For Sam, the ultimate vindication of free-market economics was not the collapse of communism. That, he always believed, was inevitable, given the many inefficiencies of the system. So there was little satisfaction in it. No, what gives Sam real comfort are the problems currently being faced by countries such as Germany.
Sam is not exactly an original thinker but he is both energetic and articulate. He used to be a professor of economics at a west coast university. In the 1970s, he embraced the theories of the monetarists and propounded them with sufficient vigor and clarity for him to reach some prominence. In the 1980s, he found himself in great demand at conferences and seminars. The end of the Reagan era produced a hiatus – gentler, more caring policies seemed to be the order of the day.
Sam did not respond to the change by being innovative and developing new products, which is one of the things he has always advocated. What he did instead was to find new markets for his old ideas.
At first there were plenty of opportunities in eastern Europe. But he soon found the territory to be very crowded. So he moved on – to the wastelands of distant countries which had once been a part of the Soviet Union.
It was not a comfortable existence. It involved long and tedious journeys and staying in hotels which had yet to develop any understanding of what it meant to be in a service industry. But he suffered privation in his cause – in the way that missionaries had once suffered privation to take the Gospel to the remoter parts of the globe. Nevertheless, he redefined the measure of economic success. It was no longer a chicken in every pot but rather a Hyatt, or at least a Holiday Inn, in every city.
Sam was in transit when I met him – but then Sam is perpetually in transit, even when he isn’t traveling. He bustled into the airline lounge at Frankfurt airport where I was engrossed in one of the back numbers of Newsweek which seem to be the staple reading matter in such places.
He was regaling me with his latest adventures when his eye was caught by an item in the news broadcast being shown on the television set across the room. We watched the pictures of a march by trade unionists protesting about a proposed cut in welfare provision.
‘Looks as though they’ve got serious problems,’ said Sam with some satisfaction in his voice. Germany had always been a problem for him. It had always been held up as an alternative model to the one he promoted. Through the ‘social market’ Germans had achieved a high standard of living, a safe and stable society and rapid industrial growth without many of the problems associated with such leaps and bounds in other countries. By contrast, deregulation in America was held responsible for growing crime, poverty and despair.
‘I always knew that it would end in tears in the long run,’ said Sam with more than a hint of schadenfreude in his voice. I ventured that many of Germany’s problems might stem from the enormous costs of reunification.
‘It’s not just Germany,’ he replied. ‘Look at France, look at Italy, look at Spain. All of them with huge unemployment problems. They don’t know how to change. They don’t know how to create jobs. And all because they want to protect themselves from what they see as the worst excesses of the market.’
‘Jobs are created by setting up new businesses and in Europe the rate of new company formation is pitiful compared with the US,’ he went on, warming to his theme. ‘Do you realize that last year, America raised $10 bn in venture capital while 17 European countries raised less than £8 bn between them? And half of that was raised in the UK. And most of it went towards financing management buy-outs rather than financing new enterprises.’
‘But they’re doing something about it,’ I suggested. ‘Haven’t they set up a new pan-European exchange for growth companies?’
‘Huh,’ snorted Sam. ‘Easdaq isn’t working. It still has only ten companies listed while over 80 European companies are listed on Nasdaq. The problem is that European investors are risk averse and Europe is no place for entrepreneurs. Why, in France, they’ve just elected a government which believes that the answer to unemployment is to create thousands of public sector jobs.’
Sam’s flight was called – the long but last leg of a tedious journey back home. As he stood up, he gave me his final thoughts. ‘Flexible labor markets, support for entrepreneurs and less government. That’s what Europe needs.’
It seemed to me that Sam was staking out a new territory for his evangelism. And who could blame him. For all their faults and many problems, Madrid and Rome were far more attractive than Baku and Tblisi.
I thought about what he had said about less government. Hadn’t Karl Marx foreseen the last stage of communism as being the ‘withering away of the state’? Perhaps we were seeing a meeting of minds.
