Tuesday, 22 November 2016

"It's the Economy Stupid", yes it is!

In recent posts I have argued that the Clintonian motto applies to everything.

Does it apply to the Trump election? It does. US unemployment may be just 4,9% but:
a) Many people are making not enough to live comfortably
b) People are still worried about losing their job and getting a new one.

Among so many things he said, Trump promised:
a) Lower taxes (ie more money in your pocket)
b) Doing away with Obamacare (many cannot afford its fees)
c) Trade protectionism and an end to US companies moving to low wage countries

Other things he said attracted voters too and what is key, people who cared about a-c above were willing to overlook the unacceptable other things he said. Why? Because it's the Economy! Money walks. Shocking, but it does.

Yes, it is not just a job any job that people want. They want good pay and security. So the unemployment rate does not tell the whole story. Not in the US not anywhere.

Unemployment is at or near 5% in the UK, in Germany and the Netherlands. Does that mean that Brexit was not going to happen, that AfD won't do well in 2017 or that PVV won't do well in 2017 either? No, it does not.

In Germany, people are still struggling with mini-jobs, they feel job competition from migrants and EU nationals too. In the NL, people have seen their jobless allowances cut and worry about their pensions. In Germany, people do not want to pay for roads in Spain and Greece anymore.

In France, unemployment is high on top of other things. People have felt the terror in 2015 and 2016.

Humans have lived in caves, huts, tents. You cannot survive in a tent in 2016 Germany or UK, some do in Greece. How do the homeless in the US survive?

Work does make you free. Ask the 23% and 19% unemployed in Greece and Spain. How do they survive (note that eg in Greece unemployment benefits last for just 12 months and are about 400 euros). Simple: They are supported by relatives who work or have pensions, those who do not, are left in the cold, albeit warmer than the north's.

What makes Spain, Greece, Portugal, Ireland, Slovakia, Lithuania et al different is that they are not the core of the EU. Germany, France and the Benelux are. Italy to some extent, that's the reality. The core of the EU are two strips. One extends from north to south across eastern France and west Germany, all the way down to the Mediterranean and the other covers parts of northern Italy all the way to south-eastern Spain. That was the case 25 years ago and still is.

Ireland uses low corporate taxation to attract business and Hungary has decided to lower its corporate tax rate to 9%! But Ireland and others get all this regional policy funds one may argue. True.

Why isn't Greece Europe's Florida and why isn't there a Euro Hollywood and a Euro Silicon Valley in Spain-Portugal? Why are not the Baltics Europe's New England? These issues will be addressed in a forthcoming post.

Talk to average people around Europe and listen to their real concerns. Their foundations are economic. Why? Because we do not live in caves and tents anymore, everything costs money. We do not hunt for food or self cultivate it.

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