Tilly-Sabco chickens out of the world market…fallout for the French middle classes

The news tonight started with about a thousand jobs lost. In other words, a thousand less middle class people in France if they all become unemployed and are unlikely to find a job.

A first level analysis of the problem is very simple. These people were employed because their industry was subsidized by the EU. As EU takes away the subsidy, the French chicken produced in Brittany by Tilly-Sabco can no longer compete against the Brazilian chicken. So, evidently, lucky people to have been employed for so long, thanks to their European compatriots.

A second level analysis indicates that it’s the strong Euro and the weak Brazilian real which is creating this problem. Once again, France and/or someone in the EU must be exporting many other things to keep the Euro strong. So, it's obvious that if they are not competitive in the chicken market, they must be competitive elsewhere. If total French exports fall and Brazilian exports rise, slowly the currency parity will change. But it may also be only a sectorial difficulty.

A third level analysis is therefore required: does it make a difference? For this we have to see what we are exporting and what we are importing. If we are exporting capital intensive goods and importing labor intensive ones, then the net result is going to be unemployment. This translates into less middle classes, less taxes, less capacity to provide subsidies and more need for doles, without which these people will one day start questioning what French ministers are doing to earn their living.

To start with, what is French minister for Agriculture, Stéphane Le Foll, doing? After all, the Chicken crisis is not the only crisis in Brittany. We've already seen crisis in pork and fish. Let us assume that he postpones the day or reckoning by giving subsidies of 200,000 Euros per enterprise. This permits ten full time jobs at the minimum wage, or many more if it is disguised unemployment we are talking about. Or he may further postpone the ecotax? But this is not entirely in his hands alone.

Obviously, if these middle class jobs are lost and if doles are to be provided, then the capital-intensive goods which are being exported need to pay higher taxes or social security charges. But, these exports may be in a country different from the ones where jobs are being lost. So, without a good fiscal federalism policy, we will soon have the Greek problem in France! Either all the countries in the EU should then compete in the capital goods manufacturing markets or the ones who want to be competitive should finance the others. Sounds like common sense, but solidarity still doesn't cross borders!

The problem also requires understanding what kind of chicken we are talking about. If these are mass produced industrial chickens, and if this market can be attacked by the Brazilians successfully, should we go back to the old biological chicken, which is three to four times as expensive and far more tasty. The problem is that at three times the price, it is not sure that the middle classes can afford it. Will they move from tax and subsidy based nationalism to bio local producer based nationalism, just to protect jobs?

Not that there is anything wrong with protecting your neighbor's jobs. A busy neighbor is a good neighbor. Gandhian economics being learnt the hard way. Schumpeterian ecology being slowly ushered in. Perhaps the lesson needs to be repeated till it is learnt. Slow food, slow money may be the answers for tomorrow. Slow management…M. le Foll. We are organizing a conference in French on the 11^th of December 2013, in Dijon. Like to attend?

Microfinance Quarterly-Conference: Le mercredi 11 Décembre, 2013: La Transition en Marche:  Slow Management, Slow Money & Dynamiques Locales

Nigloland: Amusement Park for the Middle Classes

With Disneyland being so fantasy, partly because of its price, where are the middle classes to go? In France, one answer is Nigloland. Nigloland was founded by two brothers who used to organize fairs: Patrice and Philippe Gélis in 1989. Niglo means hedgehog in the language of gypsies. 

The price of an entry ticket to Nigloland varies from 22 to 24 Euros depending on whether you are a kid or not. This is about 40% cheaper than Disneyland Paris which charges about 40 Euros. Clearly, the positioning is different. So, while Disneyland gets the international tourists and the upper classes, Nigloland is totally focused on the French. There are no signs in English or German anywhere in the park.

It has all kinds of rides catering to the very young as well as to strong sensation seeking teenagers. The food can be reasonably priced, depending on what you decide to eat.

500,000 visitors per year. Multiply it by 22 Euros and you have a turnover of 11 million Euros just from ticket sales. Of course, there are also restaurants and shops and doubling this would provide 22 million Euros of turnover. All this in a season of less than eight months for it is closed in winter.

It is a far cry from the 15 million visitors to  Disneyland Europe. And the turonver of Disnelyland is not just the 600 million Euros from tickets, but closer to 1.3 billion Euros, after including shopping, restaurants and all else. Clearly, proximity to Paris and international airports and access to the high speed trains, all help. As opposed to this, Nigloland requires a car or a tourist bus.

There is a train station at Bar-sur-Aube which is connected to both Paris (gare de l'Est), Chaumont and there is even a direct train to Dijon (capital of Burgundy). The questions is what to do for the last few miles from Bar-sur-Aube to Nigloland. Fortunately, there is hope because there are a few buses, four a day, from Troyes to Nigloland. Some of these also go to Bar-sur-Aube? But of course you have to get to Troyes or Bar-sur-Aube. With 500,000 French middle class people concerned and if the Nigloland Park is open 250 days in a year, it provides us about 2,000 people per day, more on weekends and children's holiday periods and less for the rest of the period. Four packed buses should be able to transport 200 provided no one wants to go anywhere else. Just to put things in perspective.

A good thing about being in a park for middle classes is that people are very well behaved and they do not lose their good manners. So, you don't get stressed by little incidents of beating the line. Nor do you see any signs warning you of pickpockets.

Being middleclass can be amusing.

Note: all statistics, extrapolations and errors are mine based on information found on the internet and assumptions made to simplify mental calculations.

Reconciling Indian middle class statistics with the polarization debate

India has a population of about 1250 million people. According to the BBC (May 23, 2013), it is expected that the middle class will grow to 200 million people in 2020. So, perhaps it is only 125 million now? About 10%. Even if it is 199 million now, it's only 16% of the population. So, let's say 10% to 16%. Evidently, in a poor country, people would be happy to be middle class.

The problem created by a small middle class is that it doesn't have any political power. As a result, policies are set either for the poor or the rich. But, the recent debate in India, based on studies by famous economists, shows that economic development has bypassed any social gains for the poor. So, clearly, policies are set for the rich.

But wait a minute. If the poor have not seen any gains, then how is it that the middle classes will grow as the BBC claims? Evidently, population increase could be one answer. But do the middle classes really produce so many babies? Aren't they the educated ones who have one child or two?

Perhaps some rich people may face business failure and slide back into middle class, allowing it to grow. This could be rich farmers who sell their land and don't realize that if they don't invest in anything except BMWs, they will soon spend all of it and now be without land and without income. (Of course, the BMW could become a taxi).

Evidently, most of the swelling of the ranks of the middle classes has to come from the poor. So, there has been economic trickling down to the poor. However, the poor have large family sizes. So, even if a few million move up to middle class, the lower classes are the one that are swelling in number. And for these, perhaps, there have been few social gains as suggested by the different studies.

Microfinance and the middle class consumer

How can you link microfinance to middle classes? After all isn't microfinance so micro that its only for the poor?
Well, microfinance has often been targetted to the near-poor, either because it is the only sustainable strategy or because profits from these people will be used to cross-subsidize lending to the really poor. Not that the near poor are middle class.
But extending this logic means that that microfinance may target even the middle classes (or at least the lower middle class) in a bid to cross-subsidize the poor.
Again, some forms of microfinance may require complementary capital such as education of internet access or smart phones, which are available only to middle classes.

A case in point is micro-payments. These are very small payments, often made on the mobile telephone. The mobile payment market is estimated in trillions of dollars.

One operator who is into micro-payments (as well as much larger ones) is paypal. Check out this report on paypal on Reuters.com
 
http://www.reuters.com/article/2013/10/25/kenya-equity-paypal-idUSL5N0IF12I20131025

If paypal is interested in the middle class, surely other businesses are too. And this means that the middle classes are of interest to business, and even to big business, as consumers.

So, don't sell yourself short: you are not just taxpayers and redistributors. You also contribute because you consume. The profits made from your consumption, earned by big business, should also be used for redistribution.

Not even a trickle flowing down for the middle classes

Whoever thought I would not only be reading Bloomberg Business Week, but also citing it? One of my intellectual colleagues reads everything right of whatever mark he sets for himself. After that, he passes it on to me, hoping he can save my mind by some miracle.

Guess what, even this Business Week has realized that the trickle down is no longer trickling. At least not this week, not this month, not this year, not this decade, not this ......

Read it for yourself before you continue further. 

http://www.resourcecenter.businessweek.com/reviews/the-trickle-down-has-all-but-dried-up
 
So, the growth mantra works for the rich. It may even work for throwing a few lollipops to the poor. But for the middle classes there is nothing.

Have you ever wondered who you are voting for? Why?

Do you have your own party? Are you being represented? Is there a party for the middle classes?

If not, one suddenly understand the choice made by some to opt out. But opting out means opting out of the votes as well as the economy. Suddenly, the parallel economy starts making sense. It is no longer about legality or illegality, it's about legitimacy or illegitimacy.

 Legitmacy requires representation. 

Its not about right or left, its about in or out.

 

 
 

An election without a vision

As we go to legislative elections, one wonders who to vote for. The political question is being relegated to alternative short term strategies, without a careful consideration of a long term vision. Perhaps the greens have one. Perhaps. Yes, I want to minimize energy use, but do I want to live without heating? What about air-conditioning? Do I want Gandhism and go back a century? These are trade-offs which need to be debated. They cannot be debated if one political party offers only one set and not the other. The question is what proportion of each? For this, a vision of a future world is required even before a mission or a route plan.

The problem is that any vision requires a world vision and not a domestic one-country vision nor an EU-only vision. And most politicians are offering domestic electors what is economically and socially interesting to them today.

A world vision requires participating in the world and permitting all our people to participate in the world and all the people of the world to participate in our country: visiting it, studying in it, living in it.

It also means that any security and fraternity we provide to our geographically close neighbor, we also provide to more distant people. To some of these distant people, we may be closer virtually.

In a world where human productivity is rising faster than population increases, especially if it is rising in poorer countries, evidently we don’t need to work so much. So, much of the solidarity is about sharing limited jobs. We take unemployment here to boost employment there. We share unemployment here, so that everyone has the bare necessities.

These bare necessities include opportunities not only for food, clothing and shelter, but alos for education, transport and communication. Why shouldn't wifi be free and available all over the world?

Unless we can think of new services to offer, why should we work so much? And if these services are required by people who don’t have them, we need to go out and find the poor people in whose service we can find our joy and, perhaps, salvation. Otherwise, we need to find new objectives in life!

It is the search of these future objectives that need to be defined. Just like the mantra of economic growth has exhausted itself, the mantra of happiness will also reach its plateau as we search for more emotions in life than one.

So, what is this vision? Share your views.