The Fractured EU

Dick Baynton
Dick Baynton

For ‘Progressives’ who think the US should be a reproduction of the European Union, read on. The EU is a vast bureaucracy that attenuates individual legal systems, cultures, languages, currencies and trade practices of 28 nations. Twenty four member countries have adopted the standard EU currency while nations like the UK have stuck with their pound. Currently the pound (?) is valued at $1.43 and the Euro ( €) is valued at $1.11 (per U.S. dollar). The British pound and the U.S. Dollar have been foundation currencies for many years while the Euro remains somewhat more volatile.

The management of the European Union might be likened to herding cats because there are so many conflicting rules and regulations to confound nearly every issue. The original purpose of creating the EU was to promote ease of commercial trade among European nations while uniting the EU countries into a more influential commercial trading entity regarding international import/export. But alas, member countries have varying control over their own politics and economies. An unintended and possibly thoughtless consideration was the transfer of citizenship from poor countries to economically stable countries. Greece, for example has built up unconscionable debt.

Germany unilaterally decided to bring in millions of refugees recently to bolster their population shortfall resulting from low birthrates. (Birthrates among Germans = 8.4 per 1,000, Syrians = 22.5 per 1,000). Although there are other problems, one of the main challenges is maintenance and increase in German output (GDP). Other concerns are the melding of cultures, religions, work habits and language and the drain on the German welfare, justice and healthcare systems. The birthrate in European countries has fallen by 40% since 1960 while life expectancy has risen from 69 to about 80 years of age according to a UN report.

The result is the transfer of wealth from well managed economies like Germany and the UK to member countries with corrupt and/or inept leadership. Another important profile that defines many highly paternalistic members is incompetent tax planning, low worker productivity, high pay and retirement and health benefits. As in Greece, the government ran out of tax money before they could pay benefits, leaving the nation a huge debtor. Greece’s debt was more than €360 billion but has been reduced to a little more than €300 billion as of 2015. (To convert these amounts to U.S. currency, multiply by 1.11.)

Here’s the problem; whatever the debt is, the probability of EU member nations that loaned Greece billions, receiving full payment of their loan is slim. The reason is that Greek citizens and their government are unwilling to change their economic habits of high compensation, high government employment and high benefits. Greek unions have pushed through arcane benefits such as retirement at an early age (in their 40’s), premium pay for computer operators, payments for widows and unmarried children of deceased government employees (union members) and hazard compensation and early retirement for beauty operators. Bonuses are paid by some government agencies to workers who show up on time.

Unemployment throughout the Euro area currently stands at 10.3% while member states like the UK are at 5.1%, Germany is at 6.2%, Spain is 20.9% and Greece is at 23.96%. (By comparison some of Africa’s countries suffer unemployment rates of more than 40%.) To compound the shortfall of employment, most EU countries must undergo the assimilation of several million refugees (called immigrants) with untold € billions for job and language training, law enforcement, healthcare, housing and sustenance.

There are now just 42 workers for every hundred non-working adults over age 65 according to the EU’s data agency. By 2060, the agency anticipates that there will be 65 for every hundred non-working persons 65 and older, meaning that 35 workers must carry the retirement (tax) burden in the future that 58 workers now must carry. There is a huge ‘pension pinch’ that could become an economic avalanche in Europe because there are virtually no funds built up by some member EU governments.

A student who flunked 8th grade arithmetic could understand that a worker making low or no retirement payments during 25-year employment cannot receive generous retirement benefits for 35 years without others being taxed into oblivion. That’s called Progressive Socialist Equanimity.

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