Johnson Controls' headquarters moved from Mexico to Bratislava, Slovakia

BRATISLAVA. The manufacturer of components for the automotive industry, Johnson Controls will shift its financial headquarters in Bratislava.

Establishing headquarters will initially create about 130 new jobs to add to the 3000 the company already employs.

Slovakia was chosen because of the network effects that the presence of three car corporations in Slovakia create. The appealing cost savings the stability of the country, its proximity to other european capitals, and the euro being the legal tender in Slovakia no doubt helped make this decision. The Johnson Controls' financial headquarters in Mexico will be closed down ceding almost all competencies to Bratislava.

"This step will enable us to improve the level of service to internal and external customers, increase transparency and reduce costs," Johnson Controls spokeswoman for Europe, Astrid Schafmeisterová, said.

Johnson Controls in Slovakia is based in Bratislava, Lozorno, Lucenec, Martin, Namestovo and Zilina.

further reading:

About the company: Johnson Controls
Johnson Controls has expanded remarkably since Professor Warren Johnson founded the company to manufacture his invention, the electric room thermostat. Since its start in 1885, Johnson Controls has grown into a global leader in automotive parts. The company makes automotive interiors that help make driving more comfortable, safe and enjoyable.

For buildings, it offers products and services that optimize energy use and improve comfort and security.

Johnson Controls also provides batteries for automobiles and hybrid electric vehicles, along with systems engineering and service expertise.

Johnson Controls, Inc.
5757 N. Green Bay Avenue
P.O. Box 591
Milwaukee, WI 53201
(414) 524-1200

Stephen A. Roell, Chairman, President and Chief Executive Officer
R. Bruce McDonald, Executive Vice President and Chief Financial Officer

Employees Approximately 130,000 worldwide
History 1885 in Milwaukee, Wisconsin by Warren Seymour Johnson, inventor of the first electric room thermostat.
businesses Automotive Experience: Global leader in interior systems for light vehicles including passenger cars and light trucks. Systems supplied include seating, overhead, door, instrument panels, storage, electronics.

Power Solutions: World’s largest manufacturer of lead acid automotive batteries and developer of advanced battery chemistries. About 80% of batteries are sold through the automotive aftermarket and 20% are sold as original equipment.

Building Efficiency: Leading full-line service provider of mechanical equipment as well as systems that controlheating, ventilating, air conditioning (HVAC), lighting, security and fire management in non-residential buildings. Services include complete mechanical and electrical maintenance. World leader in integrated facility management for Fortune 500 companies, managing more than one billion square feet worldwide.

Stock Traded on the New York Stock Exchange under ticker symbol JCI

Michael Moore's theory on why TV and journalism and the media in general has dumbed down so much

New car produced in Slovakia the IX35

Some pictures of the new car produced in slovakia.

cars being tested have been spotted.

New central bank governor

The Slovak Cabinet on Wednesday agreed with the Finance Ministry proposal to nominate Jozef Makuch for the post of governor of the National Bank of Slovakia (NBS), the central bank of the Slovak Republic. After Parliament votes on the nomination, the current member of the NBS Bank Board will replace the incumbent central bank’s governor Ivan Sramko as of January 1, 2010. Mr. Sramko’s term in office is to expire on December 31.

On the face of it this is a normal change that until last year was mandatory (a central bank governor could not stay on more than one term). Except on an emotional level I am sad to see Ivan Sramko go, he was the architect of the euro accession on so many levels.

Irrespective of all that we must bear in mind that:
  1. The central bank governor of a country of 5.4 million in the eurozone does not hold much sway anymore ever since Slovakia joined the EURO. Policy is decided collectively in Frankfurt by the best policymakers old europe has to offer. It is now a less important post.

  2. The profile of the new central bank governor is quite distinguished and it is normal for power to rotate to reduce the chance of corruption.
My wish would be that Robert Fico would try to promote more people of a varied background with solid professional success rather than political faceless wonders. His government is displaying a passivity about dealing with long term issues.

The new man
Doc. Ing. Jozef Makuch, PhD. was born on 26 August 1953 in Podhajska, Slovakia.

In 1976 he graduated from the Faculty of National Economy of the University of Economics in Bratislava. Mr Makuch ended his post-graduate advanced studies in 1985 and was appointed Associate Professor in 1989.

In July 1976 he was a Loan Inspector in the Bratislava for the Czechoslovak State Bank. From 1978 he was Assistant Professor at the Chair of Finance at the Faculty of National Economy, University of Economics in Bratislava. In September 1989 he became Associate Professor at the same school. In the years 1991 to 1994 he was Dean of the Faculty of National Economy of the University of Economics. From January 1993 till December 1996 he was a Member of the Bank Board of the National Bank of Slovakia (NBS).

In February 1994 he was appointed Chief Executive Director of the Research Department of the NBS. In November 2000 he was appointed Chairman of the Financial Market Authority and from April 2002 to December 2005 he was the Chairman of the Board of the Financial Market Authority (FMA).

In the position of the Chairman of the FMA Council he was responsible for the management and coordination of the supervision over the capital market sectors, insurance and pension savings. He represents Slovakia in the Committee of European Securities Regulators (CESR). He is also a representative in international association of supervisory bodies in insurance (IAIS).

Mr Makuch's professional experience was complemented with further education in banking and currency policy, organized by international financial institutions (International Monetary Fund, World Bank) and foreign central banks. He himself has been a lecturer at several conferences in and outside Slovakia.

Jozef Makuch is a Member of the Scientific Board of the Faculty of National Economy of the University of Economics in Bratislava, a member of the Editing Board of the periodicals of Biatec, (Accounting, Auditing, Taxation) and the scientific periodical of the Faculty of Finance of the Matej Bel University. Mr.Makuch has published dozens of professional works - text books, monographs, research works, etc. both in and outside Slovakia.

He speaks English and has a passive knowledge of German and Russian.

Doc. Ing. Jozef Makuch, PhD. is married and has three children.

On 30 November 2005 the Government of the Slovak Republic appointed Mr Makuch a Member of the Bank Board of the National Bank of Slovakia, effective from 1 January 2006, from 1 February 2007 he is the Executive Director for Security and Premises.

George Soros’ “Capitalism versus Open Society”

This is about the conflict between capitalism and open society, or in other words a direct conflict between market values and social values.

George Soros has had a remarkable life, and has emerged a winner despite terrible odds of persecution for his ancestry (jewish) and the extreme financial dislocation war brought onto him at a very young age. Despite all this he managed to survive all this and emerge in London, educate himself at the London School of Economics, and then since 1956 make a whole new life and career in the USA, in which he triumphed as a multi-billionaire.

Communism failed because of the agency problem rather than the escalation of the cold war or Reagan.

In politics, Agents (e.g. parliamentarians) are supposed to represent the interests of their principals (the public), but in fact, they tend to put their own interests ahead of the interests of those whom they are supposed to represent. That is the agency problem. It has been extensively analyzed by economists, but they look at it exclusively in terms of contracts and incentives and they largely disregard questions of ethics and values. Yet if you leave out ethical considerations the problem becomes pretty well intractable. Values like honesty and integrity lose their grip on people’s behavior and people become increasingly motivated by economic incentives and those alone.

Markets are supposed to be guided by an invisible hand; that is what makes them so efficient. Participants need to exercise no moral judgments in reaching their buy and sell decisions because their actions are not supposed to have any visible influence on market prices.

In truth, the rules governing financial markets are decided by the visible hand of politicians and in a representative democracy politicians run into an agency problem.

Thus, the agency problem poses grave difficulties both for representative democracy and the market economy which cannot be resolved without an appeal to moral principles. That is how the agency problem has gained such prominence in my thinking. First, I will analyze the agency problem and then, I will deal with the conflict between capitalism and open society.

In analyzing the resource curse, I came to attribute great importance to what I called an asymmetric agency problem. According to the modern concept of sovereignty, the natural resources of a country belong to the people of that country, but governments, which are supposed to be agents of the people, put their own interests ahead of the interests of the people whom they are supposed to represent and engage in all sorts of corrupt practices. On the opposite side, the managements of the international oil and mining companies represent the interests of the companies all too well. They used to go so far as to bribe governments in order to obtain concessions. Willing takers and givers of bribes are the root cause of the resource curse.

Communism failed because of the agency problem. Karl Marx’s proposition—from everybody according to their ability and to everybody according to their needs—was a very attractive idea, but the communist rulers put their own interests ahead of the interests of the people.

The agency problem is also the bane of representative democracy: the elected representatives use their powers for their own interests to the detriment of the common interest.

And in the recent financial crisis, the agency problem proved to be the undoing of the financial system. When financial engineers turned mortgages into securities by issuing collateralized debt obligations, or CDOs, they thought they were reducing risk through geographical diversification. In reality, they were introducing a new risk by separating the interests of the agents who created and distributed the synthetic instruments from the interest of the owners of those securities. The agents were more interested in earning fees than in protecting the interests of the principals.

Yet, in spite of its pervasive influence, it escaped attention until relatively recently. In my student days it was almost totally unrecognized. In the last twenty years it has received more attention, but mainly from economists who studied it in terms of contracts and incentives. In reality, the agency problem is more of an ethical problem and analyzing it in terms of contracts and incentives actually aggravated the ethical problem. Establishing the principle that people’s behavior is governed by contracts and incentives had the effect of eliminating or at least diminishing ethical considerations.

Values are less closely governed by an objective reality than cognitive notions; therefore they are more easily shaped by the theories that people adopt and economic theory is a case in point. Markets are supposed to act as an invisible hand, bringing demand and supply into balance. What makes the invisible hand so efficient is that there is no need to exercise moral judgment; all values can be expressed in terms of money and money is fungible. Pecunia non olet—money doesn’t smell—the Romans used to say. But taking it for granted that all human behavior is guided by self interest leaves no room for the exercise of moral judgment—and society cannot exist without some ethical precepts.

The behavior of market participants is guided by market values, and market values are quite different in character from the moral values that are supposed to guide the behavior of people as members of society. This opens up a whole range of questions which I have not been able to resolve concerning the conflict between market values and social values. The agency problem has provided me with some new insights. I was also inspired by a short monograph by Bruce R. Scott on “The Concept of Capitalism.” As a result, I may have something new to say. Indeed, I myself am shocked by some of the conclusions I have reached.

Scott argues that capitalism has been misinterpreted by conflating it with the market mechanism. This is a distortion that Scott attributes mainly to Milton Friedman; I am less specific and attribute it to market fundamentalism. Scott argues further that behind the invisible hand of the market lurks the visible hand of human agency, namely the political process, which sets and administers the rules. That is where the agency problem comes into play; so does the conflict between market values and social values.

The United States is a democratic, open society, based on the freedom of the individual, protected by the rule of law as defined by the Constitution. At the same time, the American economy is based on the market mechanism which allows individuals to engage in free exchange without undue interference from arbitrary actions by governmental authority. The political and economic arrangements seem to fit together seamlessly. One could easily speak of an open society and a market economy in the same breath, and people, including me, often do. But appearances are deceptive. There is a deep-seated conflict between capitalism and open society, market values and social values. The conflict has been successfully covered up by the market fundamentalist ideology which gained the upper hand in the 1980’s during Ronald Reagan’s presidency.

The distinguishing feature of the market mechanism is that it is amoral: one person’s dollar is worth exactly the same as another person’s, irrespective of how she came to possess it. That is what makes markets so efficient: participants need not worry about moral considerations. In an efficient market, individual decisions affect market prices only marginally: if one person abstained from participating as either buyer or seller, someone else would take her place with only a marginal difference in the price. Therefore individual market participants bear little responsibility for the outcome.

But markets are suitable only for individual choices, not for social decisions. They allow individual participants to engage in free exchange; but they are not designed to exercise social choices such as deciding the rules that should govern society, including how the market mechanism should function. That is the purview of politics. Extending the idea of a free-standing market, self-governing and self-correcting, to the political sphere is highly deceptive because it removes ethical considerations from politics which cannot properly function without them.

In the United States politics takes the form of representative democracy. People elect representatives who operate the levers of power. They are agents who are supposed to represent the interests of the people. In reality, they tend to put their own interests ahead of the interests of the people. Getting elected is expensive and representatives are beholden to their supporters. Those who don’t play the game don’t get elected. That is how money pollutes politics and special interests trump the public interest.

The agency problem in the American political system is not new. It is inherent in a representative democracy. The right to petition elected representatives was written into the Constitution. Yet the agency problem seems to be much more severe today than it was even as recently as my arrival in the United States in 1956. Why?

There are some objective historical developments which may be held partly responsible, notably the development of sophisticated methods of manipulating public opinion, and the growth of special interests, but the main culprit is a decline in public morality fostered by the rise of market fundamentalism.

I would like to think that at the time of the founding of the republic, citizens were genuinely guided by a sense of civic virtue. Fortunately, the founding fathers did not put much faith in that and built the Constitution on the division of powers: they created checks and balances between competing interests. That is why the Constitution holds up so well in spite of the decline in morality. Even when I first arrived, in 1956, people professed to be guided by intrinsic values like honesty and integrity. It may have been hypocritical with all kinds of vices clandestinely practiced but still, it was very different from today’s public life where the blatant pursuit of self-interest is openly admitted and people are admired for being successful, irrespective of how they achieved it.

I do not want to be misunderstood. Painting too rosy a picture of the past is characteristic of people of a certain age and I do not want to fall into such an obvious trap. I do not claim that politicians were more honest or society was more just in 1956. America has made great progress since then in transparency, accountability, and social equality. But there has been a remarkable transformation in what behavior is socially acceptable and even admirable due to the rise of market fundamentalism. I describe it as a decline in public morality in a very special sense by contrasting it with the amorality of market values.

I define market fundamentalism as the undue extension of market values to other spheres of social life, notably politics. Economic theory claims that in conditions of general equilibrium, the invisible hand assures the optimum allocation of resources. This means that people pursuing their self-interest are indirectly also serving the public interest. It gives self-interest and the profit motive a moral imprimatur which allows them to replace virtues like honesty, integrity, and concern for others.

The argument is invalid on several counts. First, financial markets do not tend toward equilibrium. General equilibrium theory reached its conclusions by taking the conditions of supply and demand as independently given. The invisible hand of the market then brings supply and demand into equilibrium. This approach ignores the reflexive feedback loops between market prices and the underlying conditions of supply and demand. It also ignores the visible hand of the political process which lies hidden behind the market mechanism.

Second, general equilibrium theory takes the initial allocation of resources as given. This rules out any consideration of social justice. Most importantly, the theory assumes that people know what their self-interest is and how best to pursue it. In reality, there is a significant gap between what people think and what the facts are. Nevertheless, market fundamentalism has emerged triumphant. How could that happen?

One reason is that the main policy implication of market fundamentalism, that government interference in the economy should be kept to a minimum, is not as unsound as the arguments employed to justify it. The market mechanism may be flawed but the political process is even more so. Participants in the political process are even more fallible than market participants because politics revolve around social values whereas markets take the participants’ values as given. As we have seen, social values are highly susceptible to manipulation. Moreover, politics are poisoned by the agency problem. To guard against the agency problem, all kinds of safeguards have to be introduced and this makes the behavior of governmental authorities in the economic sphere much more rigid and bureaucratic than the behavior of private participants. On all these grounds, it makes sense to argue that governmental interference in the economy should be kept to a minimum. So market fundamentalism has merely substituted an invalid argument for what could have been a much stronger one. It could have argued that all human constructs are imperfect and social choices involve choosing the lesser evil, and on those grounds government intervention in the economy should be kept to a minimum. That would have been a reasonable position. Instead, it claimed that the failures of government intervention proved that free markets are perfect. That is simply bad logic.

But by far the most powerful force working in favor of market fundamentalism is that it serves the self-interests of the owners and managers of capital. The distribution of wealth is taken as given and the pursuit of self-interest is found to serve the common interest. What more could those who are in control of capital ask for? They constitute a wealthy and powerful group, well-positioned to promote market fundamentalism not only by cognitive arguments but also by the active manipulation of public opinion. Market fundamentalism endows the market mechanism, which is amoral by nature, with a moral character and turns the pursuit of self-interest into a civic virtue similar to the pursuit of truth. It has prevailed by the force of manipulation, not by the force of reason. It is supported by a powerful and well financed propaganda machine which distorts the public’s understanding of its own self-interests. For example, how else could the campaign to repeal the estate tax, which applies only to an elite 1 percent of the population, have been so successful?

There are, of course, competing forces in that arena using similar methods of manipulation but they tend to be less well financed because they cannot draw on the self interest of the wealthiest and most powerful segment of the population. That is how market fundamentalism has emerged triumphant in the last 25 years and even the financial crisis was not sufficient to impair its influence. This was demonstrated by President Obama’s decision to avoid recapitalizing the banks in a way that would have given the government majority control.

Market fundamentalism should not be conflated with the efficient market hypothesis. You can be an economist working with that hypothesis without being a market fundamentalist. Indeed, many economists are bleeding heart liberals. But the efficient market hypothesis has a stranglehold on the teaching of economics in American universities and that phenomenon can be attributed to the financial support given by capitalists and foundations committed to market fundamentalism. They are also responsible for the encroachment of market values into other disciplines like law and political science.

Capitalism is not directly opposed to open society the way Soviet communism was. Nevertheless, it poses some serious threats. I have already discussed one of them; financial markets are not equilibrium-bound but bubble-prone. The dismantling of the regulatory mechanism has given rise to a super- bubble whose bursting will negatively influence the American economy for several years to come. This discussion has revealed another threat to open society: the agency problem and the influence of money in politics, which contaminate the political process.

In an open society, the political process is supposed to serve the common interest; in contemporary America, the political process has been captured by special interests. Our elected representatives are beholden to those who finance their election, not to the electorate at large. What is happening to President Obama’s healthcare and energy bills provides a vivid illustration. The electorate has been brainwashed to such an extent that a responsible discussion of the public good has become well-nigh impossible. A national health service and a carbon tax are nonstarters. Our choices are confined to solutions that can be gamed by special interests.

Lobbying is at the core of the agency problem. How can it be brought under control?

This is an ethical issue and not a matter of modifying economic incentives. Lobbying is lucrative and it is liable to remain so even if the rules are tightened. In the absence of moral values, regulations can always be circumvented; what is worse, the regulations themselves will be designed to serve special interests, not the common interest. That is the danger facing the United States today when a wounded financial sector is seeking to regain its former pre-eminence.

There is a way to deal with the ethical issue. We need to draw a clear distinction between the economic and political spheres. Market participation and rule making are two different functions. Markets allow participants to engage in free exchange. Here it is quite legitimate for participants to be guided by the profit motive. By contrast, the making and enforcement of rules ought to be guided by consideration of the public good. Here the profit motive is misplaced. It is when people try to bend the rules to their own advantage that the political process becomes corrupted and representative democracy fails to produce the results that would make open society a desirable form of social organization. It should be emphasized that this argument directly contradicts the currently fashionable market fundamentalist attitude which speaks of a political marketplace.

How could the political process be improved in an open society? I propose a rather simple rule; people should separate their role as market participants from their role as political participants. As market participants we ought to pursue our self interest; as participants in the political process we ought to be guided by the public interest. The justification for this rule is also rather simple. In conditions close to perfect competition no single competitor can affect the outcome; therefore individual market decisions have no effect on social conditions, whether or not one cares about the common good. But political decisions do affect social conditions; therefore it makes all the difference whether or not they serve the public interest.

The trouble is that the public good cannot be determined by reference to a generally accepted objective standard. It is contingent on the views of the electorate but in the absence of an objective standard, those views are easily manipulated. And manipulation is self-reinforcing; the more outrageous the political claims and counter claims, the harder it is to tell what is right and what is wrong. That is what has made the political process so ineffective.

By contrast, the market mechanism functions much better. People may not know what is good for them but profits do provide an objective criterion by which market participants’ performance can be measured. No wonder that the profit motive has gained such prominence among the values that guide people’s behavior. Not only do profits provide the means for the pursuit of whatever ends people may have, but they also serve as an end in itself because as a reliable measure of success they attract other people’s admiration and generate self-esteem. Indeed, many successful business people feel much more secure in making money than in using their wealth.

The spread of market values has brought immense economic benefits. Looking back in history, Christianity used to treat the pursuit of profit as sinful. This hampered economic development. The Reformation then facilitated the development of markets and opened the way to material progress and the accumulation of wealth. Society underwent a great transformation. Traditional relationships were replaced by contractual ones. Contractual relationships came to penetrate into more and more spheres of social life and eventually relationships started to be replaced by transactions. The pace of change continued to accelerate; it sped up tremendously during my lifetime.

The difference between my childhood in Hungary and my adult life in America is quite dramatic, so were the changes that occurred in America between my arrival in 1956 and the present day. When I first came to America, I was struck by how much further market values had penetrated into society than in my native Hungary or even England, where traditional values and class distinctions still prevailed. Since then, both England and America underwent a further transformation. The professions like medicine and law became businesses. In my view, this has had a destabilizing effect on society just as market fundamentalism has had a destabilizing effect on financial markets.

Exactly what level of stability is socially desirable is of course a matter of opinion. What is the proper role of the profit motive in the professions such as law and medicine and the media is similarly open to debate. But there can be no question that the profit motive has had a nefarious influence in the political sphere because it has aggravated the agency problem.

How can the agency problem be minimized? It is too much to expect those who have a vital special interest at stake not to lobby Congress. The tobacco industry is bound to oppose legislation against cigarettes and the insurance industry will be against a single payer healthcare system. But those who do not have a vital interest at stake ought to give precedence to the public interests over their narrow self-interests. They need not be bothered by the so-called free rider problem, namely that others who act more selfishly would also benefit from their unselfish behavior because the objective of the exercise is to benefit the public.

I should like to end on a personal note. I have practiced what I preach. As a hedge fund manager I have played by the rules and tried to maximize my profits. As a citizen I try to improve the rules, even if the reforms go against my personal interests. For example, I support the regulation of hedge funds along with other financial institutions. I firmly believe that if more people followed this precept our political system would function much better. I also believe that foundations like mine can play an important role exactly because so few people follow that precept.

In my foundation, the Open Society Institute, we have made it our business to protect the public interest against the encroachments of private interests. We are also supporting civil society in holding governments accountable. I would describe these endeavors as political philanthropy and I believe that it can make a greater contribution to making the world a better place than more conventional philanthropy because fewer people are engaged in it.

I am in a privileged position. I am more independent than most people because I don’t depend on clients or customers and I feel under a moral obligation to put my privileged position to good use. I am of course heavily outgunned by special interests but at least I have the satisfaction that my money has greater scarcity value.

The trouble is that special interests also seek to disguise themselves as protectors of the public interest and it takes a discerning eye to discriminate between the genuine and the phony, especially as both sides are forced to resort to similar methods of persuasion. In the absence of objective criteria, one can only reach a judgment by a process of trial and error. People of good intentions engaged on one side of the debate often find it difficult to believe that there are people on the other side with equally good intentions. The best way to find out is by taking their claims at face value and engaging them on the substance of their argument. This has the beneficial effect of giving the cognitive function precedence in the political debate. Only if they fail to respond in kind should they be dismissed and subsequently ignored. There are people like that in every country; unfortunately in the United States they are not ignored. They have become very influential. Whether the electorate also refuses to be influenced by people who try to manipulate them with total disregard for the truth is the test that every open society has to pass to remain open. Given the success of Orwellian propaganda, America is not doing well in this regard.

The political process which has served America well for two centuries seems to have deteriorated. We used to have two parties competing for the middle, but the middle ground has shrunk and politics have become increasingly polarized. President Obama has done his level best to reverse the trend, he has tried to be the great unifier, but to no avail.

In the end, how a democracy functions depends on the people who live in it. I believe that if more people separated their role as political participants from their role as market participants, American democracy would function better. It is up to each individual. That is what I have done. Even a small minority could be helpful in rebuilding the vanishing middle ground.

A tale of two cities: Bratislavans make most of proximity

Bratislava & Vienna:
When the barbed wire dividing Austria from Slovakia was torn down in 1989, thousands of Bratislavans descended on Vienna to see what they had been missing. Among them was Dusan Meszaros, then 19.

“I got in a car with a few friends. We had no idea where we were going,” he says. “It was overwhelming,”

Twenty years on, many of those original sightseers now own a piece of the dream. Slovaks have been scooping up housing on the Austrian side of the former Iron Curtain, and now make up a fifth of the population in border villages such as Kittsee and Wolfsthal.

Gerhard Schödinger, the mayor of Wolfsthal, is one of the biggest fans of the influx. In 2007, he received an award for his efforts to integrate Slovaks into the local Austrian population, including introducing Slovak lessons in schools.

“The people who are moving here are the same as us – educated, Catholic, from the same kind of culture,” Mr Schödinger said. “They don’t just come here at night to sleep – they come to live, to join our soccer teams, to play music in our bands, and to put their children in our schools.”

But this is not another eastern European cliché. Few Slovaks who live in Austria actually work there, nor did they come seeking opportunity.

They are refugees from high property prices around Bratislava, and continue to look to the Slovak capital for work.

“Most of the new flats we looked at in Bratislava were expensive, poorly situated such as by a motorway”

At the height of the property boom in Slovakia in 2007, building lots that fetched €50 ($75) a square metre in Austria were going for €200 a square metre near Bratislava. Now the difference is even larger.

Nor are Slovak white-collar workers smitten with Vienna. A motorway was finally built linking the two cities in 2007, and border controls were eliminated last year, reducing transit time for the 60 kilometre ride between the capitals to 30 minutes.

But traffic is thin at rush hour, and tends to consist of Slovaks racing between Austrian homes and jobs in Bratislava.

Slovak executives still enjoy better pay and career prospects at home. “There are lots of unskilled Slovak labourers such as taxi drivers and hotel personnel working in Vienna, but not a lot of executives,” says Gerard Koolen, head of Lugera & Makler, a human resources company.

He adds: “Young managers have better opportunities in Slovakia; they can earn more than in Vienna, and their career development is faster.”

Foreign investors in Slovakia began turning their companies over to local executives a decade ago, and today, the Slovakian branches of US and European multinationals such as Amslico and UPC are led by Slovak bosses.

The board of Tatra Banka, which is owned by Austria’s Raffeisen International, now only has one non-Slovak member, while the Austrian chief executive of Erste group’s Slovenska Sporitelna bank stepped down this year in favour of a Czech.

Mr Meszaros is one of the few who bucks the trend, working for Bank Austria, a subsidiary of Italy’s Unicredit, in Vienna as an equity research analyst for corporate bonds, a specialist job he could not find in Bratislava.

But he says he would have moved to live in Austria on its merits even had he found a job back home, and will probably remain there wherever his career takes him. “The commute between Bratislava and Vienna makes sense in either direction.”

World's 3rd Largest LCD Maker picks Slovakia as its manufacturing centre in EU

BRATISLAVA, Dec 2 (Reuters) - Taiwan's AU Optronics Corp (2409.TW), the world's No.3 LCD maker, will invest around 191 million euros ($287.9 million) in Slovakia to build an LCD assembly plant, a government source said on Wednesday.

The project, the biggest foreign direct investment project since the country joined the euro zone in January, is expected to create some 1,800 direct jobs.

The economy ministry said it would hold a press conference later in the day on an unspecified foreign investment project. ($1=.6635 Euro)

General information on the Slovak Republic

Geographical location: Central Europe
Area: 49 035 km2Europe - Slovakia
Population: 5 379 455

  • Hungary
  • Poland
  • Austria
  • the Czech Republic
  • Ukraine


  • Catholic Church - 68.9%
  • Evangelical Church - 6.9%
  • No faith - 13.0%
  • Others - 11.2%

Minority groups:

  • Slovak nationality - 85.5%
  • Hungarian - 9.7%
  • Roma - 1.7%
  • Czech - 0.8%
  • Others - 2.0%

Time zone: GMT + 1 hour
Currency: Euro (EUR)
Parliamentary system: republic
Official language: Slovak
Election system: proportional representation
Election term: 4 years

  • OSN
  • OECD
  • WTO
  • Visegrad Group
  • NATO
  • EU

Administrative division of the Slovak Republic

The following are the self-governing regions, and their administrative centres

The following are the self-governing regions, and their administrative centres:

  • Bratislava region - Bratislava
  • Trnava Region - Trnava
  • Trencin Region - Trencin
  • Nitra Region - Nitra
  • Zilina Region - Zilina
  • Banska Bystrica Region - Banska Bystrica
  • Kosice Region - Kosice
  • Presov Region - Presov

The future

A superb lecture by George Soros in Budapest

The future...

Come to bratislava for xmas, Wien is too chaotic :)

Bratisalva christmass market

pictures from Bratislava (1 day old)

Plus Forced smile competition between Robert Fico (Slovakia's PM)
Vladimir Putin russia's ehm master of puppets or every other job he likes.

Don't you just hate trade missions...

Real estate in Slovakia Czech & Poland vs. The Balkans in the EU.

Certainly the UK's buy-to-let model doesn't seem to work well in Bratislava. There are many reasons for this.
  1. Real estate agents are villainous and TOTALLY unregulated
  2. Professional standards are a rarity
  3. There are a lot of apartments that are being refitted with government susbidies making all buildings not only livable but comfortable.
The real estate agents do not offer full service letting for people that do not speak slovak, and those that have tried to do buy to let in Bratislava have been badly burned.

The legal framework is also not supportive rather helpful to unnreasonable tenants, and the rental market is flooded by flats in freshly done up buildings where the reconstruction is subsidised by government money for slovak families.

Claerly when the dust settles Bratislava will resume its expansion and appreciation of commercial property especially in the centre. Offices, shops are going to be the winners in the medium to long term. Buy to let looks like a loser for the foreseeable future.

General real estate sentiment
The head of a real estate investment fund on pricing in Central europe and in Eastern Europe:

"You have to split Central Europe into two areas. The healthy bit is the Czech Republic, Poland and Slovakia, where the economies are on a good basis. There's strong domestic demand, they're not overextended as economies and there is no excess of development in general except in residential. Those markets were reasonably priced and there was limited political risk in them.

How about the CEE countries you didn't mention?

Investors are now significantly reassessing risk, and particularly in Russia and the emerging markets like Romania Russia and Ukraine and Bulgaria, people are realizing that the risks in these markets are much bigger. And it's quite difficult to quantify these risks because they're political rather than economic risks. With Russia it's the problems with what they did in Georgia, and also the problems of TNK BP making people very wary about the way the Russian government behaves. Clearly Ukraine has enormous political instability, while Romania and Bulgaria have enormous corruption problems.

Vaclav Havel becomes a Bratislava citizen

Václav Havel, the former president of Czechoslovakia, dissident and one of the key figures of the Velvet Revolution that toppled Communism in the former federation has become an honorary citizen of Bratislava. The Slovak capital granted him honorary citizenship on the occasion of the 20th anniversary of the fall of the totalitarian regime for his fight for freedom, democracy and assisting in the process of Slovakia's integration into Europe.

The great statesman and philosopher/king Václav Havel said that he respects the award all the more after discovering the personalities who have received it. He has had a long and and enduring relationship with Bratislava, whose people he said he considers very amiable both while he was in office and after his retirement from active politics.

He characterised personality as uniqueness of the human soul and deeds, and as what differentiates one human being from his fellows. Another awardee was the first Austrian Ambassador to Slovakia, Maximilian Pammer. Havel and Pammer received their awards in person.

Havel will receive it on the occasion of the 20th anniversary of the fall of communism in Czechoslovakia, which Slovaks and Czechs mark on November 17.

The resistance to the communist regime's excesses were very much felt in Bratislava as well as Prague. A mass demonstration took place on Hviezdoslav Square in downtown Bratislava and then moved to the Square of the Slovak National Uprising) SNP. Students presented various demands and asked the people to participate in the planned general strike for Monday, November 27. A separate demonstration demanding the release of the political prisoner and christian activist Ján Čarnogurský (the later Prime Minister of Slovakia) took place in front of the Palace of Justice. Alexander Dubček delivered an address at this demonstration – his first appearance during the Velvet Revolution. As a result, Čarnogurský was released on November 23.

"The diplomas will be handed at a ceremonial meeting of the Bratislava City Hall on the occasion of the 20th anniversary of the fall of the totalitarian regime. Its preliminary date is November 18, 2009," the City Hall said in a statement.

Havel, a playwright and a leading dissident under the former communist regime, was the last Czechoslovak president (1989-92) and the first Czech president (1993-2003).

Even under the communist regime he was known as one of the most promitent thinkers and human rights fighters. Havel contributed to the fall of communism in 1989 to a great extent.

In the past, Havel was repeatedly nominated for the Nobel Peace Prize.

Three years ago, Havel was presented with an honorary doctor's degree in Bratislava on the occasion of his 70th birthday.

Last year, the Slovak premiere of Havel's latest play Leaving was staged in the Slovak National Theatre in Bratislava.

Eurozone and Slovakia look set to grow faster

VIENNA & Bratislava, There are indications that European Central Bank will upgrade their growth forecasts for the euro zone economy when new numbers are published next month, ECB Governing Council member for Slovakia Ivan Sramko said to Reuters.

"There is some news now that there will be a better forecast for this year and next year but this is all I can say," Sramko, governor of Slovakia's central bank, said on the sidelines of an Austrian central bank conference in Vienna.

Sramko, asked about the exchange rate of the euro against the U.S. dollar and the Chinese yuan, said that it was his personal opinion that policymakers should coordinate more on foreign exchange rates.

He also said the ECB has discussed which interest rate to put on its December tender of 12-month liquidity "many times" but declined to be drawn on those discussions

Slovak PM meets Vladimir Putin (Russian PM) about joint gas venture to link Austria to russian gas

Slovak PM meets Vladimir Putin (Russian PM) about joint gas venture to link Austria to russian gas. The Slovak side seems to want to incentivise Russia through a 3-party win-win.

What is being proposed is to link the Austrian market to the soviet era pipeline that ends in Bratislava. This pipeline only needs a few kilometers of extension to be linked to the austrian market and network.

Click on the map to see more detail:

Slovakia will gain by giving Russia a big reason not to cut supply to europe as it would inconvenience more european countries.

Below there is a video talking about the fledgling deal:

In related news: According to the European Union energy commisioner gas consumers won’t suffer if Ukraine starts another transit war with Russia this winter.

Kiev blocked transit pipelines from Russia last January in a payment row, leading to power cuts across the EU. But Energy Commissioner Andris Piebalgs says they've agreed ways to avoid Ukraine altogether.

AP: “Our gas storages are 100% full, we've increased all types of switching opportunities for countries which can't cover gas for a very long period. We also have emergency plans if they are needed. On the Russian side I believe there are also plans for increasing supply from other pipelines if there is a problem with one of them. During January there will be more gas flowing through the Yamal Europe pipeline. So it is important that both sides reunite and that the final consumer does not feel threatened at all.”

More background on the pipeline and it's significance (from wikipedia):

Druzhba pipeline
(Russian: нефтепровод «Дружба»; also had been referred as the Friendship Pipeline and the Comecon Pipeline) is the world's longest oil pipeline, it carries oil some 4,000 kilometres (2,500 mi) from southeast Russia to points in Ukraine, Belarus, Poland, Hungary, Slovakia, Czech Republic, and Germany.[1] The name "Druzhba" means "friendship", alluding to the fact that the pipeline was intended to supply oil to the energy-hungry western regions of the Soviet Union, to its "fraternal socialist allies" in the former Soviet bloc, and to western Europe. Today, it is the largest principal artery for the transportation of Russian (and Kazakh) oil across Europe.


On 18 December 1959, the 10th session of the Council for Mutual Economic Assistance (Comecon), held in Prague, adopted a decision and an agreement was signed on construction of a trunk crude oil pipeline from the USSR into Poland, Czechoslovakia, GDR and Hungary.[2] Each country was to supply all necessary construction materials, machinery and equipment. In 1962, first oil reached to Czechoslovakia, in September 1963 to Hungary, in November 1963 to Poland, and in December 1963 to GDR. The whole of the pipeline was put into operation in October 1964. The first oil pumped through the Druzhba pipeline originated from the oil fields in Tatarstan and Samara (Kuybyshev) Oblast. In 1970s the Druzhba pipeline system was further prolonged at the expense of parallel lines.[3]


The pipeline begins from Almetyevsk in Tatarstan, southeastern Russia, where it collects oil from western Siberia, the Urals, and the Caspian Sea. It runs to Mozyr in southern Belarus, where it splits into a northern and southern branch. The northern branch crosses the remainder of Belarus across Poland to Schwedt in Germany.[2] It supplies refineries in Płock and in Schwedt. The northern branch is also connected by the Płock-Gdansk pipeline with the Naftoport terminal in Gdansk, which is used for oil re-exports.[4] In Schwedt the Druzhba pipeline is connected with the MVL pipeline to Rostock and Spergau.

The southern branch runs south through Ukraine. In Brody the Druzhba pipeline is connected with the Odessa-Brody pipeline, which is currently used to ship oil from the Druzhba pipeline to the Black Sea. In Uzhgorod the pipeline splits into lines to Slovakia (Druzhba-1 - original Druzhba route) and to Hungary (Druzhba-2). The line through Slovakia is divided once again near Bratislava: one branch leading in a northwest to Czech Republic and the other going southward to Hungary. The Druzhba-1 pipeline branches off toward Hungary at Ipeľ, crosses the Hungarian border at Dregelypalank and leads to Százhalombatta.[2] In Hungary, the Druzhba-1 pipeline supplies Duna refinery while Druzhba-2 supplies Duna and Tisza refineries.[5]

The Mažeikių refinery in Lithuania and Ventspils oil terminal in Latvia are connected to the main pipeline by the branch pipeline from Unecha junction in Bryansk Oblast. This branch has ceased operation in 2006 and is not likely to become operational in any time soon.

The part of Druzhba pipeline system, which runs via Belarus, is 2,910 kilometres (1,810 mi) long. The length of the pipeline in Ukraine is 1,490 kilometres (930 mi), in Poland in 670 kilometres (420 mi), in Hungary 130 kilometres (80 mi), in Lithuania 332 kilometres (206 mi), in Latvia 420 kilometres (261 mi), and in Slovakia and in the Czech Republic together around 400 kilometres (250 mi).[2][6]

Technical features

The Druzhba pipeline currently has a capacity of 1.2 to 1.4 million barrels per day. Work is currently underway to increase this in the section between Belarus and Poland. The pipe diameter of the pipeline varies from 420 millimetres (17 in) to 1,020 millimetres (40 in).[3] It uses 20 pumping stations.


The Russian part of the pipeline is operated by the oil company Transneft through its subsidiary OAO MN Druzhba. In Belarus the operator is Gomeltransneft Druzhba, in Ukraina UkrTransNafta, in Poland PERN company, in Slovakia Transpetrol, in the Czech Republic Mero and in Hungary MOL.[7]

Proposed extensions

[edit] Schwechat (Austria)–Bratislava Oil Pipeline

Schwechat–Bratislava two-way oil pipeline project was proposed in 2003. It would allow to supply the OMV owned Schwechat Refinery from the Druzhba pipeline.[7]

Bratislava's ugly new real estate developments.

An interesting opinion in an interview of the chief architect of Bratislava
(the chief city planner if you will).

"the chief architect has actually stated that he thinks the (world
financial) crisis is a stroke of fortune for the Slovak capital because it
will give it some time for planning to catch up with the pace of
development "

Certainly some overly oppressive developments were being planned. The
relatively loose laws on the height new buildings may reach led to ugly

Despite what real estate agents on the payroll of developers say Ruzinov in
Bratislava looks too much like luxurious version of Petrzalka. Buildings
that look like office blocks turn out to be housing.

One cannot help but think that these buildings will be ungovernable,
difficult to maintain & once their newness fades a bit, places for poor
people to live...

This is especially true when one considers how expensive the rents are in
these buildings.

In short Ruzinov is not really close to the centre. There is no feeling of
community. They urban quagmires of the future. I hope that smaller &
greener developments will take their place.

Bratislava yields

Seen in a real estate mag...

' the worst of the carnage that has now reached the UK's shores, arguably sending London prime yields below those in Prague and Warsaw. But exactly what we mean by Central Europe will also come into question. Just as real distinctions are now being made between prime and non-prime assets, we're likely to start seeing CEE Prime and CEE Secondary countries. Poland, the Czech Republic and possibly Slovakia belong to the first. Hungary, however, is now being seen differently.

Another endorsement of Slovakia.

Slovakia's first A-H1N1 flu fatality died of heart failure

People seem to be really worried about the new flu. In Slovakia the spread has been quite low by international standards. As a legacy from communist days Slovakia has a lot of hospital beds and trained staff. However it doesn't seem that it will all be necessary, immunisations start from the end of this month with improved and more tested vaccines than the ones given in some other EU countries.

Today the first death occured, but it involved a person with serious pre-existing health problems... So I am not sure this one counts..

The direct cause of death on November 6 of a woman who contracted the novel flu virus was heart failure. The spokeswoman for the Health Ministry, Zuzana Čižmáriková, provided this information based on the results of an autopsy conducted by the Health Care Supervision Office.

An hour after the 48-year-old woman was hospitalised in a Bratislava hospital, doctors had to resuscitate her because she suffered from serious arrhythmia. Her overall circulation failed. The woman was put into induced sleep and connected to respiratory equipment. Six hours later the critical situation repeated, but this time doctors failed to resuscitate her, which was confirmed by the autopsy as well.

Slovakia is well-prepared for a possible flu pandemic but the situation is now stable and the number of registered flu cases is not exceeding the norm, Health Minister Richard Raši told TASR on November 9.

Socialism in America

A chinese worker supplying WalMart the shop for all american types :)

Piece by Bill Moyers:

"So, for the record let's acknowledge that all this current rhetoric about socialism in Washington is partisan poppycock. The word being fought over so fiercely today lost its meaning long ago. The late social activist and preacher William Sloane Coffin said on my show some years ago that we have to keep pressing the socialist questions because they are questions of justice, but that we should be dubious about are the socialist answers, because while the Biblical prophets may call for justice to roll down as mighty waters, figuring out the irrigation system is damned hard.

Furthermore, Barack Obama is still standing at the crossroads. Some old hands around him yearn for a third Clinton term -- government as subsidiary of corporate America. Ardent progressive followers, on the other hand, hope his heart really leans to the left, toward the public provision of public goods.

But at bottom, the issue isn't one ideology or another - we're not that kind of country. The issue is inequality. Two British researchers have just made news with a study over three decades, showing that where income is more evenly distributed, people are healthier in mind, body and spirit. You can find out more about their report on our website at* They found that violence, mental illness, overcrowded prisons, drugs, and obesity are more likely in a society where the gap between the have's and have-not's is as great as it is in the United States.

Our gap grew over the past quarter century as capitalism went on a spree of speculating, swindling and cheating. The great collapse is a painful correction. Our long term rescue, however, depends not on any "ism," but on democracy's ability to create a more level playing field, where the health of a battered woman in San Antonio is every bit as valued as a majordomo's on Wall Street.

This is a book with a big idea, big enough to change political thinking, and bigger than its authors at first intended. The problem they originally set out to solve was why health within a population gets progressively worse further down the social scale; they estimate that together they have clocked up more than 50 person-years gathering information from research teams across the globe. Their eureka moment came when they thought of putting the medical data alongside figures showing the extent of economic inequality within each country. They say modestly that since dependable statistics both on health and on income distribution are internationally available, it was only a matter of time before someone put the two together. All the same, they are the first to have done so.

Their book charts the level of health and social problems — as many as they could find reliable figures for — against the level of income inequality in 20 of the world’s richest nations, and in each of the 50 United States. They allocate a brief chapter to each problem, supplying graphs that display the evidence starkly and unarguably. What they find is that, in states and countries where there is a big gap between the incomes of rich and poor, mental illness, drug and alcohol abuse, obesity and teenage pregnancy are more common, the homicide rate is higher, life expectancy is shorter, and children’s educational performance and literacy scores are worse. The Scandinavian countries and Japan consistently come at the positive end of this spectrum. They have the smallest differences between higher and lower incomes, and the best record of psycho-social health. The countries with the widest gulf between rich and poor, and the highest incidence of most health and social problems, are Britain, America and Portugal.

Richard Wilkinson, a professor of medical epidemiology at Nottingham University, and Kate Pickett, a lecturer in epidemiology at York University, emphasise that it is not only the poor who suffer from the effects of inequality, but the majority of the population. For example, rates of mental illness are five times higher across the whole population in the most unequal than in the least unequal societies in their survey. One explanation, they suggest, is that inequality increases stress right across society, not just among the least advantaged. Much research has been done on the stress hormone cortisol, which can be measured in saliva or blood, and it emerges that chronic stress affects the neural system and in turn the immune system. When stressed, we are more prone to depression and anxiety, and more likely to develop a host of bodily ills including heart disease, obesity, drug addiction, liability to infection and rapid ageing.

Societies where incomes are relatively equal have low levels of stress and high levels of trust, so that people feel secure and see others as co-operative. In unequal societies, by contrast, the rich suffer from fear of the poor, while those lower down the social order experience status anxiety, looking upon those who are more successful with bitterness and upon themselves with shame. In the 1980s and 1990s, when inequality was rapidly rising in Britain and America, the rich bought homesecurity systems, and started to drive 4x4s with names such as Defender and Crossfire, reflecting a need to intimidate attackers. Meanwhile the poor grew obese on comfort foods and took more legal and illegal drugs. In 2005, doctors in England alone wrote 29m prescriptions for antidepressants, costing the NHS £400m.

A world trend that Slovakia needs to avoid being sucked into.

Slovakia has successfully developed a political system split between a credible centre right loose coalition and a centre left party. They might all be a bit too nationalistic overall owing to the past of Slovakia as a captive nation either to Hungary or the Austrohungarian empire, or then under communism in a shotgun wedding with the Czechs. This relishing of one's sovereignty can get a bit jarring at times, and is the reason for some superficial tensions with the Hungarians. However no borders are changing and the most extreme of the politicians of the far right in Slovakia are so unbelievably corrupt and their extremism so insincere, that he can never express more than 10% of the electorate.

Freedom (is not just economic)

The danger is not from the petty authoritarian tendencies of Robert Fico the PM of Slovakia as portrayed in some fairly US centric Slovak commentators on the right. It is true that power is exercised fairly strongly in Slovakia (but that was true of the Dzurinda administration which had a fairly radical and successful political agenda with some excesses).

That is actually to be welcomed as in Slovakia governments still have the power to change policy rather than trying to copy each other like in the UK or the US. Fico is an old-fashioned conviction politician who does seem to want to entrench some social democratic standards in Slovakia and actually believes in certain things and within the ability of the state budget he has provided some support to weaker people without for the most part restricting the ability of those who can take care of themselves from prospering. The fact that he doesn't seem to adore and suck up to rich people is not bad at all.

It is also understandable for example to hate tabloids (they have tried to disturb his personal life on many occasions with a unbelievable audacity) as he does because they do express the worst in a society and they do try to subvert the political debate to serve their owners interests (e.g. the Sun in the UK). Although i don't like the press law in Slovakia, I always thought that tabloid journalists engage in very murky circles. We need to draw a line between the financial times and the Sun. Tabloids are a caricature of journalism and a force for evil. Broadsheets however should not be put in the same bag. Fico should respect constructive and intelligent criticism and debate.

The decline of the business model of newspapers makes them even more likely to be bought by organised interests that want to have the upper hand in the political debate. Again this has happened in any country with thriving tabloids that express and represent the worst in human nature.

If one looks to the UK, the extreme consensus between Labour and the Conservatives has hollowed out politics of all relevance and has led to what feels like an ungoverned state. The result is that Britain, from a fairly well governed state, is ending up as an over-indebted country with an increasingly extremist electorate (Anti-EU, BNP growing, curtailed civil liberties through extreme anti-terror laws) and it certainly feels like it is the beginning of this process.

Free market economics has changed our democracies. Ironically these policies are bringing about authoritarianism back. The mechanism this works through are principally two.

  1. Some citizens become very rich which allows them to influence the debate through their wealth (buying TV stations or other media), they are likely to influence it through entrenching the status quo that allowed them to become rich. Essentially some have a huge megaphone that allows them to promote their ideas irrespective of their value. Deregulation was one such idea and that led to the financial crisis.
  2. The better off in society -even if slightly better off- do not vote taking into account the overall interests of the country, but simply seek to re-enforce the policies that keep them better off. Their prosperity is dependent on low social mobility and change. That is not a high quality democracy.

Ergo: Too much political consensus between left and right is a mistake

So where has this footballisation of politics and public life come from. Why are so many governments turning more and more authoritarian?

A review of a very interesting book about how increasingly the excesses of the right wing ideologues like Tony Blair (no mistake here) stemming from the time of Reagan have pushed the emergence of a feudal flavour of capitalism to be found in economically prosperous but culturally and democratically backward and stifling states like Malaysia or Singapore. Note that corruption is endemic in this sort of Fascistic regime. Its a fusion of tame consumer/citizens, propaganda, really low quality of democracy and essentially a well disguised oligarchy with some democratic traits.

Because there are no ideas or ideals in the debate, the debate becomes irrelevant. People don't vote so the extremists get bigger and bigger shares. Also a public fed a diet of tabloid news is likely to be far more susceptible to extremist politics. The stifling consensus where whatever one votes they get the same policies has brought about stability but also an erosion of democracy and brought about the politician who is popular not because he wants to do things that you as a citizen agree with, but because you like his dress sense, or you would like to be as rich as him. Berlusconi is in that mould at least partially.

Ironically globalisation and competition is now forcing European and American states to lose any flourishes of democracy and free speech they developed in the past to revert to gameshow host type of leaders (e.g. Berlusconi, Zapatero, Blair, Bush). The citizen is economically free (kind of because corruption is playing its part to skew even this). But policy is strictly set and permanent and not something that an elected leader can change. The countries that this is entrenched in the most are the US and the UK.


Review by Samuel Brittan

Published: November 2 2009 06:24 | Last updated: November 2 2009 06:24

Freedom for Sale: How We Made Money and Lost Our Liberty
By John Kampfner
Simon & Schuster £18.99, 304 pages

It is no longer a startling observation that the more western governments have spoken about freedom and democracy in the struggle against their enemies, the more the freedom part, at least, has been curtailed. In Britain, the Thatcher government tightened the screws on freedom of expression. The Blair government went further in curtailing historical rights such as habeas corpus and free speech.

In my view, the most profound study of this process in its historical context is Ben Wilson’s What Price Liberty? John Kampfner’s Freedom for Sale, on the other hand, makes up in breadth what it lacks in depth. While Wilson was mainly concerned with ­Britain, with a few glances across the Atlantic, Kampfner, a British political journalist, includes the US, Italy, Russia, ­Singapore, China, India and the Arab Emirates, and in nearly all he discovers similar erosion. Like Wilson, he attacks the ­thesis that capitalism inevitably leads to personal and political freedom as well as democracy. He cites Benjamin Franklin, who declared in 1755 that “those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety”. The excuse has always been that freedom is sacrificed for prosperity and security. Kampfner is inclined to concede that there might be something in this.

If he had only included the Scandinavian countries, for instance, in his survey, he could have seen that personal and political freedom need not be an impediment to prosperity. Too many businessmen regard critics of the Chinese and Russian regimes as doctrinaire nuisances who impede their making of money.

Security is more difficult; but Kampfner has little difficulty in showing that the restraints imposed by the Blair government went far beyond the legitimate struggle against terrorism. During his term of office Blair “had bequeathed to his successor a surveillance state unrivalled anywhere in the democratic world”.

It seems to me that the problem with Blair was – to put it kindly – an aversion to abstract thought. Hence his sneering remarks about the liberal tradition. With Gordon Brown it is different. He believes the hallmark of progressive thinking is a positive attitude to the state against “right wing” laisser faire. While this attitude stems from a preoccupation with the economic and social arguments of the 20th century, it spills over into a carelessness about civil liberties as well. In practice both New Labour prime ministers were guided by the demands of the security chiefs and the desire to be seen to be “tough”.

Politicians and mandarins tend to confuse politically embarrassing leaks with threats to national security, as Kampfner points out. On a more trivial but revealing level, Kampfner quotes a French journalist writing from the UK: “Here you are actively encouraged to denounce your neighbour for not paying road tax or putting a bin out early … There are councils that spy on their taxpayers as if they were common criminals… the Home Office proposes to set up a database holding information on every telephone call made, every email sent and every website visited by every single British citizen.” Nor do the media, who value excessively their access to top government figures, come off much better. To get the point, you only have to hear or read that “Brown has decided” or “Cameron has decided” on matters where these politicians thankfully still have no such power.

Kampfner pessimistically accepts that an authoritarian capitalism on the Singapore model is spreading worldwide: the people have made their Faustian bargain. Yet I still cherish the hope, not that the masses will read John Stuart Mill, but that enough personal experiences of the basic inhumanity of this model will lead to some kind of liberal reaction in some countries and some times.