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Friday, 23 November 2012

A Clash of Ideology

It isn't often I find myself in agreement with a politician of any stamp, but today I have to say I do agree with Mr. Cameron in his stance over the EU wanting to increase spending when almost all its member states are having to cut budgets. As usual the split on this is almost "the UK versus the Rest" but not quite. As ever it is far more complex than the usual media hype suggests. Broadly speaking the countries supporting the increase in spending are the nett receivers, while those arguing for 'stasis' or a smaller increase tend to be the nett payers.

Those in receipt of what the Commission calls "development funding" want it to continue. Those getting support for failing industries or activities, like France and its agricultural support, want it to continue so they can keep the farmers/trade unions and so on, happy. Others, like Germany, are beginning to question why they are having to make 'savings' while supporting everyone else's spending. The Kanzlerin, Fr. Merkel, is often painted as an 'eminence griese' who always wants Britain to give more, but that is not really a true picture. She walks a difficult road. At present Germany is the largest single contributer to the EU and gets, probably, the least back. Balanced against that the German political classes want the EU and the €uro to succeed, not for the reasons the UK press so often tout, but because there is, in Germany, a deeply entrenched fear of runaway inflation and instability. The country has lost, since the start of the 20th Century more than a third of its original territory, it went through the horror of the hyper-inflation and political paralysis of the Weimar Republic and then the Hitler years. Fr. Merkel knows this history, she lived and suffered under the Soviet imposed "Socialist" GDR, and she has no love for that system at all - but she is also a pragmatist and knows she must work in the gaps between ideological ambitions to find a solution which allows all the different ambitions and systems to work together.

I agree with Mr. Cameron, and it may come as a surprise to many, that, by and large, so does Fr. Merkel on many issues. Far too much of the EU "development" funding is lost through corruption and incompetence in the bureaucratic machinations of the states struggling to emerge from Communism. Ironically many of the most corrupt crooks in these states milking the system are former "communist party" apparatchiks. In other states, it is the incompetence of the politicians that is the problem. They have the socialist mindset that says they 'own' the nations wealth and can spend as much as they like on anything they like as long as it 'creates' jobs. So countries like Spain, Greece, Portugal have spent themselves into a hole and now rely on the EU handouts for "development" to bail them out - and demand help from Germany et al to pay off their massive borrowing.

The problem is that huge government managed projects seldom create long term jobs - unless you count utterly non-productive employment in their burgeoning bureaucracies as "employment." I don't. These jobs are a nett charge on the taxpayer, they "produce" nothing and often obstruct real growth. So what do these projects do?

They create an illusion of "growth" by inflating GDP figures and generate a lot of short term and usually unskilled posts which vanish with the completion of the project. The solution most politicians of this ideological stamp go for is to then start a similar project somewhere else - thus we have motorway building on islands where the traffic load is a few horse and donkey carts per month. It gets worse when you throw in the French support for non-viable farms (and they aren't the only ones) where they subsidise farmers to not produce anything more than they can use to feed themselves. Once again, the subsidies vanish into the economy and are counted as a part of GDP - giving a false picture of the "health" of a country's economic strength. I rather suspect that if all the salaries of "non-productive" jobs in the Public Sector, MPs salaries and wages and subsidies propping up non-productive industries and so on were stripped out of the GDP figures many economies would be exposed as being in the red.

Mr. Cameron is not popular at home because he is cutting what he sees as spending the government can't sustain, but sadly, he isn't cutting back the bureaucrats which is where he really does need to make some swinging cuts. He's not popular in Europe, because he opposes the spending plans of many dependent on EU handouts. As the leaders of the EU states meet over this weekend though, Mr Cameron does have some support. The Netherlands, Sweden and less obviously Germany all want cuts to the EU budget. They probably won't reach agreement, but the lines in the sand are becoming more clearly defined.

We, the tax payers, will have to wait and see.

1 comment:

  1. Far too much of the EU "development" funding is lost through corruption and incompetence in the bureaucratic machinations ... Change that from EU to USA and it is exactly what is happening here.