23 October 2011

Honey I love you, but… - Part II Working restrictions

The countries from the “old guard” in the EU imposed restrictions on their national labor markets for the citizens of some of the newly entered countries (including mine) as a temporary measure to protect their work force, despite the fact that one of the main guiding principles of the EU is the free movement of labor. One exception from this was Spain, which now facing a record unemployment rate of 20% has imposed restrictions for the Romanians and Bulgarians. In spring The Netherlands government wanted to impose even more restrictions for the season laborers from Eastern Europe. Again, it’s a case of “honey I love you but….” Let’s see why.
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First, the argument that these restrictions actually protect the local population’s jobs is false because for any reasonable human being to fight unemployment by keeping away the people that want to work makes no sense. As long as the jobs that the non-natives get are legal, it means that they get at least the minimum salary according to the local legislation, meaning that no-one stopped a local from taking that job for the same salary as the non-local.
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Moreover, the fact that one is a foreigner in a country does not necessarily give an advantage. I don’t really imagine a job that has as requirements to not speak the local language (or speak it badly), to be at least 1500 km away from home, to be separated from your family and to live in poor conditions (as most migrant workers do).
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On the other hand the legal migrant workers bring a lot of advantages to the host country. For example they consume in that country, they pay taxes to the host country’s budget and, why not, they bring some cultural richness. Also because in many cases they get the jobs that the locals don’t want for some salaries that the locals consider to be offending, the migrant workers are a source for lower costs for companies in the host country which can translate in smaller prices for the local consumers or / and higher profits for the companies that employed them.
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But, of course, it’s easier to say “the foreigners are bad and they are the source of our problems… there is nothing wrong with us”. Well, when you get 20% unemployment rate and moreover there is a long history of high unemployment, then for sure there is something wrong with you.
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The truth is that no politician will say: “get off your asses, you’re out of the social welfare or unemployment aid” because they will lose votes, whereas the migrants that actually want to work don’t have the right to vote.

12 October 2011

Honey I love you, but… or some of the EU Hypocrisy – Part One: The National Debts Issue

In recent months I’ve noticed many examples of hypocrisy in our beloved EU concerning many issues, but mainly on the financial problems of some EU member states, Greece having the un-honor of being the one that got most of the publicity and on the non-acceptance of Romania and Bulgaria in the Schengen agreement (our friends the Finish and Dutch governments said no). Also today I’ve heard on the news that Slovakia rejected the Euro-zone agreement on increasing the funds available as aid for the member countries..
Well, let’s imagine the EU as a big family in which there are bilateral relationships that are better or worse, but the family stays together because it is in everyone’s best interest to do so, even if they don’t admit it publicly. Of course in this family the members are not equal, although everybody pretends that they are, at least when in public. There are the two seniors, the smaller brothers and of course the cousins and some distant cousins from the country-side who are weaker, but extremely useful. And in such a family from time to time one member says to another: “you’re family and I love you, but…”.
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et’s talk more to the concrete side: Portugal, Ireland and Greece have some serious problems in financing their national debts. Since they use the Euro if one of them (or any other Euro-zone member state) will be unable to pay their debts the whole Euro zone will suffer… so the bigger and richer family members came to their aid… or at least pretended to do so. I will not enter into to many details on how those debts came to be, but let’s just say that the countries in question are not the only one responsible.
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hy all the big fuss about these debts and especially about the big favor that the richer countries promised? Well, yes, the countries in question need the help, but the helpers will not just give money away and they don’t. In fact there is a power game concerning many hundreds of billions of euros in which the ones that have the money want to earn the most. How is that?.
First, one huge hypocrisy is the impression that the helpers actually give money to the countries with problems. NO! In fact the richer ones give loans to the needy ones and every Euro that is lended comes with an interest rate… so eventually the helped ones will actually pay a price to the helpers.
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Second, the governments that lend money impose certain conditions to the beneficiaries. Some might say that it’s normal because the creditors want to make sure they get their money back. On the other side these conditions have other favorable effects for the creditors. The first one is that overall they actually decrease even more the competitively of the “helped” economies in comparison with the helpers. This might be argued, but in a world with fewer resources the competitive advantage counts even more than in an expanding world. The second one are the privatizations of state owned companies, institutions and selling some of the state owned properties such as real estate. What should be considered here is that in order for something to be sold, someone must buy, and the big question is who is going to buy and at what price. Regarding the price we can be sure that it’s not going to be a huge one since when in need anyone will sell cheaper. Regarding the buyers, I’m not very confident that the investment fund from Burkina Faso will come to acquire Greek or Portuguese companies, rather the big corporations from the richer countries in the EU will do so.
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In the long run, who actually wins?
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But if it’s in the favor of the “big brothers”, why don’t they just help the “poor cousins” and get it on with? Again… it’s a power game. The deeper the needy get in need, the more providential and profitable the salvation is. Another very important reason is that in many ways the uncertain and apparently unfavorable situation is in fact in favor of the big ones. Let’s just consider that due to these issues the Euro gets weaker comparing to the USD and to the Asian main currencies. Isn’t this an advantage for the big exporters of Europe (Germany, The Netherlands and France)?. A slightly weaker currency is an advantage for the exporters and a disadvantage of the importers… so Again… who wins?
.After almost endless debates there is finally a project to actually do something to improve the situation. The 18 Euro-zone member states (22 if we count Vatican, Monaco, Andora, San-Marino) decided to increase the funds available for the governments in need. In order to do so the agreement should be ratified by all countries involved..
Now, today, one country says NO. It is Slovakia, one of the latest adopters of the Euro and a country that has a population half of that of Paris. Why the parliament of Slovakia said NO? Because of some fights in the government coalition and the opposition parties didn’t miss the opportunity. I don’t mean to undermine Slovakia as a legitimate state member of the EU, but due to some petty interests in a small country some really big issues that concern the entire continent are at risk. The opposition parties in Slovakia might get their fair share of seats in the parliament after the elections, but they might come in power when it is already much worse than it is now.
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Another issue about Slovakia and many other states that form time to time say that they don’t want to participate in a commune effort is that due to the “bigness” of the issue, if one says NO, they get immediate attention. Let’s be honest… many people don’t even know where Slovakia is on the map (nor do they know where are Jordan or Macedonia) and what is the difference between Slovakia and Slovenia (similar with Paraguay and Uruguay).
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Unfortunately we are about 500 million citizens of the EU trapped in a political structure that seems to have been built with the best intentions, but it’s as easy to manage as a horde of wild cats while crossing a river.
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Pointing fingers and making stands is very easy. Of course the Geeks and the Portuguese have their faults, of course the government of Ireland sacrificed the state budget to save a bank and now they are in trouble, but these are not the issues. The main issue is if we are together or not.
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So… Honey, I love you, but… If you say that to your significant other, to your brother or sister, there is only one outcome… and the worst thing in difficult times is to be alone…
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I’ll be back soon with the Schengen issue – the second part of this post.