President Duterte and 'Pakyu' EU

These are news reports from September 21 to 23, except the news on "Killings prompt 'hesitation' among European investors" which was published a month earlier, August 2016. I also include here the fb postings by a friend, famous commentator Bernard Ong. No further comments from me.

From Bernard Ong, September 21, 2016:

"China supplies almost 100% of the shabu to the Philippines. Coddles the international drug lords & their syndicates. Takes over our seas & reefs. Chases Pinoy fishermen away from their traditional livelihoods. Corrupts our local officials to extract minerals in irresponsible manner.

Sounds 1000x more damaging than other countries urging the Philippines to respect universal human rights. Something we ought to be doing without anybody's prodding.

If you must say Pakyu. Be brave, be smart. Point your Pakyus in the right direction.

Pity the die-hard followers who have to switch-on & switch-off their anti-US hatred and pro-China/Putin love.

Those who don't suffer from mood swings due to drugs, bipolar & other conditions will find it hard keeping up with whom to bash & whom to praise. Last time I checked, the Mochas & Sassots & ThinkingPinoys that feed their confused minds are still on bashing the West (govt, media, human rights) mode. Those guys have not received the memo. Slow. Andanar is sleeping on his job.

My suggestion to die-hards is not to wait for clues from Idol's speeches. Flip-flops do not provide useful guidance.

Just think for yourself. Think of what is best for the Philippines. Key word is think. Then you won't bash the UN, US, EU, international media. Not that they are saints. But it is against Philippine interest to do so - we risk losing a lot (investment, aid, trade, tourism, jobs, defense) for the shallow pleasure of petting one man's ego and venting anger. High cost, high risk, no benefit.

Ignore the leader's mood swings. Better yet, correct him when he goes off course. Maybe he will listen to you."

"EU is the Philippines' biggest foreign investor with an FDI stock of over 366 billion pesos.

EU investment is distributed among 600 companies, employing about 400,000 Filipinos, in relatively higher-paying jobs, in sectors like energy (e.g. Shell), manufacturing (e.g. Loreal, Unilever), finance (e.g. Deutsche Bank).

EU invests almost $400B overseas each year. Philippines gets only 0.1% of that. Could easily double or triple with our market potential - IF we don't create the perception of risk by behaving like a rogue nation ruled by thugs instead of laws.

To make these numbers digestible: If the Philippines misses out on $3 billion investment in next 6 years, that means 60,000-120,000 fewer high-paying jobs, less income, less buying power, less taxes, less money for infrastructure. There are multiplier effects. Ignore at your own peril.

So "Pakyu EU". Close the lights on your way out."

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See also:

President Duterte and UNexit, August 22, 2016 

President Duterte and Hugo Chavez, September 30, 2016 

President Duterte and Hitler, October 05, 2016 

President Duterte at the ASEAN Summit, Obama tussle, October 11, 2016

Brexit debate and the EU bureaucracy

As of this writing (almost 11 pm in Manila), UK voters are deciding in a referendum whether their country should remain or exit the European Union (EU). I did not follow closely the Brexit vs Remain debate, but since my advocacy is less government (local, national or regional/international/multilateral), my leaning will be towards the Brexit. Am not a UK voter anyway, just expressing a short opinion about the issue.

Meanwhile, two articles I read today from capx.co further cement my leaning towards the Brexit. Copy-pasting only a few paragraphs. Nice one from Matt Ridley especially.

The two images here I got from the web, ie, not my artwork. Also, they are not part of these two articles, I just added them here.
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(1) In the name of science, Britain must leave the EU -- by Matt Ridley

We have clamped down on Indian scientists because we cannot clamp down on Romanian fruit pickers.  The same is true for students. The least qualified Spanish student has more right to subsidized fees than the most qualified Argentinian student.

The European Molecular Biology Organisation, the European Space Agency, EUMETSAT – these are pan-European, not EU projects with many member countries outside the EU. The League of European Research Universities included non-EU members. The particle accelerator at CERN actually crosses (beneath) a border between an EU and a non-EU country. The Higgs bosons do not have to show their passports or pay tariffs as they pass. CERN gets less than 2% of its budget from the EU.

Let’s run through a list of Brussels’s greatest hits affecting science:

– There was the clinical trials directive, which destroyed clinical trials in this country and according to Morris Brown of Cambridge University “threatened patients’ lives”. We used to have 12% of world clinical trials, but we now have 1%.

– There was the data protection directive, which made many kinds of research much harder here than on other continents.

– There was the deliberate release directive, which has killed off this country’s leading role in agricultural biotech. True, the home grown green fanatics started it, led by lords in white boiler suits, but ask scientists what’s holding it back now and they say the EU approval process for releasing GM crops or GM insects is so cumbersome, so uncertain and so unscientific that most scientists have given up even applying....

(2) The EU is about tocrucify the UK’s thriving ports -- by Daniel Mahoney 

The UK’s port industry is mostly privatised and under a self-regulatory system. 75% of the UK’s largest ports are under private ownership. This is in stark contrast to continental Europe, where around 80% of ports are operated by state or local authorities. These comparatively inefficient ports require vast subsidies – expansions at Rotterdam and Hamburg ports, for example, were constructed with subsidy assistance of 1.1 billion Euros and 788 million euros respectively. However, their counterparts in the UK – ports such as Felixstowe and Southampton – have expanded without a penny of taxpayer subsidy.

The UK’s ports are currently at liberty to determine all aspects of port services. The Commission’s proposals would change this. A new regulator would be imposed on the UK’s ports industry, which will be able to put controls on things such as price proportionality. This is likely to damage investor confidence – something the UK’s Port Association has been warning about for a long time – and could also pave the way for “regulatory creep.” Further involvement from the European Commission and adjudication from the European Court of Justice are now very real prospects....

Free Trade 43: On PH-Germany or PH-EU FTA

Tomorrow, I will attend this forum co-organized by the Friedricy Naumann Foundation for Freedom (FNF). Although free trade between the EU and the Philippines is not mentioned in  the theme, I think it should be raised from time to time.

Here are two recent reports that point to the potentials of an EU-PH or at least Germany-PH future free trade agreement (FTA).

(1) EU aims to double trade, investments in the Philippines

Manila Bulletin,  December 13, 2014

Walter van Hattum, head of economic and trade section of EU Delegation in the Philippines, said at the Open Dialogue on Trade and Investment of the Philippines and European Union, that both economic partners are performing below potential.

He said that EU with 28 member countries and a market of over 500 people can commit to double its investments and trade with the Philippines. Bilateral trade also increased by 21 percent to over $7 billion in the first six months of the year largely to aircraft purchases by the country’s two airlines.

In 2013, bilateral trade reached 11 billion euros with the Philippines exporting services, agriculture and processed foods, textile, and electronics as against EU exports to Manila of high value aircraft.

EU’s investments here in the country in the last decade has doubled to 7-8 billion euros, making them the Philippines largest foreign investor accounting for 30 percent of the country’s total foreign direct investments and creating 450,000 jobs for Filipinos.

(2) Germany eyes free trade with PH

Aquino secures $2.38 B worth of investments from European companies

Manila Bulletin, September 21, 2014

Berlin, Germany – German Chancellor Angela Merkel, impressed with the “dynamic growth” of the Philippines, proposed a free trade arrangement between the two countries during a meeting with President Aquino in Berlin Friday, saying this could further increase bilateral trade, currently at $4.7 billion.

Merkel said for the first time, the two countries have reach trade volume of more than $4 billion in 2013. “Bilaterally, we think that we can build on this, this can be increased,” the German leader added.

“For German companies, investments in the Philippines will be boosted if there is a right regulatory framework in place, if there is transparency and competitive laws, and also investment traditions are reliable, the legal situation too,” she added.

There is a good paper, EU-Philippines Trade and Investments Factfile 2012 prepared by The Delegation of EU to the Philippines. Among the data presented are the following.

Trade in goods is not rising, just flatlining on average. Not a good picture actually.

Trade in services, though remain not so substantial, is somehow rising.

EU trade with selected ASEAN countries in 2012. Total trade in the PH was not even  half of total trade between Vietnam-EU or Indonesia-EU.

PH trade with major partners in 2012. The PH economy has become more Asia-centered because of ASEAN FTA (AFTA), ASEAN-China, ASEAN-Japan pending FTAs.

EU member states' trade with the PH, 2011 and 2012. The top five trade partners of the PH are Germany, Netherlands, France, UK and Italy.

An EU-PH FTA seems a far away target because many EU member states remain protectionist to countries outside the Union as the continent deals with flat or rising poverty. And the less developed ASEAN member states like Cambodia, Laos and Myanmar tend to slow down on trade liberalization with countries outside the  association.

The FTA should be kept as a goal in the  short- and medium-term. Governments around the world should realize that countries and governments do NOT trade with each other. People and companies do. So trade barriers, both tariff and non-tariff barriers (NTBs) should be removed or drastically cut/reduced.
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See also:
Free Trade 35: EU-FNF Forum on 'FDI Engine for Job Growth', May 15, 2014
Free Trade 39: Advantages of Unilateral Trade Liberalization, October 12, 2014 
Free Trade 40: Razeen Sally Joins IDEAS, to Campaign for More Liberalization, November 25, 2014 
Free Trade 41: David Ricardo, CPE, FPE and Consumer Surplus, December 06, 2014
Free Trade 42: ASEAN Trade and Unilateral Liberalization Challenge, January 23, 2015

Labor Econ 15: Europe's High Long-Term Unemployment

Long-term unemployment means people who are unemployed for 12 months or more. The number is big in Europe, around 12.5 million people in the European Union, of which around 9.5 million are in the Eurozone area, according to this paper by the Economic Policy Viewpoint, March 2014. Including the short-term unemployed, some 26 million Europeans are unemployed.

EU countries generally have rigid and strict labor policies, the  "exensive to hire, difficult to fire" policy. I like somehow the "flexicurity" policy in Denmark, sort of "easy to hire, easy to fire" labor policy, which actually works both for workers and employers. 

Many European countries have those rigid "pro-labor" laws that make it difficult for employers to just fire workers. What do the employers do? They hire as few people as possible. Instead of hiring 3 or 5 workers, they hire only one. Give that one worker high salary, lots of trainings, travels, gadgets and car, nice housing and healthcare package, to keep his/her productivity high, and this worker will do the job of 3 or 5 people. He/she is lucky with all the high pay and many benefits. The others aspiring to be hired, sorry na lang sila. They can aspire to become start up entrepreneurs, hire themselves. But the business bureaucracy and multiple taxes, fees and mandatory contributions in Europe is not exactly something that many people would wish to experience.

And that largely explains why unemployment rate in France and many EU countries is always high.

The labor unions, they can demand as much as they can, like shorter than France's 35 hours work week, minimum wage of $50/hour, 4-5 months vacation leave with pay, and so on, and all their demands can become laws. There are several possibilities that can happen. 

One, I mentioned above, employers will get as few workers as possible and get more robots and computers to assist those few hired workers. Two, some employers will simply shut down operation in Europe and move to Asia or Africa or S. America.

The best workers' antidote to capitalism is for them to become start up entrepreneurs and capitalists themselves. If their former employers will not give them $50/hour pay, 34 hours/week or less work, etc., they should give that to themselves, as entrepreneurs. Let us see if they can walk their talk.

And one thing I notice, the more productive, more ambitious, more hard working employees and staff are not interested in joining "strong" labor unions. Why? Because they have zero intention to become workers or employees forever. Rather, they intend to become start up entrepreneurs soon. They endure "slave work" like 12-14 hours a day (60-70 hours a week) because they learn more things, more details and more tricks, how big and successful companies operate. Or if they remain as employees, they move to multinational firms as mid-level managers and directors and they travel the region, if not the world.

It is those who intend to become workers forever that tend to gravitate to militant labor unionism.

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See also:

Labor Econ 11: Employees Forever vs. Entrepreneurship, April 27, 2013 

Labor Econ 12: Wallace, Lenin, Stalin, Mao, May 02, 2013 

Labor Econ 13: The Term 'Jobless Growth' is Wrong, April 15, 2014

Labor Econ 14: Labor Day and Government-Mandated Minimum Wages, May 01, 2014

Fat-Free Econ 38: Jobless Growth vs. Jobless Non-Growth, February 12, 2013

Free Trade 35: EU-FNF Forum on 'FDI Engine for Job Growth'

Last Tuesday, May 13, I attended the EU-FNF forum on "Foreign Direct Investment: Engine for Job Growth" held at the Mind Museum, Fort Bonifacio Global City, Taguig. It was a powerhouse forum. Welcome messages given by Jules Maaten, Country Director of the Friedrich Naumann Foundation for Freedom (FNF) in the Philippines, and Guy Ledoux, Ambassador of the European Union (EU) Delegation to the Philippines.

Amb. Ledoux expressed further optimism about the Philippines and its business environment, saying that European investors are the biggest bloc of foreign direct investment (FDI) in the Philippines. A summary of the forum is also posted in the FNF website, EU FDI in PHL to Double in Five Years and there is a long quote from Amb. Ledoux there.

House of Representatives Speaker Feliciano "Sonny" Belmonte (in barong, seated right in the photo below) spoke and mentioned that he personally supports amending the PH Constitution and remove restrictions to foreign investments. He enumerated several important Congressional bills that will help encourage the entry of more FDIs. Like the Anti-trust or Competition Law, Tax Incentives Management and Transparency Act, amendments to the Build-Operate-Transfer Law, Cabotage Law, among others.

I stumbled on this data from the IMF. Not only direct equity but other forms of asset inflows were used here, hence, a total of $28.4 billion inward direct investments were recorded in 2012. But interestingly, many Philippine-based businessmen, local and foreign, sent their money to the Cayman Islands and Virgin Islands. The two are considered as among the "tax havens" around the world because of the low taxes, low bureaucracies they slap on money coming from anywhere around the world. Which should be a lesson to the central bank and other government agencies: the less that you monitor and bureaucratize foreign investments and savings, the more that that they will come to you.

source: IMF, Coordinated Direct Investment Survey (CDIS)

The four important speakers in the first session, from left: Department of Trade & Industry (DTI) Secretary Gregory Domingo; Andrew Powell, Managing Director of Bosch Philippines, Amb. Ledoux and Donald Kanak, Vice Chairman of the EU-ASEAN Business Council.

Interesting point from Bosch: the company being innovation driven, is inventing and innovating a new product every 25 minutes on average. Wow. Mr. Kanak said that by having more investments and competition, more high paying jobs are created, which provide more consumer and tax base for the country.

Sec. Domingo mentioned that one of the important assets of the Philippines is its big and young population. Yes, I fully agree. Big and young population is an asset, not a liability, that is why I never supported the RH bill, now called RH law. The average age of Filipinos, about 24 years old, is almost half that of Japan, 44 years old. Soon Japan, Taiwan, S. Korea, many European countries, will be begging for more Filipino workers and managers to run their factories, banks, hotels, offices and households. Or if their immigration policies will remain paranoid to the entry of more immigrant workers, many companies in those countries will locate here and take advantage of the country's big, young and trainable manpower.

From left: Jules Maaten, Coco Alcuaz of ANC who acted as moderator in the panel discussion of these four prominent speakers.

The next panel was bigger, five speakers and five reactors, moderated by Mr. Vergel de Dios, a veteran media man. The speakers were (1) National Economic & Development Authority (NEDA) Assistant Director-General Rosemarie Edillon, (2) Public-Private Partnership (PPP) Center Director Eleazar Ricote, (3) European Chamber of Commerce in the Philippines (ECCP) President Michael Raeuber, (4) Rep. Anthony del Rosario of Davao, and (5) Philippine Chamber of Commerce & Industry (PCCI) Honorary Chair Donald Dee.

The panel of reactors were (1) Philippine Institute for Development Studies (PIDS) President Dr. Gilberto Llanto, (2) Foundation for Economic Freedom (FEF) President Calixto "Toti" Chikiamco, (3) Makati Business Club (MBC) Project Coordinator Jose Cortez, (4) Spanish Chamber of Commerce in the Philippines President D. Javier Warleta, and (5) EU Head of Trade Section Walter van Hattum,

Toti Chikiamco pointed out that more than the high cost of electricity, what bothers many investors, those in SMEs in particular, are the high government-imposed minimum wages. Plus the various mandatory social contributions. This is a good point. Employment is a private contract between the employer and employee. A job applicant seeking high pay and many benefit package must compete with other job applicants with better qualifications and longer work experience, in landing that job. Government should come in only to enforce a private contract between the two camps if there is dispute in the interpretation and implementation of the contract. Government has no business actually setting what should be the minimum wage, the minimum benefit package, and so on. Minimum wage laws protect only those who already have jobs while providing no protection to those who are jobless or are still seeking work.

Movement of FDI is directly related to movement of goods and services across countries and continents. Free trade and free mobility of factors of production are closely linked. When the business environment at home becomes more rigid, more bureaucratic and over-regulated, more taxed, investors and professionals will seek other location where they can do business in a freer environment.

As Europe becomes more bureaucratic, economies in Asia become good prospects for investments as our politicians and bureaucrats here have not mastered yet the art of heavy bureaucratism that their counterparts in Europe and North America practice. FDI is both demand-pull and cost-push.

Lots of good speakers, and lots of food after, it was a good forum.
All photos except the table are from FNF facebook page.
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See also:
Free Trade 31: FTAs, EPAs and the Heckscher-Ohlin Theorem, January 10, 2014
Free Trade 32: Hong Kong's Unilateral Trade Liberalization and John Cowperthwaite, February 12, 2014 
Free Trade 33: ASEAN Economic Community 2016, February 16, 2014
Free Trade 34: ASEAN's Bilateral and Regional FTAs, February 27, 2014

Pol. Ideology 55: Jules Maaten's Lecture on Liberalism

A very informative lecture given by Jules Maaten last Tuesday night at our Rotary Club of Taguig Fort Bonifacio, along with RC Makati Pio del Pilar.

 Not many people were able to come though although they really wanted to hear Jules' talk. Like at least three from the Initiatives for Filipino Liberty (IFL) group, at least three from our club, and so on. So this blog post is for those who were not able to come and regular readers of this blog.

At the onset, Jules defined Liberalism as:

* It is the philosophy of liberty

* It is a philosophy of empowerment

* Origin in protecting the individual against institutions of power.

This quote from JS Mill, among the classical thinkers of liberal philosophy, is clear and direct.

Then Jules specified how the  philosophy is applied, Liberalism in Politics:

* Protection of individual rights

* Equality of all human beings under the law

* Balance and separation of powers

* Belief in liberal representative democracy

* Balance between majority rule and the rights of the minority

* Weary of (state) authority, but state is rights guarantor

* Limitation and decentralisation of government powers

* Separation of church and state

I like this quote from my favorite economist and philosopher, F. Hayek. Yes, allow people to decide things for themselves, to make mistakes, to excel.

Then he discussed what is Liberalism in Economics:

* Belief in free enterprise and free markets with many players

* Protection of private property

* Support for free trade

* Privatisation of services better provided by the private sector

* Competition, no private monopolies

* Role for state where market does not function (education, environment, culture, social policies)

* Don’t leave debts to future generations.

The last item is important. As Germany and many European and rich economies go deeper and deeper in public debt, with huge interest payment annually, the economic freedom and well being of the future generation is heavily compromised.

Weekend Fun 34: Greece to Become a Social Network

I found this funny story today. All the cartoons I got from the web.

http://www.borowitzreport.com/2012/05/18/greece-no-longer-a-nation-announces-plan-to-become-social-network/

Greece No Longer a Nation; Announces Plan to Become Social Network

IPO Imminent for FetaBook

POSTED MAY 18, 2012

ATHENS (The Borowitz Report) – After struggling for months with an intractable financial crisis, Greece announced today that it would cease to exist as a sovereign nation and would instead reboot itself as a social network.

The new entity, FetaBook, is expected to raise much-needed billions in an upcoming IPO.

The social network formerly known as Greece announced that it would cancel its upcoming elections and instead install a CEO, a 24-year-old hacker from suburban Athens named Ciro Mavromatidis.

Speaking from the newly opened offices of FetaBook, Mr. Mavromatidis explained how the social network would be attractive to the investment community in ways that Greece was not.

“We’re keeping all the aspects of Greece that made it a cool brand – the ruins, the Olympics, the olives,” he said. “We’re just losing the things that were a drag on the Greek economy: namely, the Greeks.”

He said under the new plan, all Greeks would cease to be citizens of Greece and would instead become friends of FetaBook: “They won’t receive any government benefits anymore, but they’ll be able to grow all the imaginary food they want.”

Mr. Mavromatidis said that by converting from a nation to a social network, FetaBook will enjoy other cost savings as well.

“We Greeks waste billions of dollars a year smashing plates after meals,” he said. “Now that’s going to be done by an app.”
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And more cartoons...

Happy weekend.
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See also:
Weekend Fun 26: Jokes in PH Elections, January 15, 2012
Weekend Fun 29: Corona Impeachment Cartoons, March 02, 2012
Weekend Fun 31: Filipino Shop Signs, March 17, 2012
Weekend Fun 32: Angry Birds, Angry Taxpayers, March 24, 2012
Weekend Fun 33: Government Welfarism Moolaah, May 06, 2012

Pol. Ideology 22: Diskurso sa Kapitalismo, Sosyalismo at Gobyerno

Or a Discourse on Capitalism, Socialism and Government.

The bulk of this blog's readers are from the US, Philippines, UK, Canada and Germany, in that order. Thus I write in English most of the time. But for this article, the exchanges are done mostly in Filipino language. This is my exchange of ideas with Arcy Garcia in his facebook wall. Arcy is a friend way back in the 80s in BISIG when I was still a socialist. I've abandoned socialism and Marxism since the 90s but Arcy remains a steadfast socialist, someone I would consider as a true-bloodied socialist who, unlike many other socialists and ideologues, has deep tolerance and respect even for opposing views, and does not believe in violence to advance the socialist agenda.

Arcy gave me permission to post here our exchanges - thanks Arcy. Here we go.
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Arcy Garcia

P1.3B raw ang kinita ni Pacman sa laban kanina...isang mahabang putok sa taas ng kilay ang parusa sa kanya....(may pambili na naman siya ng isang mall. (P215M ang kay Marquez, may pambili na naman siya ng hammer)..yan ang kapitalismo. magkano kaya kinita ni Arum? ang tagapagpagalaw ng mga manika.

• Nonoy Oplas yan ang isang kagandahan ng kapitalismo. Di mo kailangang maging Ayala or Henry Sy para yumaman at sumikat, pwede kang maging pacquiao or si Schumacher or Mike Jordan or maski Phil Younghusband lang. Heto, mga super-rich athletes,http://funwithgovernment.blogspot.com/2011/06/roger-federer-manny-pacquiao-and-free.html
  

  
  

  Government and Taxes: Roger Federer, Manny Pacquiao and the free market

  funwithgovernment.blogspot.com
  

  FB exchange between Bonn, Nonoy, and Kissy, 18 June 2011Bonn JuegoWhew! It's som...See More

  
  

  Yesterday at 6:12am ·  · 
• 
  

  Mark as Spam

  Arcy Garcia hindi sila dapat kumikita nang ganyang kalaki tol. ang sistemang nag-aanak ng ganitong kalaking biglang yaman ay artipisyal-tulad ng mga manlalaro natin sa PBA- na sinasahuran habang pinahihirapan naman ng mga kumpanya ang mga mangagagwa nila sa mababang sahod. o ng ateneo, si Norman Black, galing sa tuition fee ng mga estudyante.
  

  Yesterday at 12:37pm · 
• 
  

  Nonoy Oplas ok lang kung "artipisyal" basta galing sa pinaghirapan, hindi pinagnakawan. Sa gobyerno na gustong kontrolin ang kapitalismo kuno, kaya kaliwa-kanan ang regulations and taxation, subsidies and welfarism kuno, sila ang yumayaman nang di man lang nababaliaan ang katawan (tulad ng mga boksingero, basketbolista, etc.) o kaya namamatay sa sports (cycling, F1, Nascar, etc.).
  

  Yesterday at 2:10pm · 
• 
  

  Arcy Garcia hindi comensurate ang hirap at prakrtis sa kita tol. isang ordinaryong manggagawa sa isang kontrakteor ng manila water- P200 isang araw, sa kanya pa ang piko. si Pacman, 4 na linggo ng jogging, boksing, disiplina sa pagkain, etc. hindi naman matatawaran ito. pagod at hirap din ito- pero para kumita ng P1.3 bilyon (sabihin nating mga kalahating bilyon dahil pambayad niya kay Roach, trainers, etc., etc ang iba- hindi pa rin commensurate. hindi makatarungan.) dito ang crux ng isyu- hindi fair na pagsusukli sa hirap at pagod ng bawat isa- manager ng bangko- tama- mahirap di yan. reesponsibilidad- pati sa pagtulog, dala mo ang pag-aalala; pero hindi naman cguro tulad ng sahod ng mga CEO ng BA at Goldman Sacchs ang sahod at kita kasama ng santambak na perks.
  
  

  Yesterday at 2:16pm ·  ·  1
  
  
  
  
  

Fiscal irresponsiibility 8: Finland's dislike of EU and bail-outs

The European Union (EU) is perhaps the biggest bureaucracy in the planet on a per capita basis. The bureaucracy's penchant for almost all sorts of subsidies, welfare and regulations is costing taxpayers from member countries lots of money.

While the EU is imposing certain fiscal "disciplines" like the budget deficit of member-economies should not be more than 3 percent of GDP on any given year, I think almost all governments of member-countries, except Norway, have regular budget deficit. Meaning they live beyond their means; they spend more than their annual revenues (taxes, fees, etc.).

Now many voters of Finland have supported a political party with harsh words against the EU, against the additional bail-out money to Greece and Ireland, and against heavy subsidies to many refugees. The voters are saying that they've had enough of more fiscal irresponsibility, of bailing out highly fiscally irresponsible governments like those in Greece, Ireland and Portugal.

There is one good news report today in NYT, Finland’s Turn to Right Sends Shivers Through Euro Zone
By SUZANNE DALEY and JAMES KANTER
Published: April 21, 2011

Mr. Soini... who is 48 and has been active in politics since he was 17 — repeatedly lashed out at the European Union. (He is fond of calling it “the heart of darkness.”) A true democracy, he has said, is “only possible in individual states.”

“Soini talks ordinary language with ordinary words,” said Ville Pernaa, the director of the Center for Parliamentary Studies at the University of Turku in Finland. “He told the voters that they were wasting money paying for other people’s debts. Why should they pay for that when we need more doctors in the small towns of Finland?”

Perttu Pouttu, a retired worker for a Helsinki energy company... “Of course the bailouts raise questions,” he said. “Will we get that money back? Where are the banks? This is their problem.”

At the same time, Mr. Pouttu said he was worried that Finland had admitted too many refugees. “It does not touch me personally,” he said. “But it bugs me that by law we have to give them apartments. When I retired, no one gave me an apartment.”

Mr. Soini, leader of the True Finns Party, may be urged to soften his attack of the EU and the proposed additional bailout money for some highly troubled European economies. But if he does so, then the voters who supported him and his party may get angry too.

It is a good start that a small but rich country like Finland will remind many European governments and the EU bureaucracy, that fiscal irresponsibility and ever-growing government size is wrong.