FOLLOWING THE EUROPEAN UNION

Economics isn't known as the dismal science for nothing:

"...Unless Europe reverses two trends -- low birthrates and meager economic growth -- it faces a bleak future of rising domestic discontent and falling global power. Actually, that future has already arrived.

Ever since 1498, after Vasco da Gama rounded the Cape of Good Hope and opened trade to the Far East, Europe has shaped global history, for good and ill. It settled North and South America, invented modern science, led the Industrial Revolution, oversaw the slave trade, created huge colonial empires, and unleashed the world's two most destructive wars. This pivotal Europe is now vanishing -- and not merely because it's overshadowed by Asia and the United States...."

http://www.washingtonpost.com/wp-dyn/content/article/2005/06/14/AR2005061401340.html?nav%3Dhcmodule&sub=AR

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I don't understand why this can't be made a mechanic formula? Something like:

per capita net payments = x * ((per capita income) - (EU average of per capita income))

All you'd have to do at the outset is to agree on a reasonable value of x. After that, redistribution would adjust automatically as some countries get richer and others get poorer.

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All of this illustrates the bad side effects of government intervention in economic matters. If only a small portion of the energy devoted to justifying, defending, attacking and arguing over the distribution of these funds - taken from the general population through taxation - was, instead, devoted to the development of profitable economic activity in the targeted areas of Europe, everyone would be far better off. Great things have indeed been accomplished in the formerly poorer regions of Western Europe, partly as a result of EU assistance. I expect that similar great things will also be accomplished in transforming the former Socialist Republics of Eastern Europe. However these benefits are a transient thing. Government programs tend to remain long after their reasons for existence have vanished - after that there are only bad side effects - uneconomic distortion of investment and payment, and squabbling & political infighting to get better access to the government tit.

Now, in the wake of the constitutional matter there will likely be a renewed struggle between the organs of EU government, defending their bureaucratic turf, and budget power and the national governments seeking special advantage. - in addition to the disputes among the national governments themselves.

All of this suggests that the body of "settled law" that was masquerading as an EU constitution, wasn't so "settled" after all. In retrospect it is easy to see that the EU would have been better off with a constitution that focused only on the basic principles of union and the definition & limitation of the powers of the new union government. (everything is easy to see in retrospect - much harder in prospect)

Now it appears a few years will be required to get through all these disputes before the constitutional issue can be addressed again. I suspect the EU concept of "shared sovereignty" will be sorely tested in the process.

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UNION STREET. EPISODE 2

.......Meanwhile, the Smiths, the La Forge's and the Schmidts (another wealthy neighbour, who ARE paying a fair amount in) each own a business, and each business is staffed and run only by their respective extended families.

The Smiths encourage their family to take out savings and pension plans, ensure that they work as many hours a week as they want, and pay them by the hour, offering additional production bonuses, to give an opportunity to increase their salaries. Money is supplied from the Company profits in times of workers need, in order to provide basic security and wellbeing. A small Company pension is available when they retire.
Because of the work flexibility and prudent money management, the business premises "runs" for fifty hours per week, for very little increase in overheads than it would incur whilst running for 35. The business trade starts to grow, and profits are good.

The La Forge and Schmidt businesses, run on a strictly imposed 35 hours per week. The bosses do noT "push" private pensions, as there is very generous support when times are hard, all paid for out of Company profits.
The Companies promise their workers, that they will never go short of anything when they retire, as the Company will not only pay a very good pension out of the future profits, but will be very generous when it comes to medical needs or financial support when they are old.
Profits are minimal, but at least the workers are happy.

Doing the yearly accounts, Schmidt and Laforge suddenly realise that, although they are barely turning a profit, half of their workforce will retire in ten years, and there wont be enough profit surplus, to supply them with a good retirement......and these family/workers have made very little provision of their own.
They face the awful prospect of telling them that either their retirement dreams are in serious jeopardy, or the payments will cripple the profits of the business.............

There could be trouble on Union Street.......find out in the next episode (due to be screened in about 2015)

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georgeob1 wrote:

If only a small portion of the energy devoted to justifying, defending, attacking and arguing over the distribution of these funds - taken from the general population through taxation - was, instead, devoted to the development of profitable economic activity in the targeted areas of Europe, everyone would be far better off.

Here in Germany, leading politicians call your kind of attitude "the darkest 19th century". We have moved beyond that, you know. Did you know that the governments of France and Germany have pressured the newcomers in Eastern Europe to commit themselves to a minimum level of taxation? The effort is currently stalled, but I'm sure it will be revived at some point.

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In the budget debate the Brits are right: there's no way out unless the CAP (common agricultural policy, a French baby) stops absorbing almost half the EU budget. From The Economist:

http://www.economist.com/images/GA/2005w25/cga131.gif

http://www.economist.com/agenda/displayStory.cfm?story_id=4077922

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Steve (as 41oo) wrote:

The Smiths must have been pretty dumb to agree to such an arrangement in the first place.

Yes, I agree....but they were threatened at the time, that if they refused, nobody would speak to them and a big barrier would be erected, outside their house.

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Lord Ellpus wrote:

1.If we have already received 80 billion as you say, Walter, it just goes to show how much we were being ripped off in the first place, if we STILL remain the second largest overall contributor, even after that 80 billion has been deducted.
.... ..... .....

Quote:

From a nice summary by Terry Wynn, MEP for North West England, although with statistics as of 2002:
In 2002, Member States' payments (these figures include the TOR, following the "traditional" way of depicting Member States contributions) to the EU budget were the following (in million):

As was already mentioned before, the system of these own resources payments should take into consideration the ability of each Member State to contribute to the EU budget. It has to be noted, however, that the presence of the UK rebate considerably reduces this desired correlation. Its complexity also diminishes the transparency of the whole own resources system. But as long as CAP expenditure remains as it is the United Kingdom will always insist on keeping the rebate.

In the light of this, and in order to be able to see whether these shares are "fair" or "unfair", one also has to have a closer look at the "wealth" of the Member States as expressed by their gross national product.

If you look at percentages of the EU budget and at the relation of the Member States' payments (in million ) to their GNI you arrive at the following picture (2002):

Another interesting way to look at the EU budget is Member States' contributions in relation to their population, i.e. the contribution of the European citizens to the EU budget:

from: The EU Budget - Public Perception & Fact, Terry Wynn: PART ONÈ: THE EU BUDGET - REVENUE, EXPENDITURE AND BUDGETARY BALANCES

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Link to the complete broschure The EU Budget - Public Perception & Fact, The European Union - how much does it cost, where does the money go and why is it criticised so much? by Terry Wynn, MEP, Chairman of the Committee on Budgets of the European Parliament

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Ellpus,

A very nice metaphpor - Union street, as you describe it, is wonderfully illustrative.

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Walter Hinteler wrote:

Link to the complete broschure The EU Budget - Public Perception & Fact, The European Union - how much does it cost, where does the money go and why is it criticised so much? by Terry Wynn, MEP, Chairman of the Committee on Budgets of the European Parliament

Is this the same Terry Wynn, who has overseen the EU budget that hasnt been "signed off" (doesnt balance, in a big way) for the past ten years.
The Auditors have refused to declare them as correct and complete.

Or am I thinking of someone else?

Re, your linked graphs, Walter. The way they are constructed, to complicate and possibly confuse/shield people from seeing the very basic "net payment", would lead one to think they were designed by a top Eurocrat.
The H.M. Treasury graph shown earlier, simply draws from the figures of what went in, and what came back to member Countries, thereby showing quite clearly, the NET figure.

I am sure that, given a large enough team of statisticians, I could demonstrate by means of various nonsensical columns on a graph, that my Aunt Fanny is really my Uncle, but nobody would REALLY understand how these guys came to that conclusion.

How much did we pay in, how much did we get back. That's all we need to know, as we all know that the "big three" are relatively similar, and should therefore be paying about the same "per head".

I like George's idea for a formula, by the way.....but I tell you now, if it was even suggested, French Farmers would immediately cause havoc in Paris, and Calais would be blocked. The French would cave in....as they always do.

It will never happen.

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Lord Ellpus wrote:

Re, your linked graphs, Walter. The way they are constructed, to complicate and possibly confuse/shield people from seeing the very basic "net payment", would lead one to think they were designed by a top Eurocrat.

[..] How much did we pay in, how much did we get back. That's all we need to know, as we all know that the "big three" are relatively similar, and should therefore be paying about the same "per head".

Walter already posted THAT graph before, Lord Ellpus.

Here it is again: what countries paid "per head" (capita) in 2003. The UK was in, what, sixth place?

http://newsimg.bbc.co.uk/media/images/40624000/gif/_40624960_givers_and_takers2_gra203.gif

The HM Treasury graph you posted earlier, on the other hand, does not show "per head" contributions, but national totals (for 2002) - which of course will tend to be bigger the bigger a country is.

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georgeob1 wrote:

Ellpus,

A very nice metaphpor - Union street, as you describe it, is wonderfully illustrative.

Why thank you George....as we all know, it's a bit more complicated than that, but you obviously get my drift.

Any TV Companies wishing to take up this "Soap" idea, I now declare Copyright and demand a place on the screenwriters team, but I will only work 35 hours a week.

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But I agree, since we all know that Germany and the UK are relatively similar (in terms of prosperity), they should therefore be paying about the same "per head". Which means a significant increase in the British contribution.

I don't know that France is also "relatively similar" - the country is a lot less prosperous than Germany of the UK, so I'd say a smaller contribution is logical. Though I heartily agree with any far-reaching reform of the agricultural subsidies (which will indeed hit the French hardest) - for the sake of third-world peasants if nobody else.

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nimh wrote:

Lord Ellpus wrote:
Re, your linked graphs, Walter. The way they are constructed, to complicate and possibly confuse/shield people from seeing the very basic "net payment", would lead one to think they were designed by a top Eurocrat.

[..] How much did we pay in, how much did we get back. That's all we need to know, as we all know that the "big three" are relatively similar, and should therefore be paying about the same "per head".

Walter already posted THAT graph before, Lord Ellpus.

Here it is again: what countries paid "per head" (capita) in 2003. The UK was in, what, sixth place?

The HM Treasury graph you posted earlier, on the other hand, does not show "per head" contributions, but national totals (for 2002) - which of course will tend to be bigger the bigger a country is.

I think you will find that we were discussing 2002, Nimh, Walters graph was for 2003.
Yes, we were in sixth place in 2003, maybe that's why Chirac wants to push us back up to second again.

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Nimh wrote:-

"The HM Treasury graph you posted earlier, on the other hand, does not show "per head" contributions, but national totals (for 2002) - which of course will tend to be bigger the bigger a country is."

Then please explain to me why France (same population as UK) paid only half the amount we did?

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Thomas wrote:

I don't understand why this can't be made a mechanic formula? Something like:

per capita net payments = x * ((per capita income) - (EU average of per capita income))

All you'd have to do at the outset is to agree on a reasonable value of x. After that, redistribution would adjust automatically as some countries get richer and others get poorer.

Sounds good/fair to me. Well, I'd go with the PPP-something - the purchasing power per capita thing rather than per capita income outright - otherwise it wouldnt be fair on the Brits and Swedes with their high prices. But yup, would work. It'd be interesting to set different numbers for "x" and calculate what it would mean for the current contributions - might be some surprises there. No time right now, alas.

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Lord Ellpus wrote:

I think you will find that we were discussing 2002, Nimh, Walters graph was for 2003.
Yes, we were in sixth place in 2003, maybe that's why Chirac wants to push us back up to second again.

So you'd agree that in the last year we've seen figures here for, the UK was actually not paying an overly high share into the EU costs at all, then?

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nimh wrote:

But I agree, since we all know that Germany and the UK are relatively similar (in terms of prosperity), they should therefore be paying about the same "per head". Which means a significant increase in the British contribution.

I don't know that France is also "relatively similar" - the country is a lot less prosperous than Germany of the UK, so I'd say a smaller contribution is logical. Though I heartily agree with any far-reaching reform of the agricultural subsidies (which will indeed hit the French hardest) - for the sake of third-world peasants if nobody else.

On the 2002 figures, we DID pay the same per capita as Germany (ot thereabouts).
Why do you say that the French are not "relatively similar", and that they are a lot less prosperous?
If this IS the case, whose bloody fault is that? If it WERE true, isnt this a classic example of their economic policies and level of protectionism being totally wrong?
And just WHY should Germany and the UK (and others, including the Netherlands) stump up more than them, just because their work/life philosophy causes them to be poorer?

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it all stems from the early days of the CAP when France agreed to drop tarifs on German goods providing Germany effectively subsidised inefficient french farmers. (It was a war reparation of sorts).

And once you are paid for being inefficient, you tend to stay that way.

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