Europe – nonfiXe

Debt All Over Again

Doing some research for an article about ‘Ten years of crisis’ for a Dutch weekly in July 1983, I interviewed Pieter Korteweg at the Dutch Ministry of Finance. ‘We are in debt all over,’ top cleric Korteweg said. ‘We have put it in a table. Take 1976 as a starting point, from that year on up to July 1983 debt of households rose from 69 to 148 billion guilders (€1 = NLG 2,20371), public debt went from 55 to 145 billion guilders, while companies built up a debt of 155 billion (up from 78 billion in 1976).’ All because of the luxury that’s been possible by lending money from the bank or on the capital market. ‘In the end however there always has to be someone who wants to lend you the money for a certain prize,’ Korteweg went on. The higher the debt figures, the more interest one has to pay. `Korteweg remarks that because of rising debt the Dutch government had to pay 3 billion guilders interest extra each year.

By Frank van Empel

Almost thirty years later a same kind of situation occurs. It’s debt all over again and once again all professionals are negative about the future. There’s a lot of fuss about Greece that can pay interest on its outstanding debt anymore. There have been two bailout packages of 150 billion dollar each to save Greece from bankruptcy. On global scale, however it is a fuss about nothing; the numbers are so big that they have lost their meaning. Check it yourself. Does this mean anything to you: the level of aggregate net government debt in the world rose from $21,900bn in 2007 to an expected $34,400bn in 2011. IMF forecasts indicate the level will reach $48,100bn in 2016. The ratio of world net debt to world GDP rose from 42 percent in 2007 to 57 percent in 2011, and is expected to hit 58 percent in 2016.

In other words, all the governments in the world have built up a net debt of $34.400.000.000.000 up to now, 57% more than in 2007. We don’t even talk about private debt yet. We all are debtors. I can live with that. It’s easy to find solutions, but then someone or something has to give. Some options:

The EU introduces the Eurobond, to catch billions of euro’s on the capital market in order to finance all deficits in the Union. Speculation against the euro doesn’t make sense. It is simply too big.
The Central Bank buys all bonds of Greece and other heavy debtors such as Italy. By doing that more euro’s come in circulation. In a fast growing economy that can stir inflation.
The European Union has her own budget, but in addition to that may earn taxes as well. By investing in the production of sustainable energy and by lowering taxes the economy is stimulated. With the budget instrument and taxes one can fine tune policies.
To define away the whole problem. Ignoring the foreign component, or looking at the world as a whole, the overall level of debt makes no difference to aggregate net worth — one person’s liability is another person’s asset.

It is no good to dump one of the Euro-sisters. Now it’s Greece. Tomorrow it may be us, the Netherlands. On a global scale 300 billion dollars for a bailout is peanuts. Europe can handle it. The USA has run a deficit on the current account for decennia. The USA could do that because they were privileged. Oil is worldwide paid for in dollars. For that reason there is a lot of demand for dollars. The deficit on the capital account is compensated by a surplus on the capital account (the need for dollars just mentioned.

The dollar, however is being replaced, little by little, by the euro. Then a deficit more or less in Europe doesn’t matter anymore. Deficits will be compensated by surpluses.

Robin Hood Tax for the Common Good

Financial Transaction Tax is using the banker’s pocket money for great improvements. The European Union can install it, for the common good, if member states comply. All we need is national governments that look beyond small town politics.

Every seven years a human body is claimed to reinstall. Cells renew… So does the EU in financial terms. Right now member states discuss the budget for the period 2014 – 2020, in order to come up with an agreement on how to spend it.

Caro Sicking for nonfiXe

But spending in a time of conceived crisis seems to be inappropriate. Nobody wants to pay for the Greeks – they enjoy pension from 55 year. Let alone for the Italian – Berlusconi’s parties are famous. But is that what we have to look at?

The EU is founded for one reason and one only: peace. Robert Schuman and Jean Monet thought of a way to achieve this, through economic liaisons. People who trade with each other are interdependent, they don’t fight.

Today some fifty years later we stand at the dawn of yet another crisis, right at the moment the EU budget needs to be agreed on. For the coming decade. The European Committee (EC) proposes – among other things – to raise taxes by itself. Many a country, such as the Netherlands, is deadly against such a tax, afraid to loose sovereignty. And populists use the financial crisis to play peoples’ feelings, counting Euro’s as if they are accountants, forgetting the larger picture and values for convenience’ sake.

Among the taxes the EC proposes there is the Financial Transaction Tax (FTT). It is a small fee on transactions done by banks and other money machines when they trade, for example, bonds.

The same banks that were saved from bankruptcy by the taxpayer, have to give something back to society while playing with money, the Robin Hood Tax Community exclaims.

According to Robin Hood calculators 0.05% Transition Tax can lead up to €200 billion revenues each year. Enough money to save Greece, or to support the poorest, to prevent the Dutch from cutting on budgets for handicapped, in other words, the financial sector’s pocket money can save the world.

Mr Sarkozy and Mrs Merkel are in favour of the EU to raise Financial Transition Taxes. The Netherlands is one of the countries against. At least, when it is a EU measure. Financial transactions need to be taxed worldwide before the Dutch join in, afraid of the economic consequences.

This type of argument symbolises the negotiations on the whole EU budget; fear of losing, afraid somebody else gets a little bit more. As if we are children fighting over a piece of candy. What such national politicians forget is that we have much more to lose than money. The EU is, as stated, about peace. One can’t have peace when some are hungry while others spend the crab out of themselves. Large disparity of income causes discontent and raises revolutions. Banks should be aware of this as well, for their own good.

Let us not forget one thing: the EU is a democratic institute. The European parliament is chosen by Europeans and the Council consists of chosen country leaders. There are checks and balances, civilians can influence decisions and regions get support for (sustainable) development. In many a way the EU is more democratic and transparent than most member states. Europe paves the way for energy transition and social cohesion.

Yes, there is a lot of bureaucracy and, it is not perfect. But instead of rejecting the EU we should embrace it and strive for improvement. The European Union is today’s only government that works on the common good, oblivious for populists and other short-term politicians.

Every seven years a human body is claimed to reinstall. Cells renew… So does the EU in financial terms. We’d better support it, because the EU supports our individual sovereignty and continental prosperity and peace whether the Greeks pension or not.

nonfiXe October 1, 2011

Immigrants are not the problem, they never were

Fear is a bad advisor. Populists feed it in order to obtain power. We are better off with the European concept. The EU protects freedom and democracy. Member states are in peace since 1945.

Like many democracies today, the Netherlands suffer from a populist rightwing political party that has one issue and one issue only: no more immigrants.

Frank van Empel & Caro Sicking for nonfiXe

This Dutch party, ironically calling itself Party of Freedom (PVV), has no democratic structure in itself and is basically the one man show of Geert Wilders. He is surrounded by so-called blue collar – ordinary – pop up politicians to fill seats in Parliament, many of them convicted for fraud or violence. In the meantime Wilders, who himself is court marshalled for hate speech, tries to look and sound like a reasonable politician who sincerely worries about the influence of Islam in the European nations.

When he gave a speech in Rome on March 25, Wilders started with a handmade history lesson: the Roman Empire fell because of immigrants; Germanic Barbarians flooded the empire and rampaged the country. ‘The fall of Rome was a traumatic experience,’ Wilders claims. Well, merely living in these ages must have been a traumatic experience.

The Romans weren’t known for their peace-loving nature; they violently conquered quite some land (veni, vidi, vici) trying to expand their wealth. At some point Roman society became decadent and thus weak. Economic conditions deteriorated as well, due to the very expensive army the Romans had to sustain. Moreover currency devaluated when newly found mines ended the scarcity of silver. The Visigoths who entered the empire and presumably sacked it, weren’t famous for their humanity either. The world 1600 years ago was very different from the place we live in now. There was no democracy, nobody ever heard about human rights and the strongest prevailed. Wilders’ ordinary people were mainly slaves… and having a blue collar was an unknown luxury.

Luckily society has moved forward, not in the least because of the foundation of the European Union. The member states have been living in peace with each other since April 18, 1951, when the European Community for Coal and Steel – EU forerunner – came to being.

We have to thank Robert Schuman and Jean Monet for their long-term vision on how to bring and maintain peace on the continent. The basic thought behind the community was to make ‘war materially impossible’. When people trade and are mutual dependent for their livelihood, it is unlikely for them to grab arms and fight. The ECSC started with six nations and invited others to join. The treaty gradually grew into what we know now as the European Union. The community has been and still is an enormous success; it has brought peace and prosperity.

Therefore, instead of garbageing the EU like so many right wing politicians call for, we need to expand it, ask other countries to join, like Turkey and Morocco. People who are afraid of this should try to imagine how afraid of each other the French and the Germans were, after fighting two major wars in barely three decades. Fear is a bad advisor. Pouring Angst into a society is one of the most common strategies every starting dictator follows. Angst combined with a scapegoat whose fault it is when for example the economy collapses. This scapegoat can be the boogieman, Hitler picked on the Jewish community and nowadays babydictators and populists point at Islam.

These power hungry populists conveniently mix immigration and Islam into a shambolic ideology that surfs the waves of insecurity civilians tend to feel in a changing world. They abuse history, quote statesmen and philosophers or writers without mentioning the context of these words, they plant fear inside peoples’ hearts and demand for security measurements while declaiming the best security on earth: the European Union. The EU protects its’ people, not only from each other, but from dictatorship as well. We in Europe are free.

This is exactly why we have to keep Islam out, some extremists will add, the sound of warnings about an aggressive ideology ringing in their ears. Here is a parallel to the days when senator McCarthy pursued communists. Then the red danger was the great evil and threatening force, now the shekel is assigned as the symbol that is going to destroy our values, prosperity and culture.

Similar to the events in the Eastern bloc some twenty years ago, dictators and monarchs all over the Middle East are called to the stand by their own people these days. Muslims demonstrate for freedom and democracy. They are not so very different from the rest of the world. And neither is the religion.

Islam has the same roots as Christianity and Judaism. All three religions go back to Abraham. The Koran, some claim, is based on hallucinations, but isn’t the Bible as well? Stories featuring Adam and Eve, an apple and a snake …

Others state that Western society is superior to Islam communities. Today Westerners still use the Arabic ciphers (sifr) and teach Algebra in schools. Modern navigation tools and astronomy find their roots in the Middle East. Women rights? Well, the Koran teaches that men and women are equal, although this is not the case in many parts of the world. Women all over suffer from male domination. People all over the world suffer slavery and abuse, just think about the grand scale child abuse in the Catholic Church that recently came out. Abuse and discrimination happen in every society.

There is not such a thing as a superior civilisation, culture or religion. The good and the bad, the inferior and the sublime travel hand in hand wherever people live. If we want to conquer evil, we have to create a system that roots it out, with checks and balances to prevent the powerful from becoming sole rulers. We have to make wars ‘materially impossible’, like Schuman taught us and like Europe is doing for sixty years already.

People in Northern Africa demonstrate for freedom, dignity and democracy. Ecological crises, like the disaster that hit Japan, merciless point out that we all live on the same planet. The house of humans is crumbling and shaking. We have to take care of it together. When the cellar breaks down, the house collapses. If the attic is a mess with vermin crawling around, the whole mansion will become an unhygienic place. Each and every room, wall, window, hallway and door is equally important for the inhabitants. We also have to reckon with each other while living together. We can decorate the spaces differently, change colours with rooms, but together we have to maintain the building and its’ community.

Immigrants are not the problem, they never were. Most societies thrive on immigrants and diversity. Until humanity is doing good earthkeeping there will be immigrants. This will go on until basic needs are satisfied within the countries of origin as well as in the countries of destination. We can accomplish this by mutual economic dependence, which is already there, but not as such acknowledged yet. Once we start to act according to this shared fate, war will be materially impossible worldwide, borders will be marks of ancient times freely crossed over by who wants to – like in the EU now – This will save a lot of money and energy, as well as lives, because there is no need anymore to sustain an army.

Is this Utopia? No, this is Europe today and it can be the world tomorrow.

nonfiXe, March 28 2011

For an update on this subject: Ecolutie

Image: Joost Sicking, Wandering, acrylics, 130x110cm, 1986