Monday, November 26, 2012

European Union and the Welfare State

- Dr. Ileana Johnson Paugh

(Bio and Archives) Monday, November 26, 2012

The Bilderberg Group’s Steering Committee met on November 13-14, 2012 for the 61st working session of the world’s most exclusive club, during the Rome Film Festival at Hotel de Russie, hoping to blend in with celebrities, fans, reporters, and movie directors, hidden in plain view, to discuss the fate of the EU, Italy, Greece, and Spain.

Forgoing the rental of an entire hotel and the secrecy surrounding previous meetings, the 80people in attendance spent, according to the Italian daily newspapers, Il Vostro and InvestireOggi, 100,000 euros, a pricey sum considering that ordinary citizens of the 27-member union were asked to make deep cuts in their welfare state driven budgets.

The Bilderberg attendees included a long list of Italian CEOs, Mario Monti, the Italian Prime Minister, cabinet members, Italian bankers, Mario Draghi, the European Central Bank president, the owner or RAI, Tom Enders of Eads, Marcus Agius of Barclays, Kenneth Jacobs of Lazard, Edmund Clark of TD Bank, and the chairman of Alcoa and of Shell.

Spain, Italy, and Greece have protested vehemently over the required austerity measures which citizens were unwilling to accept - they strongly believed that the crisis was engineering by the very people who were now “concerned” with resolving it.

Additionally, once citizens became dependent on the welfare state, mentality, and largesse, it was much harder to become self-sufficient. When the free money and entitlements were scaled back and financial responsibility was required in order to pay for banks that gambled with derivatives but were unwilling to write off the resulting losses, the masses protested vehemently and even violently.

The blame game was exacerbated by the British weekly, the Economist, after its 14-page report called France’s economy a “ticking time bomb and the biggest threat to the euro currency’s stability.” The French called the photograph headlining the article, a bundle of French baguettes tied with a lit fuse and the French flag, inflammatory and “French bashing.” The Economist had accused the French voters in March of being in “denial,” calling President Francois Hollande “dangerous” for Europe. (France 24)

As a strategic member of the Eurozone, France is a threat to EU because of its large public sector that encompasses 57 percent of GDP. The socialist president Francois Hollande was elected on the promise of a 75 percent income tax on the rich, higher taxes on companies, wealth, capital gains, and dividends, a higher minimum wage, more entitlements, and the rollback of the Sarkozy measure to increase the retirement age.

Politicians/oligarchs spent huge sums to control the Eurozone. German industry in general and its exports profited from the initial EU conglomeration. After Germany gave over one trillion euros in bailouts to Italy, Spain, and Greece, Germany’s economic growth slowed down, even in rich parts of Germany like Mainz and the industrialized Rhineland.

Germany’s economy has been successful when compared to the Eurozone. When compared to the period when the currency was the German mark or when compared to other non-EU countries, it has been a failure.

According to Rodney Atkinson, “Germany’s success in productivity is ironically due not to GDP per capita growth but to wages falling relative to production.” Thus Germany was “left with poor consumers at home and poor consumers abroad who cannot afford to pay their debts to Germany.” Chancellor Angela Merkel urged German companies to give their employees higher wage increases in 2012. “Prosperous Bavaria is challenging in court a fiscal balancing system that makes it hand over some revenue to poorer federal states.” (Reuters, October 15, 2012)

The fiscal engineering is not a surprise. Socialist states promote re-distribution of wealth and progressives endorse taxing the rich excessively in order to “even-out the playing field” in the name of social justice. If we were to confiscate the entire accumulated wealth of every rich person in this country, it would last perhaps, at the current rate of government spending, less than two months.

The permanent euro bailout, the European Stability Mechanism, has been challenged in Constitutional Court by 37,000 Germans, the largest Constitutional complaint in German history, but the oligarchs prevailed. The European Central Bank (ECB) decided in September that it would purchase unlimited quantities of sovereign bonds from EU countries in crisis. ECB will link its market interventions to ESM, applying strict austerity criteria to any country that seeks aid. National parliaments will have no control over the unlimited hyper bailout fund, making them irrelevant. (Phillip Wittrock)

The Catalan-speaking Catalonia, a wealthier region in Spain with high-tech industries and productive farming, paying the lion’s share in taxes to Madrid, while getting less revenue when its own finances are overstretched, resents having to pay for poor areas such as Spanish-speaking Andalucia. Similarly, Dutch-speaking Flanders resents paying for French-speaking Wallonia. (Paul Taylor and Robert-Jan Bartunek, October 15, 2012)

Heather Grabbe, the Brussels director for the Open Society Institute, explains the separatist move among many states and countries as not correlated to money but an expression of “historical grievances and language.” (Steven Erlanger, The New York Times, Europe’s Richer Regions Want Out, October 6, 2012)

Could it be that rich and productive countries are tired of subsidizing social welfare, re-distribution of wealth schemes, failed multiculturalism, and sloth?

Mariano Rajoy, the Spanish Prime Minister, warned separatist regions that opting for independence will mean being shut out of the EU – new member states admission requires unanimous agreement. With unemployment at 25 percent in Spain, 6 of its 17 regions asked the central government for a bailout. Creating jobs and improving economic growth can only happen by the existence of the private sector and economic activity of citizens who pay taxes to the government.

To say that people in Spain or Italy do not like to pay taxes, it is an understatement. According to the Tax Research Institute in the U.K., 22.5 percent of GDP in Spain comes from work off the books. As fewer people are paying taxes in the underground economy, the state debt gets larger, more austerity measures are required, and fewer resources exist to jump-start the economy. (Lisa Abend, Time World, October 31, 2012)

Italy’s Prime Minister, Mario Monti, wants his country to be bailed out as well because he ‘fears the parliamentary democracy could bring down the European Union.” Mass demonstrations in Rome against German imposed austerity measures reflected those in Spain, France, Greece, and Portugal. There is a deep resentment against Germany’s dominance in the EU.

Nigel Farage believes EU bailouts are nothing short of subjugation of countries in financial need to the new world order. Farage describes the next phase of EU control as forcing those who “do not need or want a bailout to accept a bailout, to sign budget guarantees and to have the power to strike down national budgets after they’ve been through national parliaments.”

“I feel that the Euro zone is now in a very dark place, economically, socially, politically, and I fear for the countries trapped inside in that prison will be there for many years to come. It is against this backdrop that the Nobel Peace Prize has been awarded to the European Union.” (Nigel Farage, UK Independence Party)

Oskar Freysinger, Vice President of the Swiss People’s Party, pointed out in an interview that the European Union is imposed on nations by technocrats. He believes that the EU will fail eventually because “citizens are identifying less and less with a bureaucratic anti-democratic and centralized power” like the EU.

Tony Blair thinks that the EU needs a president who can rule over a “sustainable” European integration. UN Agenda 21 is promoting everything sustainable, why not a sustainable integration under the aegis of a president elected through a Europe-wide election? (The Telegraph, October 29, 2012)

The Brits are not charmed by the EU since the union is costing them jobs and it aims to wipe out national borders. Brussels pays EU citizens to cross borders in order to find employment elsewhere, but it won’t pay for Brits to move within their country in search of jobs.

“A common European jobs market exports Greek and Spanish unemployed to the relatively rich north in order to bolster confidence in the Euro and keep it going until the next crisis summit.” (Tim Aker, Get Britain Out, November 1, 2012)
Ed: I'm glad I voted Republican, but seriously doubt it really would have changed anything had Romney won.

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