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Friday, 3 April 2020

You can only hurt someone with the truth (2)

Various southern European countries are hurt by statements of the Dutch Finance minister. In 2017, I wrote my blog You can only hurt someone with the truth. This blog seems applicable here. I doubt that these countries are hurt by a lack of Dutch empathy. There is, however, a distinction between being right and being put in the right (NL: gelijk hebben en gelijk krijgen).

The northern caricature of southern European countries is as follows:
  • Southern European countries have a habit of taxing companies to near-death. 
  • In order being competitive, southern companies offer low wages and mostly temporary labour contracts. Cancelling fixed labour contracts is extremely expensive.
  • Both result in late marriages and low fertility rates as young southern adults stay at home until their 30s.
  • To compensate for low wages, southern governments offer many subsidies to their citizens (eg, free healthcare, low public housing rents). 
  • Southern governments need high taxes to pay for this all (see 1st bullet above).
  • Hence, southern European populations depend on governmental life-support. 
  • This situation is also in southern European political interest.

Essentially, many northern European countries blame the economic model of their southern brothers. This also explains their reluctance to save Greece during its financial crisis of 2009-2018. However, Greece has also shown that a turnaround is possible, once there is no alternative.

Several French presidents and Italian PM's have tried changing some of these (very) expensive public benefits, like pensions. So far, all such reforms have failed due to massive public protests (eg, yellow vests). Changing their entire economic model is doomed to fail.

The coronavirus pandemic has caused economic, financial and social havoc to southern European countries, following the "military" type lockdowns on their societies. Northern European countries keep businesses open but ask their citizens to stay at home. Sweden even operates as if there is no coronavirus pandemic (eg, BBCNYT).

Most northern European countries are already net-contributors to the European Union, while most southern countries are net-receivers. Southern countries now want to introduce Eurobonds and using the European Stability Mechanism for immediate economic relief. In northern views, they are trying to socialise their losses while appealing to empathy (eg, my Dutch blog).

Interestingly, the coronavirus frictions in the European Union are mirrored by coronavirus frictions between American states. In both cases, it's no longer one for all, all for one.

United We Stand (1970) The Brotherhood of Man

Note: all markings (bolditalicunderlining) by LO unless stated otherwise.

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