Saturday, September 10, 2011

A Federal Europe and the Middle class?

Federalism: the F Word. For the last week, the IHT has been suggesting that the EU take a federal approach (instead of confederal) following the US example (and also Indian, but they don't know it I guess).
The federalism mantra is not going to solve anything except the unanimity problem.
Todays EU's problems, largely Greece, Spain and others who wer growing fast a decade ago, come from the lowering of EU subsidies to them.
To recapitulate and simplify. An Economic Union requires opening up markets. Evidently, less developed countries like Greece and Spain know their markets are going to be taken over by more developed countries such as Germany and Holland. So, the political deal is that the EU provides subsidies to agriculture and other stagnant sectors in return.
The problem is that when the EU stops providing subsidies to Greece and Spain (because now it wants to give this money to new entrants or some other reason), it does not also tell Germany and Holland that those markets are off ground.
So, Germans and Dutch continue to make money but do not continue to pay for the Greeks and Spanish.
In theory, there is a feeling that the old subsidies should have been enough for Greece and Spain to have become competitive and not need any more subsidies. But the subsidies were not given to high tech sectors. Nor given to big Spanish businesses to get German markets. So, how could they?
At the moment, with the unanimity requirement, victims such as Greece and Spain can veto any directive to rape other countries, having learnt from experience the lessons of this market colonialism. Once federalism comes in, these countries will meet the fate of Oklahoma or Lousiana. The US tough love doctrine says Vote with your feet. If your state is poor, Go to Silicon Valley or Delaware. The problem is: will Germans allow or even like this kind of mobility of labor where all the Greeks and Spanish (and the millions of immigrants waiting there .... another story, just go to Athens and see) would come to Germany and sit there selling fake French luxury items on the streets till they get a job?
Why does this concern us middle classes? The ethical thing for Germans and Dutch to do is to tax their people, hand over the money to the EU and give it to Greece and Spain to honor the prior agreement. And keep from opening new EU markets till yout think you can pay more.
The alternative solution (leaving the Greek and spanish markets) is ethically wrong because it will take these countries years or decades to reestablish their own business prowess in these fields?
So, if taxation is the only course, who should pay it? The middle class Germans, Dutch, French and so on? Or should it be big business who are in Greece and Spain and benefitting from these markets? The answer is evident. But these rich would prefer to let someone else shoulder the bill. Guess what? The middle classes get it in the middle!!! Again.


Perhpas someone will soon take political action and crete a political party for the middle classes. In the mean time they can enjoy the rape?

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