I am a Spaniard living in Germany... part of that very same problem. Anyways, "taxes and bureaucracy" is not the problem of the of the european south. In fact, taxes and bureaucracy are both way higher in Germany.
The problems are more complex and historical. The EU economic crisis have been abused by right-wingers to argue that we have a too heavy social system. In fact, the demolition of the social system in the south is precisely preventing it from really leaving the crisis. I want higher taxes if it comes, for example, with free university, like in Germany.
Tax rates on middle income earners (15k to 30k euros annually) are higher in Italy, at least based on my limited research. If you have data to back up your claim that they are higher in Germany I'd love to see it. Either way that's not actually the core of the issue.
In Germany, you get decent public transportation, great education and healthcare for your tax money. In Italy these things range from tolerable but inefficient to outright useless depending on where you are.
I've also lived in Germany, and while they do love their paperwork and forms you are more or less guaranteed a specific result if you comply with the process, and it happens within a determined time frame. In Italy you can do the same exact process 5 times and get 5 different responses, or simply no response at all as they will happily lose your paperwork over and over. In many cases officials ask for random documents that don't exist and are not listed anywhere as required, simply to make you leave and bother someone else.
I've become convinced however that all of these issues above are actually caused at their core by nepotism, cronyism and corruption. The most incompetent and corrupt get promoted to the top, and the rest are trampled until they give up or leave. There's no future and no opportunity for bright young Italian people.
Where I live businesses still pay protection money to the mafia, openly. Why would any young person want a part of that? This is going to get worse for Italy as young people, who would normally be the catalyst for progress and change, simply leave.
Very interesting, it confirms what I suspected. A negative spiral caused by a fundamentally broken culture that Italy is unable to break away from.
It's all about stuffing your pockets and those of your family. Because nobody can be trusted. You don't build for the future. You don't care about that now.
It seems that there is a fundamental lack of trust amongst Italians. And if there's no trust, you can't build on each other and focus on the long-term. Because you have to spend tons of time watching your back and taking care of yourself.
I can tell you my story: I tried for years to stay in Italy and work there (it's my home country). As a software engineer I had to work 70 hours per week with no way to get a decent job for a salary between 20-30k euros (gross). When I severely burned out, I found the strength to leave the country and found a completely different work culture in Germany.
This to say: I'm not sure Italians will ever turn it around, still I sometimes think it would be nice to come back and try to change things, but it is incredibly hard given that most of the young people there either leave, they accept shitty jobs or have the same mentality of their parents.
Take now... some hard-headed business man, who has no theories, but knows how to make money. Say to him:
"Here is a little village; in ten years it will be a great city; in ten years the railroad will have taken
the place of the stage coach, the electric light of the candle; it will abound with all the machinery and
improvements that so enormously multiply the effective power of labor. Will in ten years, interest be any
higher?" He will tell you, "No!" "Will the wages of the common labor be any higher...?" He will tell you,
"No the wages of common labor will not be any higher..." "What, then, will be higher?" "Rent, the
value of land. Go, get yourself a piece of ground, and hold possession." And if, under such circumstances, you
take his advice, you need do nothing more. You may sit down and smoke your pipe; you may lie around like
the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon or down a hole in the ground;
and without doing one stroke of work, without adding one iota of wealth to the community, in ten years you
will be rich! In the new city you may have a luxurious mansion, but among its public buildings will be
an almshouse.
I would add: "Or get some intellectual property everyone must buy." /s
Oh, I am neither against IP, nor in favor of buy-out of all natural resources. I just think it would be good if each IP had reasonable price [0] and everyone had a land for subsistence.
I have no idea. Normally younger people could be a catalyst for change, but they are all leaving. I think the effects of this are going to reverberate in Italy for generations as they fall further and further behind.
I think a lot of mistrust comes down to an "us" vs. "them" mentality that forms in societies which are segmented or where resources are scarce. The most straightforward ways to remedy those situations are the redistribution of wealth or an increase in total wealth, respectively. But how do either of those happen in the country the size of Italy? Maybe you need a shock to the system to kick a sick society out of it's negative spiral, as you put it. The world wars acted as one for much of Europe. Maybe climate change can be the next one.
History shows two ways cultures change for the better: Top-down, by force; Bottom-up, by social pressure.
Top-down:
- U.S. Civil War and Reconstruction
- U.S. Civil Rights Act, enforced by National Guard troops
Bottom-up:
- women's suffrage protest movements of early 20th century
- educational reformist movements e.g. U.S. 19th century
- religious heresies -- Lutheranism
The weakness of "top-down" is that the dysfunction re-emerges when the top-down force is relieved -- if the Civil War and subsequent Reconstruction had fully succeeded, the National Guard would have had no need to walk the streets of Alabama with rifles in hand.
The weakness of "bottom-up" is that lasting, visible improvement takes years, and is therefore uninteresting to politicians chiefly looking to get re-elected, say, next month.
It can be hard to compare actual tax rates as you have to also account for all the payroll taxes. For instance in France for a Software Engineer you would expect about 40~45% payroll taxes [1], and you will still pay income taxes (somewhere between 20% and 40%) on what remains [2]. They go towards different budgets (Social Security and State), so it makes sense that they are collected separately. I don't know how it is in Germany or Italy.
[1] Payroll taxes go towards the Social Security budget, which covers health insurance, retirement pensions, unemployment insurance, etc.
[2] Income taxes (and VAT) go towards the state budget, which covers debt interests payments, education, justice, police, military, etc.
(fictional, simplified) Example for a Software Engineer based in Germany [1]:
Gross income: 100.000 EUR / year [2]
-------------------------
TAXES
- Income tax (28.600 EUR)
- "solidarity premium" (2.300 EUR)
- church tax (1.600 € - cumpolsory until you leave the curch)
SOCIAL SECURITY (compulsory)
- unemployed insurance (1.200 EUR)
- pension insurance (7.300 EUR)
- health insurance (4.500 EUR)
- long term care (800 EUR)
-------------------------
Net income: 53.700 EUR
Add to that what is often called gross-gross-income: Hidden from your paycheck is that social security has to be paid by your employer as well (so in this case amounts to 113.080 EUR which makes for a combined rate of 53%) [3]
[1] Hypothetical young graduate from Italy/Spain/France: Unmarried, no children and catholic
[2] 100k is not the typical pay for freshly graduated-from-school devs in Germany, but an attainable income goal after some working years nonetheless
[3] some exemptions in that employer-part, its a bit less than the employee-part
70-80K € seems attainable just judging by the recruiters' numbers, but most offers of that kind come with strings attached - like moving to one of the most expensive cities (thus being equal to a 50K job in a smaller city) or being a traveling consultant.
Tangenitally, I'm curious about the unemployment insurance. What does it cover? In the United States, unemployment insurance is compulsory for employers, but it only covers two specific cases: laid-off due to inability to pay salary, laid-off due to your skills no longer being required. Quitting / being fired / getting sick puts you out on the street. Is it the same in Europe?
For most western European countries, there are almost no case in which you end up 'on the street'.
Most countries have a system in which this is prevented in a tiered system (like the German example) where there is the utter bottom layer where you get just enough money to fulfil primary needs (health, roof, bed, food, power, water etc). This status often also means you get other things as well, like free education for people that really cannot afford anything. This basic needs for existence tier is no fun to live in as far as I've seen/heard, and is a pretty good motivator to get out of as soon as possible.
As far as I know, this is also why you don't see the same tent camps underneath overpasses you see in the US; unless you completely remove yourself from society (by choice or by mental status), there is no need for it.
Then, on top of that base layer, which is not something you usually get to, there are the layers that deal with cases where injury causes you to not be able to work, as well as simply losing a job (which is usually because your contract expired, the company no longer exists, or you did something yourself -- not the case where the employer simply said "we don't want you" -- they can't , not with a permanent contract). This layer gets you anywhere between 50% and 80% of your last salary in most countries.
Keep in mind, that with most of those constructions, a lot of systems are in place that prevent you from going that low, or staying that low, on the income/self-sufficiency ladder. This is because it was mostly modeled on the concept that enabling people to live is cheaper than having a bunch of people on the street, as well as simple compassion and empathy. A lot of it comes from historical concepts, but it seems to grow in the same direction.
Every country has its own laws. In Germany it is a historically grown two-tier system:
The "basic" one (ALG 2) which amounts to ~9-12 EUR/day + rent (if it is a reasonable flat) [1] It comes with a lot of strings attached, like you have to use up your savings first and can recieve penalties if you don't show up for job interviews etc.
The "premium" one (ALG 1) pays you ~65% of your last 12 months gross income regardless of savings and termination pay. You guessed it, for that to make sense you would have to be employed at least 12 month before becoming jobless and at a sufficient pay-rate. Also it is limited to 1 year (after that -> ALG2)
In Germany, you can also collect unemployment benefits after you've quit or been fired with cause. However, in those cases there is a waiting period of 12 weeks before you can start collecting benefits. If you have been laid off for reasons not related to your performance, including for long-term illness, you can start collecting benefits immediately.
Not any better in the EU. One’s unemployment insurance is basically void if the employment took place in one EU country and then one immediately relocated to another EU country. Theoretically it’s covered, but in practice the local formal requirements are too stringent and contradicting.
In most Central European countries the total salary cost/net salary easily approaches or even exceedes 200% for any software-related profession. Employment contract is a racket contribution-wise and what’s worse, there is no better option (please don’t suggest contracting or freelancing).
Same here (western Europe) but aside from a little complaining, nobody really wants it gone as it has too many benefits for everyone as whole. And as long as you 'know' the true cost of having an employee you can take that into account which makes it more of a math problem and less of a money problem.
> They go towards different budgets (Social Security and State), so it makes sense that they are collected separately.
Kinda beside the point, but that does not actually make sense. My home budget and car budget are different, but I collect them from the same source. I don't get a different job to pay for my car. Many countries pay for social security out of income taxes, or pay for general budget stuff out of payroll taxes.
I don't know what the real reason behind payroll taxes is. Probably it's mostly historical, as opposed to something you would reimplement if you were doing it from scratch today. But it is most definitely not simply because those taxes go into a different budget.
This will become easier to compare as income tax will soon be taken directly from the payroll like most other countries.
However it's important to note that many people don't actually pay that much income tax in France, or at least nowhere near the 20% to 40% number you're giving.
If you're married it depends on your spouse revenue, whether you have kids or not (especially between 0 an 3 yo because you get a tax credit on daycare, etc...)
I think the biggest difference between a Software Engineer in France and UK or Germany is not the taxes, but that the gross salary would usually be much lower in France.
I'm from Spain and I have lived in Germany and now UK. What surprises me from these numbers is that the share of Spaniards abroad isn't higher.
My reason to leave was my career. In Spain most things work via connections and meritocracy hardly exists. I went from a salary below the median and a dead end job to a top paying job with unlimited growth potential.
I love Spain as a holiday destination, but I will never go back to live there. I agree that the problem is way deeper and more culturally involved than tax rates and bureaucracy.
UK is meritocratic to an extent, but just look at the people at the top: usually educated at elite institutions, and often with heritage that can be traced back to the Norman invasion in 1066!
He said "taxes are excessive" not "high" and "bureaucracy is excruciating" not "high". Both his statements and your statements can be true simultaneously.
Taxes may be excessive but lower if the services received for the taxes are inferior or undesirable. Or if the tax is raised in regressive or arbitrary ways.
Germany may have a large, effective bureaucracy while Spain may have a smaller, corrupt bureaucracy. This I believe is demonstrated by the "Corruption Perception Index".
Welfare states really have nothing to do with how regimented society is.
Precisely. Value for your tax money is simply not there in Italy. You get either tolerable, or non-existent transport, healthcare and education depending on where you are.
In the south it's usually non-existent. The root of the issue is nepotism and cronyism, which gives very little hope to young people who would normally be the catalyst for change and improvement. Instead of participating in a rigged system they can just leave now, and most do.
From the outside, the bureaucracy certainly seems like a big part of the problem. I've idly thought about moving to one of those countries and starting a company there because they are so nice. But one of the big things that kills those ideas are the horror stories about the horrible bureacracy, with non-deterministic results despite the same inputs. Starting a business is hard enough without spending time dealing with that kind of BS. If they were able to get their houses in order and make running a business there simpler, I imagine that many people would be more willing to start them there. Until then, it's a nice place to vacation before returning somewhere else to get work done.
Come to Denmark. It's been rated in the top 5 world wide on the 'ease of doing business' since 2012 and ahead of the USA since 2015. [1]
Pretty much all bureaucracy happens online and my experience as an individual, is that it's minimal. I've never tried running a business , so I can't say anything on the bureaucracy there.
We don't have that nice Southern France climate, though.
Yet plenty of people have relocated to Denmark, Sweden etc because the extra quality of life is worth paying for.
I know two who did, neither now intend to ever come back to the UK with its austerity and constant wish to move in the US direction. One later got relocated by his firm from Denmark to Sweden.
And a crazy good social safety net. If you're having any sort of difficulty(ranging from depression to bankruptcy), you'll get adequate state support(income, subsidised housing and healthcare) for a long time. I wonder why more people don't start businesses there, given that it's seldom fatal to risk and fail..
I’d guess because the people who really have the money to start a business aren’t poor enough to worry about having to live on the street if it fails. Also, perhaps the strength of the safety net makes people feel less of a need to be entrepreneurial.
Tax rate is somewhere between 40% and 60% depending on your income and spending patterns, but consider that we also have free education up to and including PH.D level and free healthcare.
Of course, everyone has their own take on whether that's good or bad.
Poland has a flat tax rate of ~19% (if you run a business or are self-employed - a lot of developers are self-employed here) and it also has free health care and universities, up to PhD level... You don't have to pay 60% taxes to get these.
Exactly. Poor Western Europeans are robbed by their corrupted governments, IMHO. In Ukraine programmers pay only 5% tax, when everyone else - around 40%. So, come to us! : )
Isn't it kind of exagerating to call western EU governments corrupt and invite investors into Ukraine, a country that struggles to get out of Russia's grip and had several swift regime changes, a poisoned president and an ongoing war in the last 20 years? Also, tax extemptions for a job sector that isn't threatened in any way are discriminating.
Well, yeah, unfortunately majority of Ukrainians are not smart enough to overcome those problems (mainly with Russia). But even without IQ qualification for voting, I hope, they will be able to rule over the state right. I don't participate in voting as you can guess from my profile...
Regarding the taxes. They are not that discriminating! Because in absolute values other workers may pay to the state even less than programmers. A good programmer may earn up to $3000 every month, so $3000·5% = $150 is what he gives to the state in taxes. An ordinary worker earns (official stat) $350 a month, so he gives only $350·40% = $140. I am not sure about 40% though...
We also have very low prices here too. For instance, potatoes cost only ¢15/kg, so if you are European or American you are welcome to spend your money here : )
So in absolute values poor people are ripped off (live off $210) while IT workers are well off (live off 2850$). How is that not discrimination? A flat rate of 19% for everyone, like Poland has is quite fair in comparison. Other countries in Central and Eastern Europe have cheap food producs as well:
That is because they are doing useless jobs or work which is not yet in demand here. If they invested in education or some equipment which were raising in demand, they would be fine. Many of ordinary workers in Ukraine emigrate to the EU actually - even more would do that if the EU did not establish those discriminating boundaries with visas : )
But the main reason of their poor life is corrupted government which have been here for many years and which didn't give them opportunitytoinvest properly (not everyone can be a programmer, I admit). We had several hyper-inflation periods with banks going bankrupt, with too complicated legislation no one seriously followed, unfair privatization of former state property, policemen killing and robbing people, etc.
...€2.32 for 1 kg of potatoes in Norway?! I got a millionaire idea.
At least in the case of the French bureaucracy, it very much is the reason I'm not getting what I want done there done, and I don't think the Kafkaesque nightmare that that has been is my fault. Every interaction I've had with various US govt agencies has been a dream by comparison, especially the Federal ones, but even the terrible state ones like the DMV. At least with them the requirements to get the things you want are fairly straightforward and consistent.
I also considered hiring people here. After looking into the regulations and dealing with the government in other areas I realized I'd need a full time lawyer just to deal with the bureaucracy while I ran the business. There's just absolutely no reason to participate in the economy here, it's too deeply dysfunctional.
But that seems to be limited/worse/more when you get 'halfway' through France on the map, it's more abundant when you get in the mediterranean areas. Not sure why, but it's an observation; it's almost as if the concept of work replaced the actual merit of work.
France is quite allright in this regard, it's other EU countries that are more worying: Greece, Italy, Romania, Bulgaria, not necessarily in this order.
Yeah, it's not all of France, and the national policies make sense, but it seems that the closer you get to the Mediterranean sea, the more the quality and work-merit balance tapers off.
In fact, taxes and bureaucracy are both way higher in Germany.
People generally don’t mind paying a premium in time or money if they feel what they get it worth it. Everyone knows this is true, witness people happily stand in line for hours to buy an expensive but desirable item or experience.
In Germany and Sweden and a few other countries taxes are high but you can look around you and see that it goes on high quality public services and infrastructure. The bureaucracy is time consuming but you know when you finally fill in that form, something will actually happen.
Countries where people complain about taxes and bureaucracy are countries where the tax money disappears into a Black hole and where paperwork is pointless.
Netherlands would be one of those countries that has high taxation and indeed has good infrastructure and still decent public services (though it's been getting worse). Still I decided I wanted to leave the country for many reasons, but in part because I feel I pay too much for what I receive.
Now I live in Thailand with my girlfriend and while infrastructure is much worse and public services are of (much) lower quality than The Netherlands, yet here I will be able to make much more savings due to low (in my case pretty much non-existent except VAT) taxation.
I think it's better for us to raise our daughter here because we'll be able to give her an easier life where she will not have to work very hard and can enjoy her life. I think it's easy to save at least 35k a year here (if not more) where in The Netherlands, due to high taxation and high cost of living I should be happy to save maybe 15k.
I also think in the near future we'd have some property coupled with some other investments that will allow me to "retire" by 45 if not earlier. In The Netherlands I don't believe this would be possible either. I am 36 years old now by the way.
The key is good health insurance now, build up savings quickly and then if needed can use money from the savings for serious stuff not covered by health insurance.
But the private hospitals are very nice indeed in Thailand and very affordable as well. A decent healthcare plan for me + girlfriend would cost us around 1200 EUR a year (total), while in The Netherlands it would be double that amount and we would just get basic healthcare (i.e.: not to be used for private hospitals).
I do believe it's highly unlikely I will lose my job (mobile programmer) in the coming years. I believe there will be plenty of work for at least the next 10 years and probably much much longer. And as a freelancer I might be less affected by ageism.
> In fact, the demolition of the social system in the south is precisely preventing it from really leaving the crisis.
Isn't it arguable though that the politicians are choosing to cut social welfare instead of choosing to cut cronyism and political favors? In which case it's actually the left-wing which is abusing the economic crisis, using those in poverty as pawns in a bigger game?
> I want higher taxes if it comes, for example, with free university, like in Germany.
Is that really fair? Those in poverty are less likely to be qualified to go to university, so you are essentially subsidizing the wealthy with policies like that.
Giving everyone the same access is fair. Those in poverty are only much less likely to be qualified in situations where education is commercialized/capitalized. Also, subsidizing is a rather dirty word to use for this case (we're talking about a general pool of money in a tax system, not your money with a serial number on it going to one specific place to be spent), as well as selecting 'the wealthy' as the ones who are to profit, since they most likely pay taxes that easily cover all the expenses an enrolled student would require.
Using taxes in a manner that gives everyone the same benefit is seems like a reasonable thing, especially when compared to the places tax money seems to be spent to much (arms, military, open-loop energy systems, politics) or too little (i.e. too little for roads and bridges...).
The main difference is getting value out of your taxes. Value can be direct or indirect (the impact of education on your family, neighbors, friends etc indirectly impacts you as well, this goes for infrastructure, healthcare etc. as well), but having very little value kind of misses the point of a taxation system in an organised society. Might as well live in a forest by yourself in such cases. (but people tend to migrate to a country with a better system instead)
> > I want higher taxes if it comes, for example, with free university, like in Germany.
> Is that really fair? Those in poverty are less likely to be qualified to go to university, so you are essentially subsidizing the wealthy with policies like that.
You are right, and that's precisely the reason why rich people must pay much more taxes than the poor if you want to sustain a welfare state.
> Isn't it arguable though that the politicians are choosing to cut social welfare instead of choosing to cut cronyism and political favors? In which case it's actually the left-wing which is abusing the economic crisis, using those in poverty as pawns in a bigger game?
I don't understand what you're saying here. Cutting social welfare is not a left wing position. Neither is avoiding to cut cronyism.
Surely a major factor for problems in both Italy and Spain is the crippling effect of the Euro and EU regulation. If the Euro were scrapped, it could make the economies much more competitive. Just look at how the drop in the pound over the last two years boosted British industry and exports. That's not an option for countries shackled to the Euro.
British industry growth has become unstable rather than higher since the pound collapsed.
British exports have mainly gone up because gold (which doesn’t come from the UK, it just happened to be stored there) is being moved out of the country in economically significant quantities.
The pound hasn't collapsed, that's why. Look at a graph of GBPUSD. The pound spent all of 2017 increasing in value, and you'll see that by the start of 2018 the pound had erased the entire drop that followed the EU referendum - it was back to the value it was at the start of 2016.
The fluctuations since then have been within the same sort of range as is normal for such a currency: the fall since April is of about the same size as the falls in July 2011, Summer-Winter 2014 etc.
The narrative that the UK economy or currency is collapsing is trivially disproven by simply looking at a graph.
With respect to gold, the story you linked to says it's being moved by Chinese investors as a hedge against problems with their own currency. It's unrelated to the politics of the EU.
Before looking at the numbers you need to understand what the numbers actually mean.
The gbp value has indeed collapsed. Whoever is telling the contrary is plainly lying.
The gbp eur fx before the Brexit was over 1.40, now it is 1.11.
Obviously you look at the gbp usd graph that has nothing to do with the strength of the gbp because the major business partner of the UK is the EU, not the US, and by far.
The gbp usd graph that you are using as a proof of your fantasies just highlights that the USD also lost value in the last two years.
Can I please know where do you live? I live in UK and I can attest for sure to the GBP collapse and the economy that is growing at half the pace as before.
I lost thousands of pounds already because of the Brexit.
Note that Q1 GDP growth is usually revised upwards some time after publication, so I'd expect Q1 2018 to come into alignment with the other years after enough time has passed.
May I suggest that if you managed to lose large sums of money in an environment where the economy is growing and GBP is behaving as it normally does (and not "collapsing" as you put it, unless you think USD is also "collapsing"), then maybe the fault lies with you instead of Brexit?
As for where I live, that's got no relevance to the correctness of my arguments, has it? But I'll give you a hint - GBPCHF shows a similar pattern as GBPUSD. At the start of this year, the currency pair was at the same place it was in April 2016.
Your belief that the UK economy is doing badly just isn't grounded in anything concrete. At best you can say the Eurozone may be recovering somewhat. You clearly want to believe leaving the EU = sky falling, but it's just not - as evidenced by the fact that people are still moving to the UK in huge numbers!
https://tradingeconomics.com/united-kingdom/gdp-growth-annua...
Don't you notice anything between before June 2016 and after?
Before was growing at 2.2%, now it is growing at just 1.2%.
To me 1.2% seems pretty close to half of 2.2%.
I lost thousand of pounds because I had to spend money abroad and thanks to the collapsing value of the pound I had to spend much more.
Where you live has a huge importance because you clearly have no idea of the current economic scenario in the UK.
The evidence is all in the numbers that you try to ignore or to manipulate to justify your agenda.
But numbers don't lie and everyone can verify that as I said just before the Brexit the annual gdp growth was 2.2% and now is 1.2/1.3%. The GBP before arrived to 1.43 on the EUR now it is at 1.11. The net migration from the EU is at its lowest in 5 years at just 100K people. These are the raw and pure numbers, not your fantasy that UK economy is the same as before.
Like I said, you have to be careful with recent GDP figures because Q1 is always revised upwards - there's some repetitive statistical flaw in the way the ONS calculates these things, it's always the same problem.
It's possible the figure for 2018 will be slightly lower in the end, we'll have to wait and see. But GDP growth went from 3% to 2% between 2015-2016 and nothing much was happening then, so again, you're taking perfectly normal and quite small fluctuations in economic indicators and linking them all to Brexit, which is logically unsupportable.
As I said before, the strengthening of the Euro is related to economic changes in the eurozone and not anything to do with Brexit. That can be easily seen by just comparing GBP vs other currency pairs. Your trip cost more because Europe became less poor, not because the UK did.
As for the implication I somehow don't know what the UK is like, knock off it mate. I visit the UK every month or two because I work for a company based there, and actually am British myself. I am very familiar with how it's doing, and it's doing fine. Stop assigning arbitrary fluctuations in a single exchange rate to your personal political biases.
> Look at a graph of GBPUSD. The pound spent all of 2017 increasing in value, and you'll see that by the start of 2018 the pound had erased the entire drop that followed the EU referendum - it was back to the value it was at the start of 2016.
GBP/USD:
* 7 Jan 2016: 1.46
* 20 Oct 2016: 1.22
* 15 Dec 2016: 1.34
Jan-April 2017 were at the level of early 2016, but still lower than just before the referendum itself.
Then it went back down again. It’s currently 1.31
That graph looks like two patches of normal currency variations separated by a vertical line on 24 June 2016. If that’s not a collapse, what is?
Most of the beauricracies I've dealt with in Italy have nothing to do with the Euro or the EU. And yet they are horribly mis-managed and run by corrupt nespotic maniacs.
It's a cultural problem, not a regulatory one. And thanks to brain drain the young people are leaving instead of affecting change.
And yet, these cultural problems have existed for many decades. While I'm certainly not claiming that the Euro and EU are the sole causes of today's problems, the introduction of the Euro is the more recent change, and I think a more likely contributor to the recent economic problems.
I'm sure that both are factors. However, it was fairly easy to work in different European countries before the EU or the EEC existed, it just needed some paperwork filling out, so I'm inclined to think this is a lesser factor. There was migration for work between western European countries such as UK/Germany/France/Italy for well over a century. It has certainly increased in recent decades, but it's not at all new.
In contrast, the Euro affects entire nations, which can depress weaker economies as a result of it being tied to stronger economies like Germany. This affects every manufacturing and export business, with no way to become more competitive relative to stronger economies within the Euro zone. Wealth will continue to drain out to stronger economies. The currency itself is an insurmountable problem, it's not a level playing field, and there's no way to correct that without reverting to a freely floating national currency or political and monetary union. And the latter is not going to be acceptable to the public any time soon; the Euro zone is more likely to collapse before that ever happens.
I'd also suggest that a lot of the migration out of Italy and Spain is a consequence of the Euro-induced economic collapse, not the primary cause. Though it certainly will have a reinforcing effect. I've met plenty of Italians who migrated to work in the UK and US over the last decade+, and for most it wasn't because migration to the UK or US was a life goal for economic or other reasons, it was because there were simply no opportunities or a future for them at home. They would have liked to stay if they could. Open borders would have made this choice easier, but that's an enabling factor, not the primary driver. The situation for these countries is increasingly desperate; they need to have a future for their own people.
I’ve just moved from the UK to Germany. This was primarily enabled by Google translate and online courses like Duolingo, and by websites making the necessary tasks known and understandable.
The Euro is icing on the cake, not the… I guess the metaphor would imply “the main course”?
rleigh isn't arguing that the Euro makes it easier to migrate, which is what you seem to be getting at.
He's arguing that, essentially, countries like Italy, Spain, Greece etc cannot reform their cultures and without the Euro would effectively be forced to re-calibrate their economies by a sinking exchange rate. That is, they'd be unable to afford foreign exports so they'd buy more domestic products, and that in turn would grow their economy. But in the euro there are no floating exchange rates, and people are very reluctant to pay themselves less, and governments are very reluctant to pay out less in benefits, and the EU/ECB is very willing to finance all of this with money printing and huge bailout "loans" .... so in the end there's no incentive to reform or make it easier to get things done.
Convenience of currency changes when migrating is certainly not the issue at hand.
It's true that differing currencies is basically negligible as far as friction goes. So long as you can exchange your money fairly (and you could and can), it's nothing.
Contrast with, say, Venezuela, where there's a fake exchange rate propped up by the government that the average person cannot get, and you start seeing some actual monetary friction.
Both are really important. Single causes to explain gradual changes in state of complex adaptive systems are rarely correct. Listing your top ten reasons in order or with percent importance attached, would be a more insightful dialogue.
I'm not sure why you're being downvoted here - I think there is substantial truth to the idea that Italy had historically (under the Lira) run an economic model where it devalued its currency to offset poor total factor productivity growth. Within the Eurozone it is no longer able to do that but has not been able to improve productivity growth rates either.
This leaves lowering wages (at least in real terms) as the pretty much the only remaining way to offset low productivity growth in comparison with its industrial competitors. Unfortunately wages take much longer to adjust downwards because its very difficult to tell people to take a pay cut (over the long term the only way to do it on a large scale is to give low/no pay increases for seniority).
In the mean time, returns on investment fall and one suspects a partial downward spiral has developed as a result, where lower returns attract less capital and less capital investment leads to further poor productivity growth.
So, the same problem that the poor(er) states in the US have. And yet, they seem to be content to stay within the union - so I think there may be a little more to it than a single variable? I'm open to the argument, it just seems a little... well, short. Especially in a reply to a comment that said "The problems are more complex" :-) (now it's simple after all? I doubt it)
Those figures do not show massive inter-regional financing. All but 2 countries have net EU expenditures of +/- 250 Euro per person. Per capita spending by the EU is 215 Euro per person compared to federal government spending of $9,961 per person in the US.
The EU budget is 1% of GDP while the US federal budget is 20% GDP, 60% of which goes on social security / medicare / safety net programs. US federal spending acts as a huge inter-regional stabilizer.
Regional transfers must significantly increase within the Eurozone if the Euro is to avoid breaking up or immiserating huge numbers of citizens.
British economy went from a growth of ~3% before the Brexit to half of that after the Brexit.
Italy economy with the lira in the ‘90s was completely stagnant.
Please avoid spreading misinformation passing your conjectures for facts.
The problems are more complex and historical. The EU economic crisis have been abused by right-wingers to argue that we have a too heavy social system. In fact, the demolition of the social system in the south is precisely preventing it from really leaving the crisis. I want higher taxes if it comes, for example, with free university, like in Germany.