<$BlogRSDURL$>

2004-05-23

Swoboda's justice for Slovakia 

Call me a geek, but I listened to some of the appearance of Hannes Swoboda (top candidate of the Austrian social-democrats for the EU elections) in today's ORF Pressestunde. I lent him one ear only, since meanwhile our three years-old was working diligently towards detaching my second ear from its incomprehensible location on my head. Therefore my report has to stop at the point where three years-old came too close to succeeding and TV needed to be switched off.

It is generally unpleasant to witness relatively sober politicians turn into populists during election campaigns. Swoboda was no exception. He dug out that current continental European blockbuster, "the EU takes our net contribution and gives the money to the Eastern Europeans so that they can make our life harder." Swoboda said that Slovakia has

  1. lowered its tax rate to 19%,
  2. then suffered a budgetary crisis,
  3. therefore had to cut its social welfare net
  4. and social turmoil ensued, witness the Roma unrest in February.
  5. Now Slovakia takes EU money to repair social welfare.
  6. Because of the low tax rates, jobs move from Austria to Slovakia, instead of helping the creation of new jobs through active labour market policy.
(1) Swoboda is right about the tax rate, Slovakia has set a flat tax rate of 19% - for VAT, labour income and corporations. (2) It is wrong that Slovakia is suffering a budgetary crisis - latest projections [in German] are for a deficit of 3.8% at an equal growth rate - the deficit is therefore sustainable.

(3) Since there is no budget crisis, the cuts to the social welfare net were not forced, but an intentional measure of the economically liberal government, allegedly to provide a back-to-work incentive.

(4) It seems that the reasons for the Roma unrests [in German] were rather more complex, although the situation of the Roma minority is certainly oppressing and I agree that the Slovak government should probably do more to support them.

(5) As far as I know, Slovakia will get funds from the EU for infrastructure projects and economic stimulus programs rather than for propping up social welfare. Is Swoboda against these transfers, which amount to less than one percent of the relative transfers from Western Germany to Eastern Germany? A country like Slovakia has a GDP/head which is at one sixth of the Austrian level, a fact which can be almost entirely explained by the exact location of the iron curtain after WWII. Had it fallen a few hundred kilometres further to the west, the Austrian social-democrats could rejoice today about the equality of standards and absence of competition to the Austrian workforce. This is where I just cannot imagine the concept of justice that people like Swoboda seem to have - or are they just pretending to be so nationalistic?

(6) To believe that the economic situation of the Eurozone can be improved by raising the taxation level of the new EU members to German levels is astonishing. Would this remove any of the competition from the low wage countries in the rest of the world? All it would achieve would be to hurt the new members in their competition with low wage countries outside of the EU. And about active labour market policy: that may have merit for helping the weakest participants of the labour market, but it is not a program for reviving economic growth, which is unfortunately the only way to reduce unemployment.


0 comments:
Post a Comment

Back to Main Page
This page is powered by Blogger. Isn't yours?