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Post Europe's "Givers," "Takers," and Brexit
Created by John Eipper on 12/28/16 5:35 AM

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Europe's "Givers," "Takers," and Brexit (John Heelan, -UK, 12/28/16 5:35 am)

Istvan Simon commented on 28 December: "Takers are those US states that receive more from the federal government than the federal taxes they contribute. The definition itself had nothing to do with Hillary Clinton or Donald Trump."

It does, however, have everything to do with the attitudes towards Brexit of the 22 EU "taker states" out of 28 EU nation-states.

JE comments:  Did economic self-interest, more than abstract concepts of sovereignty, seal the deal for Brexit?  This question might lead to a fruitful discussion.

John Heelan's point could be made within European nations as well.  Jordi Molins has often portrayed Catalonia as a "giver" region of Spain, and uses this argument as a justification for Catalonian independence.  What about the north of Italy vis à vis the south?  Germany's west vs the former DDR?


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  • Europe's "Givers" and "Takers" (Eugenio Battaglia, Italy 12/29/16 5:22 AM)
    In reference to "giver" and "taker" nations in Europe as explained by our friend John Heelan on December 28th, the following is the latest study from the US think tank Stratfor:

    Givers: Germany, France, Italy, (UK), Sweden, Finland, Austria, Holland. Cyprus receives as much as it gives, while all the others are takers.


    Italy over the last 10 years has contributed about 50 billion euros more than it received, but the difference seems to be increasing towards €8 billion per annum.


    Romania and Greece receive back four times their contributions, while Poland has been the major taker, of more than €9 billion.


    Per capita, Luxembourg receives €2278, Greece €448, and Poland €240.


    Belgium and Luxembourg receive a huge amount of money, since they are the location of several (worthless?) EU institutions.


    Personally I believe that if there is an important common aim it is not important whether a nation is a taker or a giver but, frankly, the EU is a failure.  By now, it is not worth anything.


    On the contrary, I believe that in Italy there should be no giver or taker difference between North and South, because we are a single nation and the economic underdevelopment in the South is probably also the fault of the North.


    Do not tell me that the Southerners are poor workers; if properly motivated they are the best. As a captain at sea I generally had crews from the South of Italy and they were marvelous.


    Rommel after the heroic defeat of El Alamein wrote: "The German soldier has stupefied the world, and the Italian soldier has stupefied the German soldier." But note he mentioned the soldiers and not the generals.


    Unfortunately for one reason or another, except for a too short period, Italy did not have good leaders.  Especially in the last 70 years they have suffered from xenophilia, getting the worst and not the best from abroad.


    JE comments: Adding to Ric Mauricio's list of predictions for 2017, what about the EU? Will there be any more national exits? If so, which nation will be first? Italy?  France?  At this point, the conservative François Fillon is predicted to triumph over the extreme-right Marine Le Pen.  What does Fillon say about the EU?

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  • Economic and Political Reasons for Brexit (John Heelan, -UK 12/29/16 8:51 AM)
    JE asked on 28 December: "Did economic self-interest, more than abstract concepts of sovereignty, seal the deal for Brexit?"

    There are two answers. Firstly the "sovereignty" argument (i.e. "take back control from Brussels") was a major argument for the Leave campaigners, just as the "fear campaign" of post-Brexit economic mayhem was advanced by the Remain camp. However, it is the economic self-interests of the 16 "taker" EU member states that will make a successful Brexit more difficult, together with the realisation of the "giver" states that the EU will demand more money from them when the UK withdraws.


    See http://news.bbc.co.uk/1/hi/world/europe/8036097.stm#start


    JE comments:  There is talk of a Brexit "windfall" for the UK, meaning, the money it will not have to chip in to the EU.  Others see the opposite effect from a shrinking Pound.  One thing is for certain:  tourism to Britain has become cheaper.


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  • Europe's "Givers" and "Takers," and Trade Advantages (José Ignacio Soler, Venezuela 12/29/16 3:26 PM)
    There have been several recent WAIS posts about "taker" and "giver" states in the US and the EU, based on the definition proposed by Istvan Simon (27 December): "Takers are those US states that receive more from the federal government than the federal taxes they contribute." Istvan added that his definition had "nothing to do with Hillary Clinton or Donald Trump." John Heelan (28 December) commented in response: "It does, however, have everything to do with the attitudes towards Brexit of the 22 EU 'taker' states out of 28 EU nation-states."

    John H's comment raised my curiosity about the current state of things in the EU regarding this concept, specifically the in-and-out flux of funds among member states and the EU. In a simplistic way, this concept seems to suggest that "givers" are the generous ones and that "takers" are some kind of parasites.


    In any nation, it is logical that the wealthier states should contribute more to central or federal government than others who are less fortunate, and there are other considerations. I will try to develop this concept further a fairer way. By the way, all data used (2015) can be found in the Euro parliament page.


    http://www.europarl.europa.eu/news/en


    The six main contributors to the EU are Germany, France, Italy, United Kingdom and Spain. But strictly following the definition, there are 9 "giver" countries out of 28. This means subtracting the amount spent by the EU in that country from the country´s contribution to the "Federal" union. The first "giver" by far is Germany (€7.5 bn), followed by France (€4.9 bn), Italy, and the United Kingdom (€4.7 bn).


    However, to consider just this factor for understanding the whole fiscal and commercial picture in the EU is very limited. One factor to add is the commercial benefit these countries obtain from the common market in term of exports, free trade and tariffs, which give them a very important competitive advantage in real economic terms.


    For instance, Germany´s exports to the EU market in 2015 was about €1.080 trillion Euros, more than 50% of its total exports, which if translated to a weighted MFN tariff (Most Favored Nation) of 2.8% (there are even higher tariffs in some types of exports), means an approximated "saved" alternate amount in duties of €33 billion. The same argument applies to the United Kingdom, with approximately €600 bn in exports to the EU market, almost 47% of its total exports, and €20 bn "saved" in duties. This obvious fact made me wonder was what the real reason for Brexit, as economically it does not sound logical to risk losing these privileges.


    It is easy to understand the advantages, benefits and interests of EU membership for the largest economies. The bottom line is evident that there is not only altruism, generosity or solidarity of the "giver" towards the "takers" states.


    Some time ago on WAIS, I made this same argument regarding the internal situation of Cataluña with Spain and with the EU.


    JE comments:  Humans are highly attuned to resenting anyone perceived as a freeloader.  This sentiment had no small impact on the Trump victory. 


    But José Ignacio Soler makes a strong case that the "giver-taker" dynamic is never a zero-sum game.  A curiosity:  how might "brain drain" play into the EU formula:  for example, professionals trained in Spain who find work in Germany?

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    • EU and UK: Givers, Takers, and Freeloaders (John Heelan, -UK 12/31/16 6:37 AM)
      José Ignacio Soler (29 December) is correct that the flux of EU funds is a simplistic argument, as are JE's comments (same date) that "the "giver-taker" dynamic is never a zero-sum game, and "Humans are highly attuned to resenting anyone perceived as a freeloader."

      On the first point, I would argue that there is little altruism by the EU "giver" nations who are bound by EU regulations, treaties, laws and so on to provide the funding required of them. As to balance of trade between the UK and EU member states, I find it difficult to believe that German car manufacturers would forego exports of their models to the UK for ideological and EU solidarity reasons, nor would Spanish, Italian and French vintners and distributors.


      On the point of "freeloading," the Schengen free flow enables those EU member states suffering high unemployment and low national incomes to export the unemployed--and the allied costs of supporting them with national social benefits--to richer member states as "economic migrants."  One example is that the NHS's being free at the point of delivery attracts "medical migrants," placing extra strain on the already underfunded NHS structure and thus affecting indigenous applicants for medical services. Under the European Health Insurance Card (EHIC)--countries can claim back health costs from other EU countries if their citizens use medical services abroad. However, the UK pays more than £670m to EU countries for Britons' healthcare abroad, while claiming back less than £50m from the EU.  The new figures reveal that nearly every country claims more from the UK than the UK claims back from the rest of the EU. France pays back £142 million less than it charges: Germany £24 million less: even in countries such as Poland where net migration is massively towards the UK, the discrepancy is four-fold in Poland's favour. (Sky News)


      Then there is the cost of education. EU students have access to student loans via the Student Loans Company (SLC), a UK public sector organisation established to provide financial services to students, in terms of loans and grants. Yet there is evidence that many EU students do not have the slightest intention of repaying the loan (could be up to £40,000 for standard 3-year degrees and £60,000+ 6-years degrees, e.g. medicine and architecture.


      Once the degree is awarded, the student becomes untraceable after disappearing back to his/her EU member state. Thus the shortfall in repayments to the SLC falls on the UK taxpayer.


      So from the UK perspective, the EU "giver/taker" axis is certainly not zero-sum.


      JE comments:  This drain is at least partially offset by the human capital received by the wealthier EU nations--meaning, the economic migrants who arrive with skills acquired at their home countries' expense.



      I believe I posed this question in the context of the June vote, but no one ever replied.  Here it goes again:  Won't loan defaults from EU students of UK universities balloon even higher after Brexit?

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      • Poles on Isle of Wight (John Heelan, -UK 01/04/17 3:24 AM)
        Regarding immigration from poorer to richer EU countries, JE commented on December 31st on the "economic migrants who arrive with skills acquired at their home countries' expense."

        This indeed is true. The Isle of Wight employs many such workers--I can even buy Polish newspapers in my local convenience store Polish delicatessens are starting to spring up to cater for the Polish community. However, while I am grateful for the training given to my excellent Polish dentist, the reality is that many of the Polish immigrants (although having a reputation for being excellent workers) work in the unskilled sector--i.e. construction, field labourers. Island greenhouses employ many such workers to produce hydroponic crops such as tomatoes. Catering staff on ferries running to and from the Island are often from Eastern Europe.


        The knock-on effect is that they are often paid less than national minimum wage that results in their having to live in densely populated accommodation (sometimes 5-10 to a house) or temporary accommodation in trailer parks. Many are supporting their families back in Poland. (Poles have been welcomed on the Isle of Wight as locals are still grateful for the protection provided against German bombers on May 4-5 1942. (See http://h2g2.com/edited_entry/A87769453 )


        JE comments:  We joke (OK, I joke) in our house that Poles can only relax when they're working.  Aldona always needs to be doing something productive.  Her husband is more accomplished in the skill of "chilling."


        John:  Will the Poles on the Island have to pack up and leave post-Brexit?  I assume many of them are permanent UK residents, but I do not know the particulars.


        Here's a replay of my 2012 visit to the ORP Blyskawica in Gdynia, Poland.  (It's the destroyer that defended the Isle of Wight.  Coincidentally, the ship was constructed in an Island shipyard.)


        http://waisworld.org/go.jsp?id=02a&objectType=post&o=70774&objectTypeId=63839&topicId=152


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        • What Will Become of UK's Poles Post-Brexit? (John Heelan, -UK 01/05/17 7:18 AM)
          John E asked: "Will the Poles on the [Isle of Wight] have to pack up and leave post-Brexit? I assume many of them are permanent UK residents."

          I hope not, as they are a valuable addition to the Island community. Further, many have married UK citizens and Polish children are being born on the Island with an automatic right of residence. WAISers might be interested in the following Facebook page for the Island's Poles:


          https://www.facebook.com/PoloniaNaIsleOfWight/posts/487494171333899's Polish community-


          JE comments:  The Facebook page mentions a 1968 Polish postage stamp depicting the legendary destroyer Blyskawica.  I'm appending a copy below.

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