Pedro Albuquerque Sheds Light on U.S. & E.U. Economics and Our Current Political Climate

I met economics professor Pedro Albuquerque in a somewhat freaky manner. My family was reading the book Freakonomics and a section of the book made me want to write about incentives as they relate to economics. I did a Google search and found an interesting blog titled Incentives Matter. As I read some of the articles I felt like I'd discovered a kindred spirit, which made me want to contact this blog writer to get to know him better. To my astonishment he was actually here in Duluth, teaching economics at UMD. We soon had lunch at Pizza Luce which led to inviting he and his wife Sophie to our Philosophy Club. Eventually they moved to the south of France, but we've stayed in touch. Occasionally events in the news lead me to reach out to gain his perspective on things from outside the country. Since reality is mediated to us through only partially reliable media it is useful to have a network of collaborating or alternative perspectives. I've found Pedro's perspectives fresh and insightful.

EN: Briefly summarize your career and what you do.

Pedro Albuquerque: I was born in Brazil and I have a Ph.D. in Economics from the University of Wisconsin-Madison. I lived in Duluth while teaching at UMD's Labovitz School of Business and Economics and I'm now a professor at KEDGE Business School in the metropolitan region of Aix-Marseille in the south of France.

EN: You lived in the U.S. for a while and now live in France. Economically and politically, what is similar and what is different?

PA: I've lived in the U.S. from 1995 to 2010 and, retrospectively, I must say that those were great times, specially the years before 9/11. Our expectations about the future were much more optimistic then. Having lived for 15 years in the U.S. and for 8 years in France I can say that there are many similarities between these two societies, which have origins in their common revolutionary roots, after all the American Constitution and the French Declaration of the Rights of the Man and of the Citizen, having both benefited from the pen of Thomas Jefferson, are based on similar values, ideals and struggles. In this sense I don't think there are two other developed societies that have so much in common. But there are many differences naturally, most of them stemming from the contrasts between common law in the US and Roman civil law in Continental Europe, which lead to American corporate capitalism on one side and to European social market capitalism on the other side.

EN: What is the appeal of socialism for so many Americans? What is the track record of socialism in Europe?

PA: The US, despite its enormous historical achievements, has been until now unable to extend the benefits of its successes to the whole of its population. This is particularly true when compared to the more evident social successes of some Western European societies. One popular but disingenuous explanation is to attribute Western European relative successes to socialism, so the mentioned appeal. Reality is more complex however: socialist experiments in Europe have all failed badly, with the developmental disparities between Western and Eastern European societies being the best example of how negative was the impact of socialism in many of those. Some have argued, and I agree with them, that the success cases weren't due to socialism but to ordoliberalism, a modern version of social and economic liberalism that emphasizes institutional building, good governance, social protection and sensibly regulated market capitalism. Nordic societies would be examples of ordoliberal successes.

EN: What are the strengths and weaknesses of Capitalism?

PA: I believe that Joseph Schumpeter's work is still the most important in explaining the strengths of capitalism: it promotes creative destruction, a system of incentives where innovation is at the heart of entrepreneurship and its rewards. This has never existed before in history. The weaknesses come from the instability and conflicts that rise from this same creative destruction. Finding the right balance between innovative disruption and social peace is in my opinion the greatest challenge of modern societies, which becomes even more important as the pace of social, economic and technological transformation accelerates. I'd like to add that we should never forget that modern societies like the American or the French are still in the middle of the revolution of ideas that gave rise to the modern era.

EN: The divisions between right and left (conservatives and liberals) in the U.S. seem more extreme today.

PA: I like to think about what's happening today in the US as another backward step in the incomplete path of the American Revolution. This is not new in the relatively short American history, it has had enough of its Andrew Jackson versus Abraham Lincoln moments. Still, it's quite surprising to observe that the U.S., the clear hegemonic winner of the post-WWII period, is now at the front of the political destabilization process that has been taking over the world since 9/11. Very candidly, from a social scientist perspective, I wouldn't have ever predicted this historical outcome. I've always had enormous faith in the American humanistic and progressive fiber, and I'm still in awe at how badly it has been faltering recently.

EN: How is this playing out in Europe? Is the E.U. threatened? That is, will the E.U. unravel and what will be the end result?

PA: Europe has been very badly affected by those internal struggles in the U.S. given its prominent role in reconstruction and stabilization of the continent after WWII and the influence of American culture and business in the region. There are therefore only two possible outcomes for Europe, which has its own ghosts to deal with: it will bend back towards its most primitive political instincts and disintegrate into relatively irrelevant and isolated aging nations, see the recent example of Italy, or it will grow over the tutorship of the U.S. by finally taking responsibility for its own future as a still very influential federation of nations, accepting immigration as a social force instead of a social handicap. Despite some recent political accidents there are also some even more important positive surprises such as the election of Emmanuel Macron in France. It's very hard then to predict how this situation will unravel, we're clearly at a historical crossroad, but if the past serves as a guide I still remain mostly optimistic about the end result. Social change is the only historical constant and there is always sunshine after a storm.

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Related Link
http://pedrohalbuquerque.net