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Comparing Bureaucracy: No Wonder The Euro Zone Is In Crisis
By EconMatters
In addition to decades of overspending beyond means, there are also some less discussed contributory factors leading to the current debt crisis in the Euro Zone, particularly when compared to the United States.
The following charts from the Telegraph illustrate how regulations and poor administration have held back Portugal, Ireland, Italy, Greece and Spain's economies, using data from the Doing Business project, which carried out by the World Bank, measures the time and cost of common business activities.
The charts compare eight European Union (EU) countries (Italy, Greece, Portugal, UK, Germany, France, Ireland, Spain) and the United States, in terms of days it takes to
- get construction permits,
- get commercial electricity connected,
- enforce commercial contracts
- export goods
Overall, the United States leads with an average of 100 days to carry out business in the above categories whereas it take 420 days in Italy. (See Graph Below)
One glaring example is contract enforcement.
Contracting is an essential and integral part of transacting business and contributing to a country's economic growth. Enforcing a contract takes about 9 months, which is not that great, yet it takes more than two years to enforce a contract in Greece, and more than three years in Italy.
One interesting statistics is that the U.S. leads the pact in getting construction permit in less than a month, which probably partly explained the housing bubble. The same process takes more than 8 months in Italy and Portugal to get a construction permit.
Another example is that while it takes 17 days to get commercial electricity connected in Germany, and more than two months in the US (which is bad enough), the same task takes over six months in Ireland and Italy.
Exporting and importing a standardized cargo of goods by ocean transport also takes longer in Italy, Portugal and Greece compared to other European countries as well as the the U.S. Telegraph also pointed out that it takes nearly three years to resolve a commercial dispute, compared to a year in Germany and France due to Italy's highly bureaucratic judicial system,.
From a business perspective, this suggests even if Europe could get past this current debt crisis, their recovery would be a long and difficult one with more structural reforms on the way not limited to just austerity measure.
Similar to the Euro Zone, the U.S. has its own fiscal problems with more than $15 trillion in debt, and we'd agree that there are plenty of bureaucratic red tapes in the current U.S. regulatory system. However, given the same set of global macroeconomics, our bet is that the U.S. would come out ahead in the recovery phase of the current cycle, based on its more efficient business infrastructure already in place.
Chart Source: The Telegraph, 21 Nov. 2011
Further Reading: Expect A Global Recession No Matters What Happens In The Euro Zone
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All those numbers are completely useless, because of the HUGE shadow-banking Sector the market numbers (especially in the US) can not be trusted. On Paper the US has a booming economy.
Sorry guys, but in real world productiveness, compared to the german machinery, you are a third world shithole. The only thing that is top-notch is the financial sector. Once this charade comes to an end its game over.
Its the Dollar, not the Euro, that will cease to matter in this crisis, just watch and learn.
Erm?
Not quite sure what the point of this article is.
Seems to be an argument that the less regulation/laws that there are, the better an economy should do. But it does not wash, does it!! All economies are in trouble.
The argument appears to be a doctrinaire libertarian one ... just get regulators out of the way, remove all planning permissions and anything else standing in the way of "free enterprize", then everything will be OK.
The argument appears to be a continuation of the Chicago School of Economics (Milton Friedman, Alan Greenspan, the Bernank and other disciples of Ayn Rand ... which include Ron Paul, who named his son Rand).
And what a fine mess that has got us all into. Especially since Clinton removed the Glass-Steagal Act.
It took a B-Grade movie actor - Ronnie Raygun - to popularize voodoo economics (trickle down) in the US. In the UK it took a grocers daughter - Maggot Scratcher - to explain, to the masses," how much better off they would be without "the heavy hand of government intervention" in the provision of safe working practices and such essential services as health care, roads, railways, air traffic control, etc.. NO. It all had to be privatized for "efficiency", even though railways, for instance, historically went broke and had to be bailed out by gove
That is: Capitalism persistently failed, beyond the first provision of services necessary to a modern, industrial economy which cannot continue without rail links, for instance.
There is nothing wrong with nationalizing essential services to keep them running, even at an ostensible loss - say postal services - because, without them, everything would grind to a halt.
This was all once quite clear, but NOW the failure of Capitalism has given way to the failure of Financialism.
Once upon a time it was obvious that a failed railroad company was "too big to fail", because it had both tangible assets and an important part to play in the real economy of transporting materials, goods and people, from one place to another.
NOW Financialism rules, OK.
NOW it is banks that are "too big to fail", though they have no capital of any kind and do not facilitate anything of tangible value.
TPTB have had their way - Wall Street and the City of London rule OK.
Rant over.
After owning small businesses for many years, it is hard for me to think of the US having efficient business infrastructure.
Drive along virtually any major road in North America, especially within urban town/city limits and all you see is a forest of in your face averts/hoardings, sometimes so bizarre it makes one smile at first and then angry that such f**k*d up planning regulations (or lack of) exist. Why would I want to know that a certain hotel is just 350/450/600 miles up the road? Do many people really go those extra miles just to stop at a certain branded hotel/motel?
In the UK, all you see are fields and trees for the most part, with far more discreet adverts, where allowed. Even in urban areas, you won't see massive roadside adverts/hoardings every few yards.
Quality of life IS certainly more important.
well then, carry your ass on to the uk, i'm sure one of those crass signs tells you how far away the airport is.
Nice article. A really good example of why the EU leaders can't get a real solution...considering it takes them six months to establish electric service. This is what happens when governments run businesses -- they run the business and the service right into the ground.
Hard landing, bitchez.
please note that the article is commenting on the local governance in the EU
i.e. not Brussel's fault, this time
I've see a similar UK article time ago when all the franchise-based companies were trying to get a slice of Italy's "Main Street" and were claiming that it was all done so that they could not invest...
mmmhhh... does this mean that Italy could become vastly more efficient while the UK has already reached it's pinnacle? interesting thought...
Ever been to Europe?
Thought not.
If you had ever been to France, Germany and Belgium, then you would know that the government-owned transportation systems are the best in the world.
Bitchez, but true.
PS
Not saying that fascism/national socialism is a good idea overall, but without German government backing the autobahns would never have been built and you would never have heard of Volkswagen - the project started by Herr Hitler. Nor would you ever have heard of Citroen and Renault. Nor would you have even the slightest notion of a public health system, nor any other benefits of a mixed economy; which you doubtless view as "communist" ... you probably even believe that the O'Bomber is Communist/Marxist/progressive/liberal, even though he takes his orders from Wall Str.
The sheer ignorance of you Usans never ceases to amaze me.
In my midwestern community, turn-on of either residential or commercial electric is routinely done in a few hours.
yea, here in Dallas also. I think the charts shown were compiled in the NE or the west coast; where unions reign and multiple fees (taxes) are extracted to pay for the unions. Still quicker than europe which has to pay for all the social programs; not to mention the mordida (graft).
European countries have only so much land....so forget the Construction Permits. Hell, here in 'fly over' land there are no construction standards. Hell, insulation isn't required.
I'd rather live in France/Germany/Holland/Denmark than here....their culture has an appreciation of the quality of life.
Like building crappy buildings brings a great quality of life. Vinyl siding and crappy windows w/ no insulation.....USA is number 1.
But I do like electricity....just wait until the Grid starts fucking up here in the USA. Germany has a massive residential solar program in place...not us.
Plus they have better FOOD!!!! Great food in fact.
I wish I could get more Italian goods....great porcelain, leather goods.....Goddess, I miss Italian shoes and purses. There is a CONTRACT somewhere that says 'USA will only import shoes, handbags, porcelain from China....never Italy.' Italians have a sense of beauty....China doesn't. I don't buy anything anymore...because it's all UGLY CHINESE CRAP. Thankfully I saw this coming and stocked up. I need nothing anymore.
Go OWS!!!!
Wow, seriously? Europe is running out of land? No country, except tiny island nations, is going to run out of land any time this century.
Don't let the TSA grab your ass on the way out.
How long does it take to get a hooker delivered ???
Getting a hooker is the inverse of the construction permit charts
This data would be a lot more useful if it showed the time taken vs the size of the bribe.
One thing that makes cell phones real popular in a lot of Europe and in third world countries is that getting a land line can take 6 months to a year.
FYI: It takes about 1-2 weeks in Frankfurt.
On the plus side, if you stop paying your rent in Italy (and sometimes if you never paid it), you will be well into retirement before they evict you. Of course, that's no plus if you're the landlord.
You forgot to mention what a giant bloated bureaucracy the World Bank is.
This article is misleading.
If you build during the night, you don't need a building permit in Greece, because inspectors only work from 11AM-3PM.
Why didn't I think of that? Our building inspectors are always back at the office by 4 p.m.
In the summertime that gives me nearly six hours of nailgun time before it gets dark, even if I don't get up until noon. There's always a silver lining somewhere.
Bureaucracy is the child of corruption. Corruption needs bureaucracy to hide behind.
With all the negativity, anti EU-EuroZone bloggers and the msm (s)pin heads.
If I were a betting man (which I am not),
I bet that Europe will succeed in becoming a united federalist state, (United States of Europe) either with or without the UK, as planned.
Keep betting...go long Euro now...show us.
america is going in the same direction and the truth is super unpopular.
http://expose2.wordpress.com
UK =Cuba