Geopolitics of Coffee and tea

One of my favourite blogs is the It’s About time one – which sends me on a daily basis marvellous pictures of old paintings generally on a theme such as the ruffles which adorn the necks of aristocratic figures or the preparation of foods in medieval times – eg here and here
Some amazingly modern faces and styles are in evidence
I hadn’t realised that the famous Vienna coffee shops came from a some coffee beans being found in the fields outside Vienna in the aftermath of the Ottoman siege of Vienna in the 17th Century. Curious that the main thing which impacted me on my first visit to Istanbul some 25 years ago was their teas! In powder form and carried on trays around the bazzars and served as you looked at carpets.
My 3 years of ceremonially receiving and serving teas in small, beautiful bowls and teapots in Uzbekistan 1999-2002 almost killed the coffee habit in me. The coffees of Sofia dragged me back to the dangerous weed – but, at least, Sofia hedges its bets by having so many small shops which seel both coffee beans and Chinese teas!
I wanted to get an explanation for this apparent decline in Turkish tea-drinking but Google seemed strangely hooked on either the Tea Party or the Greg Mortensen saga (Three Cups of Tea). Wikipedia tells me that

tea became the widely consumed beverage of choice in Turkey only in the 20th century. It was initially encouraged as an alternative to coffee,which had become expensive and at times unavailable in the aftermath of the First World War. Upon the loss of southeastern territories after the fall of the Ottoman Empire, coffee became an expensive import. At the urging of the founder of the republic, Atatürk, Turks turned more to tea as it was easily sustainable by domestic sources

A Greek site tells me that tea there was expensive and, on independence from the Ottomans, was considered an upper-class habit. Another site told me of the Ottoman (red) tea spoken about by travellers and still apparently available in places such as Bursa - with 10 different natural ingredients - ginger, havlıcan (a plant in the ginger family), hibiscus, linden, cloves, lemon, orange, cinnamon, apple and thyme.

And I found this superb tea and carpets site which reminded me of the carpet-buying days in central asia and Turkey which preceded my current passion for painting.

Finally some lovely miniatures from the website with which I started

Technocrats, securitats ...and cronycrats

An article in Scottish Review by someone apparently also living in Romania asks whether we now have 'Eurocracy' replacing democracy – pointing not only to the parachuting of bankers into the Greek and Italian Prime Minister jobs (in the greek case, the same guy who had overseen the falsification of accounts when the country entered the euro) but also to recent events in Romania. Romania has just completed a 2 year (apparently successful - at least in IMF terms!) spell of control by the IMF and, the article writes, –

two days after the IMF representative left Bucharest, the government of the deeply unpopular prime minister, Mr Emile Boc, resigned en masse and was swiftly replaced by a completely new government of what appear to be young technocrats. In Romania, the prime minister is appointed by the elected president. Finally, two days later, the governor of the Romanian Central Bank, the only man with any clue about fiscal and economic policy in the entire country, announced that responsibility for the nation's fiscal policy should no longer rest with the IMF but should be transferred to those nice German regulators at the EU, through the new fiscal treaty. Romania's president was one of the first non-Eurozone government heads to sign the treaty. Romania is confirmed as the next country, after Greece and Italy, to be governed by Merkozy's EU fiscal and political regime.

I have much sympathy with the author’s general point about the reduction of democracy but he is not quite right to argue that the new Romanian government is an example of the new "technocracy”. It is certainly true that the new Prime Minister Mihai Razvan Ungureanu, is not an elected politician. He was, previously, head of Romania's foreign intelligence – which makes him a "securitat" rather than "technocrat"! His full list of new ministers was approved yesterday in the Parliament. M.R. Ungureanu's government team is formed of all-new members from the Democratic Liberal Party (PDL), while coalition partners, the Hungarian Democrats (UDMR), and the UNPR retain their ministers who have served in Emil Boc's government. Two independents also keep their portfolios. Half, therefore, of the new government is unchanged – and only about 6 (on my count) are not politicians half of them incumbents. The full list of the new government is:

• Deputy PM - Marko Bela (UDMR, incumbent)
• Home Affairs and Administration Ministry - Gabriel Berca (PDL)
• Finance Ministry - Bogdan Dragoi (PDL)
• Economy Ministry - Lucian Bode (PDL)
• Foreign Affairs Ministry - Cristian Diaconescu (UNPR, incumbent)
• Transport Ministry -Alexandru Nazare (PDL)
• Environment Ministry - Laszlo Borbely (UDMR, incumbent)
• Tourism Ministry - Cristian Petrescu (PDL)
• Defense Ministry - Gabriel Oprea (UNPR, incumbent)
• Culture Ministry - Kelemen Hunor (UDMR, incumbent)
• Justice Ministry - Catalin Predoiu (independent, incumbent)
• Communications Ministry - Serban Mustea (PDL)
• Labor Ministry - Claudia Boghicevici (PDL)
• Education Ministry - Catalin Baba (PDL)
• Health Ministry - Ladislau Ritli (UDMR, incumbent)
• Agriculture Ministry - Stelian Fuia (PDL)
• European Affairs Ministry - Leonard Orban (independent, incumbent)

As many of the new members of the government are young - some of them in their early 30s - Mihai Razvan Ungureanu pointed out on Wednesday it was a young government formed of

new faces, exceptional professionals, people who I've worked with in various structures of the government. It is a government worthy of trust and ready to show not only a change in political generations but also a change of principle in activity

Frankly I don’t hold my breath. I have already commented that the younger generation of ambitious people here is no better than its elders. They owe their position to those elders (whether parents or protectors) and their education abroad has made them even more arrogant than their elders. It is, for me, significant, that the new Minister of Finance is the very young man I fingered in September 2010 for cronyism and disregard for such legalities as the need to make an open and honest declaration of financial interests. He was then State Secretary at the Ministry and is therefore apparently one of the non-elected technocrats – except that I doubt whether his route to that high-level civil service position permits that term to be used of him and his like. This is what my September 2010 blog said about him -

People like Dragoi enjoy such patronage (with no experience - he became a State Secretary at the age of 26 after an extended education!) and protection and seem so contemptuous of these forms that he doesn't even bother to update his form which understates his income by a factor of 40! 250 euros he says when it is actually 9,600!
His out-of-date form does, however, declare some of the additional revenues he earned as a committee member of various state funds.
I alighted on his declaration form by accident – just choosing his file at random from the list of officials’ forms. These assets, earnings and concealments reveal systemic immorality which, in Romania’s case, seems to be shaped and sustained by the role of its political parties which grabbed significant amounts of property in 1990 and which now determine the career path of young characters like Dragoi (nationally and internationally) and take in return a significant part of his earnings. For more on this issue see Tom Gallagher's 2010 article.

When people talk about pinning their hopes on the younger generation, I will always think of this face. It is when such behaviour is revealed that I feel some shame for having spent time working trying to reform such systems.

Perhaps, therefore, the term we should be using for Romania and similar countries with similar systems is not "technocracy" (which implies ability) but "cronycracy". By the way, an earlier article in Scottish Review by the same author was the best piece Ive read about the reasons for the protests here which led to the change in government.

The caricature is Daumier - one of history's best! This one is called Marionettes.

Some positive Greek responses

For some time now, I’ve been wanting to visit Thessalonika which is just down the road. A week or so ago, I watched a documentary about the city’s new mayor – a 69 year-old vintner who got involved in citizen politics some 7 years back through disgust with the way the city was being run. It was clear he (Boutaris) was a popular figure as he walked through its streets with the journalist. Der Spiegel has a short article about how he is going about the reform of the city’s administration – eg hiring an auditor in his first week in office and reducing the number of Directorates from 31 to 20. Already the city's budget has decreased by 30%

Thessaloniki was always seen as a stronghold of the conservatives and nationalists. The conservative New Democracy party controlled city hall for 24 years, holding the city hostage with its cronies. During the election campaign, the local archbishop refused to allow Boutaris to kiss the cross during mass, even imposing an excommunication of sorts on the candidate: "As long as I am in office, you will not see the inside of city hall." A television crew recorded the incident, and when the footage was aired even conservative citizens were outraged over the archbishop's audacity. "People wanted change. They realized that things couldn't go on that way," says Pengas. Under Boutaris's predecessor, €51.4 million ($68.4 million) had suddenly and inexplicably disappeared from the city budget. No one knew what had happened to the money. A former prefect is now under investigation in the case.

One of the mayor’s young aides reckons that the city (with 7,000 officials) has double the number it needs – thanks to cronyism. So clearly some of the shine will come off the mayor’s image as he begins to tackle that problem. Already his attempts (with French help) to introduce performance evaluation of staff has hit resisitance.
All of this confirms the appalling picture which emerged in the recent OECD report on Greek administration - which, again, seems to have been covered only by Der Spiegel. But the Archbishop's behaviour reminds me of Michael Lewis' article on the Greek crisis which appeared in October 2010 (in the American Vanity Fair of all places) which fingered the Orthodox Church as the richest and most corrupt body in Greece!

Most of the articles which are appearing about the impact of government measures are focussing on the impoverisation of its people and settlements. The New York Times Magazine ran a long piece recently.
But Le Monde of the 10th February ran an article called "Vivre la Decroissance" by two journalists Olivier Razemon and Alain Sailles to Athens telling the story of people who had set up a “bank of time” (trapeza chronou)..It works like this; people work as certain amount of hours and in exchange they get some services. Some people have set up a clothes exchange…Others are working solar systems in order to get free electricity…Some cultivate tomatoes, spinach, thyme, laurel, in a word all sorts of fruits and vegetables…which can be exchange for hours in the bank of time. The two journalists asked the question: “a big debate has ben launched; must we exchange products for services? If yes, how do you define the value of this product”. People in Britain have tried similar ‘alternative systems” like ‘letts’. It did not get very far…

An interesting Greek blog I've just come across gives a lot of detail going back some years about the situation there.
One of the journalists has recently published a book on a theme close to my heart – how concrete is destroying our countryside -

Année après année, la campagne française disparaît sous la ville. Malgré les proclamations indignées et les législations vertueuses, la terre fertile se raréfie, les espaces naturels se morcellent, la ville s’éparpille et se cloisonne, l’automobile s’impose comme unique lien social. Le phénomène, connu sous le nom d’étalement urbain, ne résulte pas seulement, comme on le croit souvent, de la crise du logement et du désir d’accession à la propriété individuelle. Centres commerciaux, entrepôts, parkings, la ville étalée se nourrit, en France comme ailleurs, d’une économie opulente et d’une société qui valorise le bonheur individuel, à court terme de préférence. Autrement dit, nous sommes tous responsables.
Les égoïsmes locaux, les tentations des élus et les tics des aménageurs se heurtent ça et là à des réflexes de survie. On pourrait densifier et vitaliser la ville existante. On pourrait prendre les décisions au bon niveau et en réfléchissant à l’avenir. On pourrait résister au tout-parking. On pourrait améliorer la qualité de vie sans gaspiller le territoire.
Les auteurs brossent un portrait vivant et sans concession de la bataille inégale qui se livre entre la soif de bitume et les rares garde-fous susceptibles de contrer le phénomène. Tout est perdu ? Voire. Et si les crises qui se profilent fournissaient un sursaut brutal mais inespéré ?

collapse of empires

I am now literally marooned here in the Bucharest snow – such heavy snowfalls as have blocked the car exit although I have tried to clear the snow each day. As tends to happen in such situations, I have been losing myself in the past – first with Joseph Roth’s classic The Radeztky March written in 1930 and then with Robert Service’s Trotsky; a Life.

Roth’s book is the first of a trilogy and relates the stories of three generations of the Trotta family, professional Austro-Hungarian soldiers and career bureaucrats of Slovenian origin — from imperial zenith to First World War nadir. For saving him in battle, the Emperor awards Lt. Trotta the Order of Maria Theresa and ennobles him. Elevation to the nobility ultimately leads to the Trotta family’s ruination, paralleling the imperial collapse of Austria–Hungary (1867–1918).
Although he does not assume the airs of a social superior, everyone from the new baron’s old life perceives him as a changed person, as a nobleman. The perceptions and expectations of society eventually compel his reluctant integration in the aristocracy, a class with whom he is temperamentally uncomfortable. The disillusioned Baron Trotta opposes his son’s aspirations to a military career, insisting he prepare to become a government official, the second most respected career in the Austrian Empire; by custom, the German son was expected to obey. The son eventually becomes a district administrator in a Moravian town. As a father, the second Baron Trotta (still ignorant of why his war-hero father thwarted his military ambitions) sends his own son to become a cavalry officer; grandfather’s legend determines grandson’s life. The cavalry officer’s career of the third Baron Trotta comprises postings throughout the empire of Austria-Hungary and a dissipated life of wine, women, song, gambling, and dueling, off-duty pursuits characteristic of the military officer class in peace-time. In the progress of his career, Baron Trotta’s infantry unit suppresses a local uprising against the imperial government; awareness of the aftermath of his professional brutality begins his disillusionment with empire. I found this quotation from the last few pages of the book which covers the retreat from the borderland with Russia -

Most of these orders were to do with the evacuation of villages and town and the treatment of pro-Russian Ukrainians, clerics, and spies. Hasty court-martials in villages passed hasty sentences. Secret informers delivered unverifiable reports on peasants, Orthodox priests, teachers, photographers, officials. There was no time. The army had to retreat swiftly but also punish the traitors swiftly. And while ambulances, baggage columns, field artillery, dragoons, riflemen, and footsoldiers formed abrupt and helpless clusters on the sodden roads, while couriers galloped to and fro, while inhabitants of small towns fled westward in endless throngs, surrounded by white terror, laden with red-and-white featherbeds, grey sacks, brown furniture, and blue kerosene lamps, the shots of hasty executioners carrying out hasty sentences rang from the church squares of hamlets and villages, and the sombre rolls of drums accompanied the monotonous decisions of judges, and the wives of victims lay shrieking for mercy before the mud-caked boots of officers, and red and silver flames burst from huts and barns, stables and haystacks. The Austrian army’s war had begun with court-martials. For days on end genuine and supposed traitors hung from the trees on church squares to terrify the living.

Robert Service's Trotsky (2009) deals with the aftermath of the collapse of both the Austro Hungarian and Russian empires. It's a reasonable read - although the flurry of the revolutionary action did leave me a bit bewildered at time and I felt more space was needed (it's almost 600 pages). The picture painted of the man is not an attractive one - arrogance is the main feature stressed. The book has in fact attracted a fair amount of criticism -  both for factual errors and those of bias - on a professional historian site which one might normally expect to be positive; and also by more political critics here and here.

Managing knowledge

A colleague sent me recently some diagrams about knowledge management – which prompted some musings about a term which has never been an inviting one for me. When so much institutional knowledge has been lost by peremptory sackings and downsizings in the past decade and more, how can anyone take seriously an interest/discipline for the retention and management of knowledge? Or was KM indeed brought into being precisely because such losses of personnel were anticipated? And how does KM relate to the previously fashionable "organisational learning" – and the writers associated with that eg Peter Senge let alone the less celebrated Reg Revans and his "action learning"?
What precisely have we gained through use of the latest term? I could relate to the previous terms – but find "knowledge management” pretentious (in its reification of knowledge, implication that organisations can capture it) and offensive (in its apparent emphasis on systems rather than people). Perhaps it’s just me and my anarchistic leanings – I have never really properly belonged to an organisation although, when a senior politicians, I did organise a variety of forums which brought people together who did not normally rub shoulders with one another. And, as my website and blog demonstrate, I am very committed to sharing knowledge and experiences. I belong to that generation which does not see it as a private resource. But Knowledge Management, as I understand the subject, springs from the recognition that the skills and knowledge of an organisation’s staff are, potentially, the distinctive advantage it has these days which can pull in the profit. If only, that is, it can identify the winning formula and ensure it is applied appropriately elsewhere in the organisation. But all of this implies and requires trust – and this is the one thing which the management of modern organisations has succeeded in destroying.
Of course, many non-profit bodies, not least in the development field such as The World Bank, see themselves as knowledge hubs and have published useful stuff about how to collect, access and use appropriate lessons from practice. One recent (and rather simplistic example) example was from the World Bank Institute and, some years ago, the ODI did a very useful literature review.

But I still feel that the field itself deserves the sort of ridicule which , by serendipidity, another blogger heaped on management fads -

Until five years ago, I'd never heard of brand wheels. I'd chosen the relative penury of bookselling so that I would never have to sit in boardrooms, having serious conversations about things that didn't matter. It was an unspoken agreement. Then HMV bought the company I worked for and suddenly books were called 'product', knowledge became 'learnings' and the staff were called 'resource' (always singular, I noticed). The agreement had been broken. It was a horrible time.
One day I was invited to a regional meeting and an ambitious young manager revealed a diagram of a thing called a 'brand wheel'. It consisted of various segments that represented different aspects of running a bookshop. Things so painfully obvious that it seemed unnecessary to write them down.
There were lots of words like knowledge (not 'learnings', on this occasion), authority, communication, enthusiasm and development. There was a reductive quality about the brand wheel that smacked of totalitarianism (I'm sure that Stalin would have had one if he'd known about them): this is who we are, this is what we think and this is what we must do.

And my prejudices were reinforced when I glanced at the many volumes of text of the incredible project which has just tried to diagnose the state of the "knowledge sector" in Indonesia - and also by this 2002 article - The Nonsenseof knowledge management.

And, if you’re wondering why I’ve not said anything about the change of Romanian government which we have been experiencing this week, it’s simply because other people are saying it much better than me. See Sara’s blogposts since 6 February

The painting is a Josef Iser (1881-1958) - probably at the Hippidrome of his home town Ploiesti and one of whose paintings was available, at a private gallery I visited yesterday, for 15,000 euros. It's the Ana gallery which has a great collection of paintings -most however piled inaccessibly against the walls - and managed by a dour woman who follows you round and names the authors of each work you touch regardless of the interest you show. Very depressing. 

Money silences

A very important and revealing short piece on media freedom by Nick Cohen deserves a high profile -

The grand posture of writers in liberal democracies is that they are the moral equivalents of dissidents in repressive regimes. Loud-mouthed newspaper columnists claim to 'speak truth to power'. Novelists, artists, playwrights and comedians announce their willingness to transgress boundaries. Their publishers look for controversy like boozers look for brawls because they know that few marketing strategies beat the claim that a courageous iconoclast is challenging establishments and shattering taboos.
To maintain the illusion that they are part of some kind of radical underground, intellectuals must practise a deceit. They can never admit to their audience that fear of violent reprisals, ostracism or crippling financial penalties keeps them away from subjects that ought to concern them - and their fellow citizens.
Challenging writing about economic crises is rare. Diligent readers have every right to ask why so few financial writers warned them that the greatest crash since 1929 was on the way. As no less a personage than Her Majesty the Queen said to the academics at the London School of Economics, 'Did nobody notice?'
In Britain's case, any writer who had tried to research a book on the rapacious and authoritarian managers at the Royal Bank of Scotland or HBOS, for instance, or on the insanely reckless derivative swap and insurance markets in the London-based subsidiaries of Wall Street banks, would have run into the libel law. It is some barrier to overcome. The cost of a libel action in England and Wales is 140 times the European average. Contrary to common law and natural justice, the burden of proof is on the defendant. Even the few remaining wealthy newspapers, which have business models that have not yet been destroyed by the Internet, find it hard to afford a court case. For the publisher of a serious book, which would do well if it sold 50,000 copies, the idea of risking £1 million or more in a legal fight to defend it is close to unthinkable.

In 2006, the Danish tabloid Ekstra Bladet investigated the links between the Icelandic bank Kaupthing and tax havens. Kaupthing's managers did not like what they read, but failed to persuade the Danish press council that the paper had done anything wrong. The bank sued for libel in London instead. The newspaper pulled the articles and apologised because English lawyers ran up costs that were beyond its editor's worst nightmares - £1 million, and that was before a case had gone to court.
Kaupthing went for the paper in England not just because it wanted to kill the original story, but because it also wanted to deter others from spreading the idea that Iceland was not a safe place for investors. The English legal profession obliged. Newspapers' lawyers thought once, twice, one hundred times before authorising critical stories. A few months later Kaupthing collapsed - along with the other entrepreneurial, go-ahead Icelandic banks - and British depositors lost £3.5 billion. By allowing libel tourists to fly to London and use our repressive laws, the English legal profession had also stopped the British investors from learning of the danger in investing in the country's banks.

You no more hear writers and broadcasters admit that they are frightened of investigating investment banks than you hear them admit that they are frightened of challenging the founding myths of Islam. We cannot puncture our own myth that we are fearless seekers after truth, even though, if we honestly owned up to our limitations, we might force society to confront the fact that modern censorship does not conform to old models. It is a mistake to think of repression as repression by the state alone. In much of the world it still is, but in Britain, America and most of continental Europe the age of globalisation has done its work, and it is privatised rather than state forces that threaten freedom of speech.

Editors are no longer frightened of politicians but of Islamist violence, oligarchs and CEOs. They worry about libel and the ability of the wealthy to bend the ear of their proprietors or withdraw advertising. But they are not frightened about leaking the secrets or criticising the actions of elected governments. We need new ways of thinking about censorship. The first step is the most essential. Only when we have the courage to admit that we are afraid can we begin the task of extending our freedoms.

EC's Cohesion Funds (part V) A Tale of Sound and Fury?

There’s something to be said for ignoring a policy field for several years and then trying to catch up with it in one go – it makes you focus on the essentials and certainly saves a lot of time! So it’s been in the last few days as I have downloaded and skimmed a lot of material on the (rather incestuous) debate which has been taking place over the past 2-3 years about the EC Structural (or Cohesion) Funds whose programme for 2014-2020 will have to be decided this year.

As the Commission’s views eventually surfaced at the end of 2011, it seems, frankly, to be have been a case of "sound and fury…signifying…nothing”! When I read the leaflet which set out the Commission’s proposals of 6 October, they don’t seem to contain anything significantly new – more ex-ante evaluation; better monitoring; and a new category of "transitional regions”. And the much-discussed idea of more local flexibility seems to have died without trace. So perhaps the journalists I accused of neglect in an earlier post have been correct to leave the subject well alone. As we say, it "doesn't appear to amount to a row of beans!"
In 2010, a slide presentation caught the terms of the then current debate rather well. For those masochists who want to follow the details of the debate, an archived site allows you to access both the key papers and also the various components of the 2009 Barca report including its ten 10 commissioned studies and a summary of some hearings.

Despite a caustic comment recently about language, the papers from Strathclyde University’s European Policies Centre are the only clear updates you get on Structural Funds. The latest is appropriately subtitled "let the negotiations begin".
In November 2011 one of the leading members of the Centre produced a paper EC Cohesion Policy and Europe 2020 – between place-based and people-based prosperity which subjected the debate on the EC’s Cohesion Policy to the dreadful Discourse Analysis -

Ideas are increasingly recognized as playing an important causal role in policy development. Instead of seeing change as the product of strategic contestation among actors with clear and fixed interests, an ideational perspective emphasises the struggle for power among actors motivated by different ideas.

 The last half of the paper, however is actually interesting - it traces the history of cohesion policy and then explores the various policy positions about the nature and shape of the future programme (which now accounts for 40% of the EU budget). The paper suggests 2 central dimensions – focus and management – to construct a matrix. The focus can be geographical place or sector (eg transport, energy, IT, environment); the management central (EC led) or local (national) – which gives four options -
• Territorial contractualism (top-down); supported by two key players – the European Parliament and the European Commission’s Regional Policy Department (DG Regio)
• Territorial experimentalism (with more local flexibility); supported by the Committee of Regions
• Sectoral functionalism (top-down); supported by the other relevant Commission Directorates
• Sectoral coordination

Ideas in these arguments become tools which rationalise the interests of the various actors. As I thought about the process, I was suddenly reminded of one of the seminal texts in the literature of political science – Graham Allison’s The Essence of Decision (1971) - which applied three different explanatory models to the Cuban Crisis – the rational (what is in the interests of the government); the organisational process (organisations do what they are used to doing); and bureaucratic (court) politics ("various overlapping bargaining games among players arranged hierarchically in the national government”). This is a paper of his from 1968 which presents the basic proposition; and this a critique from 1992.

we don't live in a post industrial age

I’m reading Ha-Joon Chang’s 23 Things they don’t tell you about Capitalism at the moment – and am very impressed. An economist who writes simply and elegantly (shades of JK Galbraith) and makes you think (as distinct from fall asleep). Section nine – entitled We do not live in a post-industrial age - took me back to arguments with my father in the 1970s about the role of industry. The indifference (at least) of British social scientists – and the policy elites who took their arguments – to the decline of manfacturing industry is a phenomenon to which we have not yet done historical justice! Here’s some of what Chang has to say -

Part of the de-industrialisation myth is due to optical illusions – reflecting, for example, changes in statistical classification rather than changes in real activities. One such illusion is due to the outsourcing of some activities that used to be provided inhouse by manufacturing firms and thus captured as manufacturing output (e.g., catering, cleaning, technical supports). When they are outsourced, recorded service outputs increase without a real increase in service activities. Even though there is no reliable estimate of its magnitude, experts agree that outsourcing has been a significant source of de-industrialisation in the US and Britain, especially during the 1980s.
In addition to the outsourcing effect, the extent of manufacturing contraction is exaggerated by what is called the reclassification effect. A UK government report estimates that up to 10% of the fall in manufacturing employment between 1998 and 2006 in the UK may be accounted for by some manufacturing firms, seeing their service activities becoming predominant, applying to the government statistical agency to be re-classified as service firms, even when they are still engaged in some manufacturing activities.
A third factor in the myth is the relative price-effect. With the (inflation-adjusted) amount of money you paid to get a PC ten years ago, today you can probably buy three, if not four, computers of equal or even greater computing power (and certainly smaller sizes). As a result, you probably have two, rather than just one, computers. But, even with two computers, the portion of your income that you spend on computers has gone down quite a lot (for the sake of argument, I am assuming that your income, after adjusting for inflation, is the same). In contrast, you are probably getting the same number of haircuts as you did ten years ago (if you haven’t gone thin on the top, that is). The price of haircuts has probably gone up somewhat, so the proportion of your income that goes to your haircut is greater than it was 10 years ago.
The result is that it looks as if you are spending a greater (smaller) portion of your income on haircuts (computers) than before, but the reality is that you are actually consuming more computers than before, while your consumption of haircuts is the same.

 A very thorough review in Dissident Voice starts with an excellent summary of some of the main points Chang makes - all starting with a statement of "what they tell us", followed by  a demolition of the conventional wisdom -

* Government must never interfere with “the free market.” (Chang says WRONG: modern economies would collapse without numerous forms of government intervention. Smart capitalists know very well that “there is no such thing as a free market.”)
* Companies should always be run in the interests of their owners/shareholders (WRONG: shareholders often damage the long-term prospects of companies by over-emphasizing short-term profit.)
* Economic health requires the assumption that people think only about themselves (WRONG: the most successful firms and national economies understand how to harness peoples’ cooperative and altruistic sentiments and instincts.)
* Poor counties need to adopt “free market” (neoliberal) policies (especially “free trade”) to achieve sustained growth. (WRONG: developing countries experienced superior growth in the period of state-led Third World development [1945-1970] than in the period of neoliberal, market-oriented “reform.” This is richly consistent with how the world’s richest nations – the ones who preach neoliberalism to the rest of the world – rose to ascendancy in the past: “through a combination of protectionism, subsidies, and other [state- and not market-led) policies that today they advise developing countries not to adopt” [63].)
* The relatively free market, capitalist-friendly neoliberal United States enjoys the highest standard of living in the world. (WRONG: thanks to the nation’s remarkably high levels of inequality [itself a symptom of its extreme neoliberalism], millions of Americans do not enjoy the United States’ remarkable average living standard. That extreme inequality and the poverty it generates are the main factors behind comparatively poor health indicators and crime levels in the U.S. Higher immigration and poor working conditions explain are the main reasons that many services are purchased more cheaply in the U.S. At the same time, Americans work considerably longer hours than Europeans so that “per hours worked, their command over goods and service is smaller than that of several European countries [103].”)
* Making rich people richer makes the rest richer too since it is rich people who seek out marketing opportunities and then invest to create jobs (WRONG: pro-rich policies have failed to produce economic expansion in the last three decades. “Trickle down economics” doesn’t work. It can have no positive outcomes in the absence of polices that (contrary to neoliberal doctrine) that make the rich deliver higher investment and share the benefits with – and put spending power in the hands of – non-affluent people, who spend a higher portion of their income than do the rich).
* Government must give maximum freedom to big corporations for the good of the countries in which those companies reside (WRONG: it is often better for the national economy and even the individual company for government to impose reasonable restraints and obligations on those companies).
* Capital has no nationality in the age of multinational corporations and globalization and therefore it nationalistic government policies towards transnational capital is “at best ineffective and at worst counterproductive” (WRONG: “most transnational companies in fact remain national companies with international operations, rather than genuinely nation-less companies” and it is “very naïve to base economic policies on the myth that capital does not have any national roots anymore”)
* Governments lack the ability (including the required expertise and information) to make intelligent business choices and thereby “pick winners” through state-led industrial policy. (WRONG: governments can and do regularly choose winning firms and industries over and against “market signals” and in ways that can and do “improve national economic performance”).
* The only equality that is economically functional or advisable is equality of opportunity. Policies that seek to generate more equality of outcome are inherently inefficient and unjust (WRONG: the equality of opportunity that is required to broaden the spread of economic benefits does not really exist without at least some measures to enhance equality of outcome. Free public education is woefully insufficient to broaden opportunity when it is not accompanied by policies that put a basic decent minimum standard of material living for households on the bottom end of the scale).
* The big government welfare state damages economies by depriving the rich of the incentive to create wealth and making the poor lazy. It creates resistance to the change that modern economies require. (WRONG: by providing second and third chances and a safety net to the non-affluent, the welfare state encourages workers to be more open to change when comes to choosing their first jobs and letting go of their existing jobs).
* Efficient financial markets – capable of the rapid allocation and re-allocation of capital across time and place – are the source of economic health and expansion Recent financial disturbances aside, smart policy makers should do nothing to slow down and complicate the operation of the world’s high speed financial markets (WRONG: U.S. and western financial markets are actually too efficient. The currently over-developed financial sector is now so proficient and organized in the pursuit of short-term profits that it is a leading source of economic instability and is incapable of giving emergent enterprises and industries and complex national economies the patient nurturance they require to develop over time.)

The painting is the only abstract which graces my collection - by Stefan Pelmus, more of whose paintings can be seen here.