"It would be absurd to take the money of the industrious and productive northern Europeans to give it to the southern Europeans, less laborious and already on early retirement," writes the Dutch weekly Elsevier Weekblad in his comment. This sentence is enough to understand that the transfer union in Europe will be an inexhaustible source of resentment, hatred and mutual accusations. On Tichys Einblick from German the article by the Dutch Jelte Wiersma.
Dutch, help us. This is how the Frankfurter Allgemeine Zeitung reacted when Angela Merkel and Emmanuel Macron on May 18th proposed a 500 billion euro European fund for reconstruction. Holland is expected to pay around € 30 billion. The fund should be an unconditional gift to the countries economically most affected by anti-coronavirus restrictions. These are mainly the countries of southern Europe. The proposal by the German chancellor and the French president implies a transfer of money from north to south Europe. Germany will thus cross the Rubicon. For the first time, in fact, Merkel shows her intention to transfer money to southern Europe
It is a rather perverse fact. Because the data show that southern European countries are not poor at all and have enough money or have sufficient access to credit. They could also easily improve the productivity of their economies with reforms, as indeed the northern countries have already done.
The Germans are less wealthy than the French and Italians
First of all, we must clear the way from a series of fairy tales. The main countries of southern Europe, France and Italy, are not poor. The Swiss bank Credit Suisse every year calculates the value of private assets in these countries. The analysis shows that if the total capital in France is added up and divided by the number of adult residents, the Frenchman has an average of 276,121 euros. For the Italian, the average wealth is 234,139 euros. For the Dutch it is 279.077 euros, for the Germans 216.654 euros. The Germans on average are poorer than the French and the Italians, while the Dutch are a little richer. The debt of Northern Europe is also not less than that of Southern Europe.
The focus is always on public debt. Everyone is familiar with the rules of the eurozone stability and growth pact that states can have a national debt of up to 60%.
But few people know the suggestions of the European Commission, which for families indicates a maximum debt of 133% of GDP. And in Northern Europe, private household debt is much higher. If you add up the public and private debts of the 27 EU countries (Eurostat data 2018), you get a more precise picture of which countries are really indebted.
The Dutch have mega-debts, the French and Italians don't
France has a public debt of 100% of GDP, private debt amounts to 148% of national income. Taken together they make 248%. Italy has a national debt of 137% and a private debt of 107%: a total of 244%. Germany has a public debt of 62.6%, the private debt of families is 102%: a total of 164.6%. And then there is the Netherlands. Here the public debt is 59.4%, but the private debt is 241.6%. Overall, the Netherlands has a debt of 301% between public and private debt.
While Germany is less indebted than the two major southern European countries, the Netherlands have more debt. Denmark and Sweden have slightly lower debt than the Netherlands, but both countries with around 250% of GDP are higher than France and Italy.
The difference is mainly due to the high debt contracted for the purchase of real estate. In other words, most houses in France and Italy (over 70%) are real estate without or with a small mortgage. In the north, mortgage debt is skyrocketing, while access to real estate is lower. Only 56.2% of the houses in the Netherlands belong to those who live there, in Germany it is 54%.
Theoretically, France and Italy could greatly reduce their public debt. If homeowners in these countries took out (higher) mortgages for their homes and some of the payments were paid to the state, public debt could easily be reduced to a level similar to that of Northern Europe.
Why is there no Eataly in the Netherlands?
Another fairy tale. According to the heads of government of southern Europe, the countries of northern Europe take an excessive advantage of the European internal market.
Northern European countries would only like to export (to the south), but without importing from the south. Northern European countries would also defraud by keeping wages too low, thus giving Northern European consumers insufficient purchasing power to import products from Southern Europe, thus forcing Southern European companies to exit the market. Indeed, Northern Europe's trade surplus has increased significantly since the turn of the century. The Netherlands has a trade surplus of 10% of GDP, Germany and Sweden are around 6%, Italy has 2%, France at -2%.
But is it the fault of northern Europe? It's not a political decision, it ultimately depends on what consumers do and what they don't want to buy. And Italy exports more than it matters and therefore every year has more money available, France instead has only a small trade balance deficit. In both countries there are large companies that manufacture products in demand all over the world, such as luxury clothing, shoes, perfumes, food and furniture. There is nothing to stop France and Italy from advertising their products with the message: help us Northern Europe, buy our products instead of the Chinese ones. But you don't see it written anywhere. A missed opportunity. And why isn't Eataly in Holland yet, the beautiful chain of shops / restaurants with high-level products from Italy?
France and Italy wanted the euro, but now they complain about it
The northern trade surplus is in part due to the euro, a currency that was introduced at the request of France to nullify the strength of the D-Mark. And Italy wanted to unite against the will of the Netherlands. In both France and Italy the introduction of the single currency had been celebrated as a victory over the north, especially over Germany. But the euro is actually too weak for Northern Europe and artificially makes high-quality services and products produced by the North cheap. For this reason, there has been a boom in exports, not only within the EU. In fact, one third of Dutch exports go to non-EU countries, even 40% of German exports go to non-EU countries.
The euro is actually too strong for southern European countries and makes their services and products too expensive compared to their quality. But this is exactly what Southern Europe asked for when it asked to enter the euro. And wages in northern Europe, contrary to the accusations from the south, are higher than those in the south. In Germany and the Netherlands, a company spends around 36 euros per hour per employee, in Denmark as much as 44 euros, reports Eurostat. In Italy they are only 28 euros.
Northern Europe is already super solidarity with the south
Of all the charges, the most bizarre is that of French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte. In their opinion, in fact, Northern Europe would not show a sufficient level of solidarity. It is a great absurdity. Germany has always been a net contributor to the European Union and also to what was there before. In fact, the Netherlands is the largest net per capita contributor to the EU budget. This is somewhat strange because Luxembourg, for example, which makes a smaller contribution to the EU budget, is instead richer. In addition, there are already huge transfers from savers to debtors in the eurozone. The European Central Bank (ECB), dominated by southern Europeans, keeps interest rates low and keeps the money supply at an unprecedented level. And this policy harms savers and favors debtors.
For example, in Germany and the Netherlands, most workers paid money into a private pension. These pensions continually lose value. In Germany, private social security risks failing; in the Netherlands, pensions are not indexed and may even be reduced. Northern European (pension) savings have been burned. Debtors benefit from it, as do people who have to repay a mortgage (also in the Netherlands) and countries with a high public debt, especially in southern Europe. The ECB also purchased a huge amount of public debt - up to 30% of the public debt of the eurozone countries. Creditor countries like Germany (with a 26% share in the ECB) and the Netherlands (5.6%) contribute and guarantee for the high level of debt in southern Europe. This is super solidarity.
The Dutchman works nine years longer than the Italian
In the opposite direction, however, this solidarity is lacking. The south is systematically violating the EU's stability and growth pact agreements. France and Italy have not talked about it since the introduction of the euro in 1999. Since then, in fact, the Italian public debt has increased from 113 to 137% of GDP. On the contrary, it should have fallen to 60%. When the euro was introduced, France had a public debt of around 60%, but already before the coronavirus it had a 100% debt. The European Commission, as the custodian of the rules, should have imposed fines, but never did so under pressure from France and Italy. The public debt of Germany, the Netherlands and the Scandinavian countries has always been around 60% or less, except for a short period at the lowest point of the banking and credit crisis.
France and Italy have never respected the rules of the euro
France and Italy have taken advantage of the low interest rates they enjoy thanks to the euro to spend more money. To do what? An important point in this story is pensions. The Dutch work 41 years on average, the Swede 42.9 years, the Germans 39.1 years, the Danes 40 years, according to Eurostat data. In France they are 35.4 years old, in Italy 32. The Spaniards, Belgians, Greeks and Portuguese also work between 33 and 38 years old. Northern Europeans and the companies they work for pay pension contributions and income taxes for a longer period and enjoy fewer retirement years.
Employment rates are also much higher in Northern Europe. In Denmark and the Netherlands, nearly 80% of people aged between 15 and 65 work for more than twelve hours a week. I'm at the top of the ranking. Sweden and Austria follow. Germany is just over 70%, France 65%, Italy 58%. In short, Northern Europeans work more frequently and much longer.
The Dutch, however, work relatively little: 28 hours a week. But this is partly due to the fact that there are so many people employed and 55.1% of them work part-time. If you only look at full-time work, the Dutch work on average 39 hours per week, while the French with a full-time job have the shortest working hours in all of Europe: 35 hours. And the productivity of the work of the Dutch and Germans, in the hours in which they work, is a quarter higher than in Italy and Spain. It would be absurd to take the money of the industrious and productive northern Europeans to give it to the southern Europeans, less industrious and already on early retirement.
Taxpayer loyalty is also better in the north than in the south. According to the International Monetary Fund, in fact, a quarter of Italy's economy is submerged. In France it is 14%, almost 20% in Spain, 9% in Austria and 13% in the Netherlands. Southern Europeans can hardly expect Northern Europeans to fill the holes in their national budgets caused by these behaviors.
The sum of public and private debt in the Netherlands is higher than that of France and Italy
It is only the southern European countries that can solve their problems. Increase the retirement age, make the labor market more flexible, simplify setting up a business, introduce more transparent taxation, impose taxes, etc. There are no costs, only willpower and determination are needed. But this is what is missing in southern Europe. Citizens and politicians prefer to continue insulting Northern Europe if it refuses to put money in its pocket.
The proposal of Merkel and Macron for now is just a rumor. What will they say if we shoot 500 billion euros? The sum is only one blow in the air. And this is because it is oriented towards supply and not demand. The 500 billion will be a solution to which problem? Thanks to the guarantees of northern Europe, the southern countries, in fact, can already obtain low-cost loans from the ECB or on the capital market. And if not, they could try to collect more taxes from their wealthier citizens.
The four "reasonable" countries are generous
The European Council of Heads of Government will meet in Brussels on Thursday 18 and Friday 19 June. If no summit is convened before this meeting, this will be the first collective confrontation between the 27 EU heads of state and government since the presentation of the Merkel / Macron plan. Prime Minister Mark Rutte (VVD) and his colleagues from Sweden, Austria and Denmark, Kjell Stefan Löfven, Sebastian Kurz and Mette Frederiksen must put an end to this nonsense.
These four "reasonable" countries, certainly not "stingy", have already said "no" to the plan. They presented a counter-proposal: loans for a maximum of two years, conditioned by incisive reforms. An amount has not yet been indicated. Countries wishing to obtain loans will have to submit their proposals on the amounts and ways of spending money. It is a demand-oriented and therefore logical approach. Under the circumstances, he is very generous, perhaps even too generous.
Nessun commento:
Posta un commento