The Belgianisation Of Europe, Part 11

From the desk of Dirk Crols on Wed, 2011-02-02 13:51

Elton-John-Just-Like-Belgium-272985.jpg

Paul Belien will surely forgive me for using his well-known expression.  It was simply the first thing that crossed my mind when I read the article with the revealing title 'Breaking up is hard to do' in the European Voice a couple of weeks ago.  

Author Tim King wonders whether it would be easier for the eurozone to break apart or for Belgium to split up.  True, both scenarios are fraught with difficulties.  In King's view, both putative break-ups have in common that it is unclear whether there is an exit strategy.

For the eurozone, the costs of a break-up are immense - for the country that leaves the single currency, whose borrowing and debt problems would become worse rather than better, for the remainder of the eurozone, and for the rest of the international economy.

Breaking up Belgium is not much easier.  Even if the relatively minor problem of dividing the electoral district of Brussels-Halle-Vilvoorde can be resolved (and according to the courts, it will have to be), the position of Brussels is a much greater obstacle.

I do not entirely agree with the author, but that is not the issue here.   Further in the article, King is making a much more important point. Although breaking up is indeed in both cases very difficult, King correctly observes that the advocates of Belgian unity cannot argue as convincingly as those wanting to keep the eurozone together that break-up would be economically damaging for everyone.  In that regard he explicitly refers to the growing view in Flanders that the Flemish would be 'better off' without Wallonia which is draining Flemish resources and blocking Flemish policies and progress.

This discussion brings King to the main point of his analysis.  According to him, common to both break-up debates are fiscal transfers.  Both in Belgium and in the eurozone, the social consent in favour of fiscal transfers has broken down.

The wealthier Flemish north of Belgium declares itself fed up with paying the social-security costs of the south, arguing that Wallonia is profligate and wasteful.

In the eurozone, German politicians (on behalf of German taxpayers) declare that they should not have to meet the cost of public servants in Greece retiring in their fifties.

Both entities, Belgium and the European Union, are indeed suffering from the same (Belgian) disease.  Completely different nations with completely differing points of view and collective preferences are forced to adopt the same policies in practically every domain.  Whatever the outcome of the different democracies in Europe and Belgium may be, ultimately the federal entity, Belgian or European, decides.  

Like in Belgium, fiscal transfers in the EU under all kinds of regional aid schemes serve only one official purpose: to bring the poorer parts up to the standards of the wealthier parts.  In European newspeak this is termed 'cohesion policy'.  Regardless of the actual results, the EU continues to pour (European) taxpayer money - called structural funds - into various regions.  To give you an idea: in the Belgian context this means that in the period 2000-2006, Wallonia received 672,4 million euro of European aid in the field of "Objective 1" of the structural funds, and 224,9 million euro in the field of "Objective 2".  In the period 2007-2013 Wallonia is receiving 638,3 million euro in the field of regional policy and 449,2 million euro from the European Social Fund.  

In an interview in the Metro daily paper on 4 February 2008, the French-speaking liberal politician Gérard Deprez, then Chairman of the Committee on Civil Liberties, Justice and Home Affairs of the European Parliament, admitted that the European structural funds had not achieved much result in Wallonia, and that both Wallonia and the European Commission are responsible for this failure.  But the effectivity of economic policies or the quality of the decision-making processes do not matter much to policy makers.  Money will continue to flow.

Fiscal transfers not only underpin all kinds of European policies - like the Common Agricultural Policy and the Common Fisheries Policy - but they are now very visible in the eurozone debt crisis which makes this crisis, in King's view, a very sensitive one.  Richer (Northern) countries are asked to transfer taxpayer money to a bail-out fund to save poorer (Southern) countries which pursued dubious policies or where the population lived beyond its means, like in Greece.  Indeed, this is a very visible illustration of the Belgianisation of Europe.  King thinks that in Belgium there will be a trade-off between fiscal transfers and reform, with more responsibilities for the regional governments.  Again, I do not agree.  Anyway, King's article offers ideas for an interesting discussion.

Marcfrans said: "I do

Submitted by Capodistrias on Fri, 2011-02-04 19:22.

Marcfrans said:

 "I do consider the term "idiocy" to involve at least an element of "acting against one's own self-interest".  Politicians reflecting the wishes of the 'special interest groups' that put them there are acting in their "selfish" (I repeat) personal interest, and are thus not "idiotic".  That the general welfare is not served by this, should be obvious to sane minds.  However, that is not those politicians' concern.  In the long run, they will be dead.."

Or sooner, depending on the pursuit of their self-interest.

Marcfrans,

Idiocy is part of human nature, I don't exempt anyone walking, breathing, texting or avataring. Some take it to an art form, take another bow Kappert; some (most)dabble, thank you, thank you; some believe they have staved off idiocy and built up an impenetrable wall around themselves with books and reason, status and bank accounts where the pursuit of self-interest is not only equal to the exercise of Free Will but supercedes it, nothing could be further from the Truth. They too can take a bow, just be careful bending over, oops there goes the wall.

The inability of the latter group to continually be asking themselves 'WHAT is right and wrong?' not 'WHO is right or wrong?' and their preoccupation with their "self-interest" is precisely why the world finds itself immersed in idiocy on a regular basis.

European Cohesion # 4

Submitted by marcfrans on Fri, 2011-02-04 01:02.

@ Traveller, Capo

No, I don't see a Chicken and egg problem here.  I do consider the term "idiocy" to involve at least an element of "acting against one's own self-interest".  Politicians reflecting the wishes of the 'special interest groups' that put them there are acting in their "selfish" (I repeat) personal interest, and are thus not "idiotic".  That the general welfare is not served by this, should be obvious to sane minds.  However, that is not those politicians' concern.  In the long run, they will be dead (to paraphrase Keynes), but the childeren and grandchildren of the voters will bear much of the consequences.  I maintain that the "idiots" are the voters when unsustainable and shortsighted fiscal policies are being pursued by politicians over a significantly long period.  

@ Kappert

For once you make a few sensible comments, but you remain ignorant of the major relevant facts or the 'big picture'.  The subject concerned irresponsible fiscal policies in various European countries which have jeopardized "European cohesion".  A couple of points:

-  Bankers certainly have played a role in the current financial crisis (which helped to make the recession deeper than normal), but so have government  regulators of the financial systems in several countries.  But, that is a wholely different subject and has nothing to do with the massive debt problems of various European countries. These debt problems are the result of run-away spending, i.e. large budget deficits over a long period. 

-  The runaway public spending is overwhelmingly the result of so-called 'social spending' mainly on highly questionable items.  To include "defense", in a European context, is ludicrous, because the share of defense spending (both in relation to GDP and to total G expenditures) has been declining continuously for a long time.

- I am no fan of state capitalism or so-called crony capitalism, irrespective of which "cronies" are receiving favors, be they "pharma, bankers,.... or whoever.   However, while these distortions of genuine competitive conditions will negatively affect the overall growth rate of an economy over time, they have virtually nothing to do with the issue at hand, which is massive debt problems of various governments.

Your commentary proves my earlier point, i.e. it is the bulk of of the voters that are often stupid, not the politicians. Such an opinion does not make me anti-democratic.  On the contrary, as a democrat and as a conservative, I say that the voters get the politicians that they deserve.

@traveller

Submitted by kappert on Thu, 2011-02-03 19:42.

No obligation for thanks. My text is my text and not intended to drag you in.

European cohesion #3

Submitted by kappert on Thu, 2011-02-03 14:18.

I like to agree with traveller and blame unprepared (or over-convinced) politicians and greedy bankers for the current debt crisis. I also doubt that the 'voters' (we the people) are to blame for those people getting in high positions. The 'people' increasingly do NOT vote any more, but 'special interest groups' (banks, pharma-industry, military) rise their stake in our still called demo-cracies. Industrial and agricultural subsidies guarantee the maintenance of stakes, preventing, for example, a higher import of agricultural goods from Africa or South America. Dumping prices, e.g. milk, jeopardise any healthy competition. Arbitrary tax laws (Ireland, Channel Islands, Luxembourg, Liechtenstein, etc.) foster 'grasshopper' enterprises and save haven for criminals. As marcfrans likes to blame (quote) 'stupid voters', I may question, repeatedly, his view on demo-cracy. According to siegetower, only economic powerhouses can get rich, all others, consequently unsuccessful, will be always behind and eventually get bankrupt. It's hard to argue in a more primitive way, I hope you act different in your own family.

@ kappert

Submitted by traveller on Thu, 2011-02-03 14:58.

Thanks for agreeing with me, but no thanks for the subsequent text.

You draw me in an impossible direction there and I feel used, ouch.

Be nice please and don't do this anymore.

@Kappert

Submitted by siegetower on Thu, 2011-02-03 06:17.

Ok Kappery.

All the nations and regions you mention, in simple fact do not produce as much economic activity as...Flanders, the other hald of Scotland, all of England except Cornwall, All of Austria except Burgenland, Lisbon, the other half of Spain, the north half of Italy, France, Scandinavia, most of Germany Holland, Prague, Athens and Budapest.

So throwing money at Malta etc and expecting them to get rich is not good policy or sustainable policy. Germany is richer because of centuries of investment and development by themselves, the Germans. After the Estonian social and national capital was destroyed by Communism/Socialism it will take hundreds of years of investment and development by themselves, the Estonians, to come to a comparable level to Germany. If those regions and nations you mention do not produce quality goods or services that are comparable to those of France or England, then they'll always be behind.

From what economic powerhouse is Greece ever going to pay back their debts incurred in trying to live outside their means. What do they make that will pay back their unsustainable lifestyle. Nothing.

You cannot compensate for being unsuccessful. Otherwise you take money from productive people and nations and waste it, frankly. You cannot eradicate poverty by merely transferring assets from the wealthy.

It just makes everyone poor.

And the nations that are raped by these structural funds are not tiny. If England and Denmark etc were not being leached by the unproductive-lets-compensate-them EU, they would have more international voice and clout than they do under the EU.

European cohesion # 2

Submitted by marcfrans on Wed, 2011-02-02 21:05.

@ Traveller

I disagree.  Those politicians are responding to the 'special interest groups' that put them there.  So, the "idiots" are not the politicians but, rather, the voters who do not seem to grasp this and who keep on re-electing these politicians.  Exhibit # 1 (of such voters) is kappert.   He actually thinks that the debt problems of various European governments are/were caused by ...."subsidies and dumping prices".   That parroted (mis) 'diagnosis' is as fanciful as blaming the Brazilians for 'Hitler'.  

Conclusion: stupid voters lead to foolish politicians. But the "idiocy" lies in the stupidity of the voters, not in the selfish shortsightedness of politicians.

@ marcfrans

Submitted by traveller on Wed, 2011-02-02 22:02.

Although in principle I would agree, I am still convinced that a politician who follows this trend is an idiot or a crook. You cannot ignore the reality of our situation without being idiotic or guilty.

@traveller

Submitted by kappert on Wed, 2011-02-02 19:32.

I'm sure you know people who do work in the poorer European regions. Subsidies and dumping prices would be a better argument than to ride on the 'lazybone' argument.

@ kappert

Submitted by traveller on Wed, 2011-02-02 20:27.

Yes, I know Greece and other "poor" European countries.

Europe has launched themselves into a sure collision course with destiny. Smack against a concrete wall of debt.

We know all about that in Flanders.

If somebody goes bankrupt, let him go bankrupt, so much the sooner he will be back on his 2 feet.

Now the agony is prolonged and everybody gets poor.

The American and European  politicians of today ARE PURE UTTER IDIOTS, advised by corrupt unprofessional bankers..

@ kappert

Submitted by traveller on Wed, 2011-02-02 18:50.

In short, pay, pay, pay, otherwise we make trouble.

We could work, but that's not really what we want to do.

European cohesion

Submitted by kappert on Wed, 2011-02-02 16:45.

Regarding the often criticized European structural funds, receiver regions include Wallonia, half of Scotland, Wales, the Cornwall tip, Burgenland in Austria, Portugal except Lisbon, half of Spain, half of Italy, Malta, parts of Lower Saxony and the 5 new Länder of Germany (former GDR) except Berlin, Estonia, Latvia, Lithuania, Poland, Czech Republic except Prague, Slovakia, Hungary except Budapest, Slovenia, Romania, Bulgaria and half of Greece. Therefore, it is not comprehensible to speak of a north-south dichotomy, nor of 'dubious policies or where the population lived beyond its means'. If tiny Europe wants to keep a voice in the world, cohesion efforts are indispensable, further neglection of the poorer regions might reveal hazardous.