole process from the basic agriculture to the harvesting to the fermentation to the maturing, to the bottling and, ultimately, the marketing sounds like a great deal of work, it is. This is one of the reasons why so many growers in Bordeaux are getting out of the business or relying simply on selling their grapes or bulk wine. Marketing now requires a global approach, and Joep travels frequently all over Europe and Asia introducing his wine to new customers. Each country has different regulations on importing wine, and the paperwork can mount rapidly. Owning and running a vineyard is definitely not a hobby or something to 'mess around' with in one’s retirement. It’s a full time job, and then some.

However, we the consumers can benefit from the number of smaller vineyards run by people like Joep dedicated to the art of making very good wine. We also benefit because many of these vineyards are not in the well defined regions called appellations where the prices can sky-rocket according to the reputation of the appellation in general rather than the quality of the individual wine. All it requires is a bit of pleasant experimentation to find the wine that fits your own taste. And you can do this without breaking the budget.

What Is The Real Cost Of That Chinese T-Shirt?

I’ve had it! I’m going on strike! I refuse to wear another garment or footwear made in China. No more! Clothing shops in Europe and the United States are filled with nothing except products made in China. Only with great difficulty and perseverance can I find anything that is made within 500 miles of where I bought it. The iconic American outdoor gear shop L.L. Bean may as well be in downtown Beijing. I couldn’t find a single American made product the last time I was there. Time to take a stand.

Now, of course, I realize that this means I will probably go around barefoot wearing a barrel – assuming I can find locally made straps to hold the barrel up. It also means that I will have to give up most forms of modern communications: no cell phone, no television, no computer, and none of the other seemingly essential do-dads that take up so much of our time and isolate us so effectively from each other.

I should eat OK, but I’ll probably have to cook the food over a fire in some cave and resort to some primitive refrigeration system to keep things cool. On the plus side, I could still have a very good car.

I have nothing against the Chinese. They are industrious, hard working people trying desperately to correct the horrible economic mistakes of Mao’s regime in just a few short years. And they’ve got more than a billion people who have decades, if not centuries, of pent up demand.

The Chinese Are Not The Problem

My problem is the Western companies who labor under the illusion that we will all be better off  if they close factories in Europe and America, open them in China and export the theoretically cheaper products back home. However, there is a problem. Wages in China are rising rapidly. They still would not satisfy any worker in Europe or the US, but the direction is clearly up. Also working against the current wage differential is any potential re-valuation of the Chinese currency, the renminbi, against the US dollar. Such a revaluation would make Chinese products that much more expensive for American companies and consumers.

Unfortunately, the response to this change in China is not to move the factories home. The parent companies simply look for cheaper places like Bangladesh, Vietnam or Cambodia to set up shop – places that do not place too much importance on environmental damage, safety or child labor.

The biggest problem, however, is the dislocation in Western economies. Economists can talk all they like about globalization, productivity, and the constant need to improve technology. All of this is true, but it does not eliminate the real, and the very pressing problem created every time a local company In Ohio or France pulls up stakes and moves to China or another Asian country.

The lobbyists talk until they are blue in the face about how total jobs really aren’t lost because those manufacturing jobs are replaced by accountants, freight forwarders, retail clerks, etc. Tell that to a local mayor who has to close schools because his town’s tax base has just been eroded as the major employer closed down. A drive through once thriving places in the American Midwest or parts of Italy or France will demonstrate this devastation.

Unfortunately, there are no easy answers to this issue. One thing for sure is that the solution does  not lie in self-defeating protectionism. It is impossible simply to pull up the drawbridge  and shut out the world. That is bad politics and worse economics. Exporters in the US and Europe need to keep markets open.

Private Gains, Public Losses

But there should be some realization that the companies leaving one place for cheaper labor elsewhere are simply privatizing their gains and socializing their costs. Their own profit margins may indeed increase. But the costs for the rest of the taxpayers and ordinary citizens shoot up sharply. Who pays for whatever re-education is provided for the work force? Who makes up the loss of tax revenues? Who compensates the teachers, police and firefighters that have to be laid off? And, worst of all, who pays for the social upheaval, the desolation that follows such a move? These are real costs with real, unfavorable, consequences.

If a company wants to take advantage of lower wages, however fleeting those may be, let it go. The only way to prevent such a move is to introduce Chinese wages and working conditions into Michigan or Ohio. And I don’t think that is going to happen any time soon.

But there should be some recognition, some payment toward meeting the social costs that such a move entails. Corporations love to talk about having ‘multiple stakeholders,’ but unfortunately these so-called stakeholders never seem to include the communities they leave in the middle of the night.

Maybe the companies should include in their cost/benefit analyses the real costs of their move. Maybe they should help pay for the local consequences of their moves. Perhaps that move to a lower-wage country would look less attractive if the companies actually acted on their own ‘corporate responsibility’ public relations.

But most of all we the consumers need to re-think the real cost of the cheap Chinese garment. Are we really saving anything if our communities are destroyed and our friends and family unemployed? Are those lower prices at WalMart really worth the high long term costs involved? 

The Real Risk Of Leaving The Euro

The calls for Greece to default on its mountain range of debt and leave the Euro for the perceived safety of its native Drachma are growing louder. Nouriel Roubini’s column in The Financial Times gives several very good reasons why such a move would make sense for Greece. Roubini acknowledges that the extensive ‘collateral damage to Greece’ of leaving the eurozone, but says it can be contained.


Other analyses, however, verge on the ludicrous. Costas Lapavitsas, a professor SOAS and a member of Research on Money and Finance writing in The Guardian, recommends default and departure from the Euro because of the ‘errors’ of the organizations charged with giving Greece enough money to pay its bills.

“Greece is facing an economic and social disaster, the results of so-called rescue by the ‘troika’ of the EU, the International Monetary Fund, and the European Central Bank. Greece must change course to avoid a grim future for its people: it must default on its debt and exit the eurozone,” opines Lapavitsas.

Noticeably absent from his analysis is any recognition that the real culprit in the Greek tragedy is the very structure of Greek economic and political life over the last several decades. The international organizations he blames had nothing to do with the out-of-control political patronage, corruption, bloated state sector, stagnant economic structure, and unpunished tax evasion that brought the country to its knees. Undoubtedly the international organizations could have responded faster and more effectively, but it is risible to blame them for Greece’s sharp descent into the third division.

Collateral Damage

Roubini is right about the collateral damage to Greece if it leaves the Euro. Banks would probably have to be nationalized, there could well be a bank holiday for a few weeks while the drachma was re-introduced, inflation would soar, savings would be at risk, and the value of the drachma would drop like a stone.

Lapavitsas blithely says such a development would give Greek companies a chance to increase exports and recapture the domestic market. What is he talking about?! Perhaps he hasn’t noticed that the Greek industrial infrastructure has been eroded to the point of extinction. Every ounce of steel, every drop of oil, every car, every electronic product, much of its food is imported. What exactly does he think Greece will export? Most Greek companies rely heavily on imported raw materials and machinery. Exactly how are they going to pay for these with a rapidly depreciating Drachma?

Greece does have certain industries, like ship yards, that could benefit. But years of union intransigence and government incompetence have reduced this industry to a shadow of its former self.

Pressure For Reform Must Continue

But the real risk of returning to the Drachma is that it could remove the pressure on the political class to make the reforms necessary to put the Greek economy on the road to recovery. Right now, under the threat of bankruptcy, the ruling party in Greece is promising extensive reforms that should have been made decades ago. Opening up closed professions, shrinking the size of the state, selling state assets, collecting taxes are just some of the reforms agreed to because of the pressure of the very international organizations that Lapavitsas criticizes.

Make no mistake. These reforms are traumatic for the ruling PASOK party that blossomed on the back of a corrupt system of patronage. They spell the end of business as usual, and could mean the end of PASOK as a major party. Who is going to vote for them if they cannot deliver the jobs and pensions they used to pass out? No wonder several leading members of PASOK are resisting implementation of these reforms. The fact that this is the only way to create a sound economic basis in Greece is of little importance to them. The risk of losing their office far exceeds their knowledge of or concern about the economic well being of their country.

The only way they could continue business as usual is to remove the external pressure for reform by defaulting on Greece’s sovereign debt, declaring bankruptcy and returning to the drachma. With inflation and depreciation it could be much easier to retain the old habits that got them into this mess in the first place.

The likelihood of a Greek default increases with each passing day. The European Union is simply not able to respond quickly to anything, let alone the risk of a default by a member state. Something like that was not supposed to happen. But despite much flapping around with endless, conclusionless summit meetings Greece may be forced to default and leave the eurozone. Whether this is a disaster for Greece depends entirely on how it is done. If such a move is taken as an excuse to abandon all the reforms discussed so far the Greek economy will remain mired in deep recession without even the hope of growth. The benefits that Roubini discusses will be possible only if the difficult steps taken under duress continue when the immediate pressure is removed.

Good Theatre -- Bad Politics

The move by the Palestinian Authority unilaterally to declare a state is an understandable, theatrical, and ultimately self-defeating gesture. Understandable in the face of the combination of rigid Israeli intransigence and ignorance and cowardice on the part of the American political establishment. The Palestinians have always been good at political agitprop, and have often confused great coups on the global stage with real progress in the daily lives of struggling Palestinian citizens.


The gesture is self-defeating because it will only further alienate the Americans and make the job of potential allies in the United States much harder. The response to this problem may well be a resounding ‘So What? Exactly what have the Americans and Europeans done for us so far?’ True enough in that the Americans have actually come through with very little. Israel, confident in the support of a wilfully ignorant Congress, has safely ignored any American pressure for sincere negotiations with the Palestinians or even slowing down the construction of settlements on Palestinian land. No American administration, especially in an election year, is willing to challenge Congress and the powerful American Israel Political Action Committee (AIPAC) that does so much to misdirect American policy toward this issue. However, by embarrassing the Obama administration and forcing it use its veto in the Security Council to block the statehood claim, the Palestinian leadership has just made it even more difficult to get any, repeat any, support from the United States in the future. This move even could reduce what little funding the Palestinian Authority receives. Who will fund a group that just wants to rub your face in your own weakness?

Embarrassing Relative

But the main conclusion of this train-wreck is to demonstrate just how isolated Israel has become. Israel has so few friends that it will not be difficult for the Palestinian Authority to get the required votes in the General Assembly of the United Nations. Without the American veto the statehood claim would very likely pass the Security Council. How has Israeli gone from being the ‘plucky, valiant little country defending itself against the Arab hordes’ to the embarrassing relative everyone hopes will stay away from Thanksgiving.

Under the leadership of Benjamin Netanyahu and his combative foreign minister, Avigdor Lieberman, Israel has lost much of the support it used to enjoy. As Carlo Strenger, a professor at Tel Aviv University, notes in a column in The New York Times, Lieberman runs a small, right-wing hyper-nationalist party that keeps Netanyahu’s fractious coalition in power. His role model is not the liberal democracies of the West that he openly disdains. He looks to the autocrats of China and Russia as his role models. It was Lieberman who helped destroy Israel’s relations with Turkey by preventing Netanyahu from apologizing for the killing of nine Turkish citizens in the now-famous Mavi Marmara incident. Whatever, the rights and wrongs of that incident, a simple apology from Israel could have avoided a breakdown in the important relationship with Turkey.

Israel also lost badly when the autocrats in Egypt and Tunisia fell before the popular uprisings in Egypt and Tunisia. Those autocrats gave only lip service to the Palestinian cause, and Israel was left free to do what it wanted. The people now running Egypt take the Palestinian issue much more seriously. When the prime minister of Turkey visited Egypt he was greeted like a conquering hero because of his uncompromising stand against Israel. Israel seems unaware that the equation in the Middle East has changed dramatically.

Netanyahu is counting on the continued support of a clueless American Congress. But do these congressmen know or even care what kind of Israel they are supporting? Is it the Israeli myth so well propagated by AIPAC or the reality so evident to anyone who cares to look? American supporters of Israel should ask themselves if they really want the intolerant, illiberal, autocratic Israel of people like Avigdor Lieberman. Or do they want a country that honours its liberal traditions, recognizes it is actually part of the Middle East and works to end its isolation by sincerely dealing with its neighbours?

As Strenger notes, Netanyahu also believes that Obama will be defeated in 2012 and that he will have more luck essentially blackmailing a gullible Republican than a much more sceptical Democrat. If his calculations are wrong and Obama does indeed win a second term he could be in for a rough ride. In a second term Obama might actually act on some of the fine words about peace and dignity that he has spoken about.

So yes, the Palestinian claim to statehood will be good theatre but terrible real politik. But the real tragedy is the transformation of Israel into the very caricature of the implacable, intolerant, and aggressive country long feared and despised by its neighbours. One fears that the reaction of the current Israeli government to developments at the UN will be to rely even more on military power in an attempt to contain the Palestinian movement. This will be difficult.