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posted on 30 January 2016

Massive Fiscal Transfers, The Only Chance For Survival Of The European Union

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Germany and other richer European states oppose massive fiscal transfers inside the European Union. They wrongly think that poorer EU member states may reduce the gap between them and the richer side of Europe through 'reforms'.

It is just wishful thinking. Germany itself managed to keep its Eastern side (the former GDR) afloat only through enormous fiscal transfers, maybe the biggest ones in the history of mankind. West Germany flooded East Germany with trillions of Deutsche Marks, then Euros: pensions, benefits, procurements, everything was financed in East Germany on a par with West Germany, using West's money.

The German narative for Eastern Europe proves wrong again and again. They wrongly supposed that granting only the freedom of movement and some meager founding would be a panacea for Eastern Europe. They imagined that poor people from the East would work in the West only for a while, saving money and then returning in their native countries to invest their savings into new businesses. That assumption was completely wrong.

Those who left the East to live in the West have no intention to return in their native countries because of the big differences between social systems: healthcare, pensions, benefits, education. While in the West those systems work very well, in the East they are almost bankrupted. The exodus of the best educated and fitted for work people from East to West maintain and even increase the gap between the quality of social services in East and West.

As a result, who is now so stupid to give up the British healthcare for a Romanian one, the Dutch schools for Bulgarian ones, a French pension for a Hungarian one?

Without common European pensions, social systems, public services, financed by a common European coffer, the EU is nothing but a kind of colonial empire. Freedom of movement for workers and some imperial investments in agriculture and infrastructure were a feature of most colonial empires. The Indian railroads were built by the British and Indians had the right to work in England. Even today the citizens of the British Commonwealth are allowed to join the British Army, while the EU citizens aren't.

Unless richer EU states accept to finance common pensions, healthcare, education, social benefits, public procurement and same wages for public servants, the European Union will destroy itself. And its end will come sooner than some expected.

By far, the most amazing fact regarding the current lack of real fiscal transfers inside the EU is that the poorer EU member states don't ask for such fiscal transfers. Yet.

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