Who, Whom?

One of the most crucial functions of the European Union is to redistribute wealth from the more productive “regions” of the superstate to those that produce less. But which countries are net contributors, and which are net beneficiaries? Who are the donors, and who are the recipients?

We all know the general outlines of the process: Germany is the great industrial powerhouse of the Union, the engine of the general prosperity, while the weaker, more corrupt recipient states are exemplified by Greece. Both parties to the exchange resent it — ordinary Germans see themselves as having to work harder and longer to pay for over-generous pensions doled out to Greeks who retire early or go on disability, while the Greeks object to being bossed around by the overbearing bureaucrats of a foreign power.

But what are the details of the redistribution for the individual countries of the EU, and for individual citizens?

A handy reference table may be found in a document entitled “Which countries are net contributors to the EU budget?” posted at the website for Folketinget (the Danish parliament). Eleven years of data are included in the table, showing the dynamic evolution of the redistributive mechanism as additional countries joined the EU during the first decade of this century.

What makes these figures really interesting, however, is the addition of population data to provide an insight into the size of the average burden or windfall being applied to individual citizens. To produce the graphs and tables below, I joined the monetary transfer data for 2010 (the most recent year available) with population data from 2012 for the twenty-seven countries that make up the European Union. Dividing the net exchange by the population of the country produces the average annual transaction imposed upon each citizen.

The results may surprise you: Germany is not the largest per-capita donor to the Union: it is third on the list. Nor is Greece the greatest beneficiary, either by gross redistribution or per capita: it is third from the bottom in both cases.

I’ve color-coded the relative contributions of all the countries in the following map, with the blue end of the spectrum representing the donors (those with negative numbers, which indicate an outflow of wealth), and the yellow-orange-red portion showing the recipients. Countries in black are not members of the EU:


See the bottom of this post for the tables of data used to produce this graphic

As expected, Germany is the outlier on the “blue” end of the spectrum. But Poland is the largest recipient country by a long shot, far outweighing the usual suspects along the Mediterranean littoral.

However, both Poland and Germany are populous nations, so their gross total transfers are not terribly informative. The per-capita figures tell a different story, as revealed by the second map:


See the bottom of this post for the tables of data used to produce this graphic

Nothing could be clearer: the powerhouse of productive enterprise in the EU is centered in Northern Europe. Belgium and Sweden lead the way, with the rest of the Big Six — Germany, Denmark, the Netherlands, and the UK — not far behind. Wealth extracted from the pockets of citizens in these countries flows eastwards and southwards to less productive and more destitute citizens of those regions.

Estonia is the greatest recipient of the EU’s largesse, followed by other countries in Central and Eastern Europe, and then the less surprising southern beneficiaries in Greece, Spain, and Portugal. Italy is anomalous in the South: although it has a huge debt overhang, it has remained relatively productive and avoided the quicksand into which Greece, Spain, and Ireland stumbled. Despite its financial difficulties, Italy remains a significant net donor to the Union.

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We’re accustomed to thinking of these wealth transfers as benefits that are enjoyed by the recipients, while the donors experience hardships. But is this really the case?

It’s true that the pockets of affluent German citizens have been picked to provide welfare benefits for Greeks and Spaniards. Yet the South is scarcely richer as a result — the austerity regime imposed on the beneficiary countries in return for repeated bailouts is so draconian that more and more citizens join the ranks of the unemployed, pensions and subsidies are repeatedly reduced, and businesses shut down by the thousands. In addition, the recipients retain so little economic autonomy that they can hardly be classified as sovereign nation-states.

Yet the average taxpayer in Germany or Sweden is not getting any richer. So what’s going on here?

Cui bono?

The answer, of course, is: the banking system. The banksters arrange subsidies, loans, bailouts, and austerity in such a way that the financial institutions they control become more and more powerful, usurping many of the functions that used to be performed by sovereign governments. The officers at the pinnacles of these enterprises become fabulously wealthy, and ensure that enough payola flows to ostensible national political leaders so that the system maintains itself.

Ordinary citizens are impoverished and demoralized, especially in the recipient countries. And they commit suicide in ever-increasing numbers, but this is hardly a concern for those inhabiting the rarefied eyries of financial puissance.

What matters to those exalted personages is who holds the authority to deliver the mega-goodies, and to whom they are delivered.

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Table 1: Total net transfer of revenues within the European Union for 2010

Country   Net Transfer (€M)   Population 2012
Germany   -9,223.6   81,757,600
United Kingdom   -5,625.9   62,041,708
France   -5,534.8   63,460,000
Italy   -4,534.0   60,418,711
The Netherlands   -1,833.1   16,696,700
Belgium   -1,466.4   11,007,020
Sweden   -1,211.4   9,360,113
Austria   -677.0   8,414,638
Denmark   -615.3   5,568,854
Finland   -300.2   5,357,537
Luxembourg   -41.9   472,569
Cyprus   10.6   863,457
Malta   52.9   408,009
Slovenia   424.1   2,012,917
Estonia   672.7   1,315,681
Latvia   674.2   2,366,515
Ireland   803.9   4,434,925
Bulgaria   895.5   7,621,337
Romania   1,245.2   19,042,936
Slovakia   1,349.6   5,422,366
Lithuania   1,358.4   3,401,138
Czech Republic   2,079.3   10,535,811
Portugal   2,622.6   10,607,995
Hungary   2,748.4   9,979,000
Greece   3,597.4   11,645,343
Spain   4,100.9   47,150,800
Poland   8,427.5   38,192,000

 

Table 2: Net transfer of revenues per capita within the European Union for 2010

Country   Net Per Capita (€)
Belgium   -133.2
Sweden   -129.4
Germany   -112.8
Denmark   -110.5
The Netherlands   -109.8
United Kingdom   -90.7
Luxembourg   -88.7
France   -87.2
Austria   -80.5
Italy   -75.0
Finland   -56.0
Cyprus   12.3
Romania   65.4
Spain   87.0
Bulgaria   117.5
Malta   129.7
Ireland   181.3
Czech Republic   197.4
Slovenia   210.7
Poland   220.7
Portugal   247.2
Slovakia   248.9
Hungary   275.4
Latvia   284.9
Greece   308.9
Lithuania   399.4
Estonia   511.3

Hat tip: C. Cantoni.

22 thoughts on “Who, Whom?

  1. Don’t omit the EXPORT industries.

    Mercantilism still beats in the hearts of European finance ministers.

    It’s their love fantasy for export receipts that has conjured up the economic friction.

    And, sitting behind it all, that undying bug-bear of European mercantilism: A Fixed Exchange Rate Regime.

    At bottom, the Euro facilitates ‘Macro-Embezzlement.’

    ….

    Today’s Euro is merely a re-sculpted gold standard. (or silver standard)

    Under any hard standard of exchange, this or that currency is converted to (theoretical) troy ounces of bullion. This figure becomes the ‘crossing value’ for every other metal convertible currency.

    Today’s Euro was created by swapping fiat currencies, new lies for old, as it were.

    French Francs were withdrawn and French Euros printed in their stead. That ratio was chosen so that the new target fiat currency would exchange, internationally, with the German version of the Euro at a 1:1 ratio. (6.55957 old to 1.0000 new) Berlin did likewise. (1.95583 old to 1.0000 new)

    To sum up: two widely accepted fiat currencies were simultaneously exchanged for new fiat currencies – all set so that after the exchanges were complete – that the new French and German Euros would trade dead even – 1:1.

    This new currency first occurred only fictively. It was a matter of contractual account for trade across the French-German border – particularly in the iron and coal trade – as far back as the mid-1970s.

    (This particular trade was the source for the entire European Economic Community – as a structure.)

    It is critical to remember that this unit of account was started precisely to get away from floating exchange rates – and by Paris.

    As long as the trading parties/ nations were similar – and committed to mutually open markets – then pricing pressure against the rigid exchange rate figured to be modest. It was presumed that some occasional political interventions would keep the whole scheme rolling steady.

    Eventually, the bi-national arrangement expanded to Belgium, et. al. Each, in turn, swapped out their old fiats for new fiats – and called each new currency a Euro.

    In the very beginning, Germany wanted these new currencies to be openly named the German Euro, French Euro, Belgian Euro, … right on the notes.

    Paris nixed that. She convinced Germany it’d be much, much, better to just market all of them as “THE Euro.” In this manner, the general public would be won over to the whole (mercantilist oriented) scheme.
    Not withstanding the the marketing campaign, no unified currency exists. There is no such thing as a simple, single Euro.

    For, none of the European central banks has been disbanded. They are STILL keeping track of how much currency they have issued in the new form. (!)

    These currencies are still printed – unique to each nation. (Usually, the smallest nations are hiding behind the other’s ‘paperwork.’) You can spot the issuing power by any note’s serial number suffix.

    X = Germany
    U = France
    V = Spain
    Y = Greece
    N = Austria
    Z = Belgium
    P = Netherlands

    en.wikipedia.org/wiki/Euro_banknotes

    (The anti-correlation between the letters and the nations is deliberate.)

    They are STILL keeping track of who owes whom across the national accounts.

    In short: other than the fiat currency swaps, nothing has changed.

    Indeed, that’s what’s got Athens in an uproar. At the end of the day, they can’t use their own printed Greek Euros to substitute for the German Euros that they’ve spent.

    If any financial journalist was willing to wade deep: he’d find that the co-ordinating agreements explicitly NEVER cross-guarantee other sovereigns; and, at the end of the day, each nation is expected to ‘sort out’ their own affairs and start to run surpluses to balance the trade flows.

    AS IF!

    This is a path trod many, many, times before. It always ends up with insolvent lenders and a rupture of the rigid exchange rate regime.

    Such travails also cause those export powerhouses to contract – if not fold up entirely.

    (European labor laws make any scale-backs problematic – in the extreme.)

    If this is the first time you’ve encountered this line of reasoning, be assured: many hedge funds are already positioned for the break-up of the Euro. It’s just that the financial press is corrupted by the national mercantilist mania. No-one wants the export party to end.

    ….

    Where did the PIIGS spend the easy money? Political pork – what else.

    Hence, Spain has state of the art subways – that she can’t pay for. She also broke the bank importing German PV arrays. Spanish electric power rates are now at crippling levels that’d make you fall out of your chair. They’re needed to cover the tab the Spanish have run up with Germany – since these systems were bought ‘on tick.’

    Greece bought a fantastic, state of the art, bridge… just in time for the Olympics. It’s an economic bust. They owe France for it now. It was, essentially, bought ‘on tick.’

    The fat times induced poverty striken immigrants from the east to settle down – in amazing numbers. It’s a taboo topic, but the mild climate and open wallets of the southern European lands Hoovered in millions after the Wall went down. This has had a tremendous effect on the statistics listed in the original post.

    Even Italy is really two economies. Up north, it’s Germanicly efficient. Down south, it’s astoundingly dependent. In Rome, it’s politics as usual.

    • Let’s keep in mind that these transfers are all done at the respective government levels, having nothing to do with the wishes of the people of each country.
      They wake up one morning in Portugal and see a new road or a new bridge that is under construction – the people never had a say on the matter.

  2. Pingback: EU: The Norwegian Zakat | Gates of Vienna

  3. BTW, it was only a coincidence that the US Dollar was trading

    1.0000 to 6.55957 French Francs
    and
    1.0000 to 1.95583 German Marks

    When the two currencies were ‘unified’ under the Euro brand.

  4. Fascinating stuff. :)

    I think that the conclusions might be impacted by a measurement of native productive workers within each country.

    If we define native productive workers as native tax payers versus welfare takers and non-native tax payers, then the drag on native tax payers in countries with high numbers of welfare takers and non-native tax payers must be much greater than indicated here.

    Every nation that allows immigrants to work – or receive welfare – where immigrants will send money overseas to support their nations of origin – actually taxes its native tax payers to support foreign people in their own country and in other nations because immigrants usually use significant local national services like infrastructure, schools, and welfare (Indeed, immigrants have been shown to use MORE welfare services than natives.) while sending money overseas to develop their nations of origin instead of spending money locally to improve the local national economy – where immigrants siphon valuable jobs and resources from native people.

    P.S. I learned this 25+ years ago in Economics 101-102 from an example about how Mexican immigration negatively affects the US economy.

  5. A good place to look for a corollary is Foreign Aid from the US in general and Foreign Aid to Africa from the West in particular. This has been studied pretty extensively. What you are seeing is a transfer of wealth from the lower classes in the prosperous countries to the rich and elite in the poor countries…..and everyone who inserts themselves into the process in between. As you rightly noted Banksters are high on this list.

  6. Therefore there have been so many cycle routes appearing in the Czech Republic at the time of an economic crisis and there have been so many private businesses expanding – a brand new ‘conference centre’ and enlargement of a golf course near the late President Havel’s weekend retreat – Hradecek. It’s got the EU stars and acknowledgement that the money was received from the EU… and play areas for children are popping up everywhere even in places where they are not necessary…..and we in Britain are paying for it and have to negotiate numerous potholes when travelling to work …

  7. As someone “down on the ground” in one of the biggest recipient countries, I’ve seen first hand some of the “crucially needed” spending the EU money goes on:

    180 million Euros (of purely EU money) on a railway connection between Warsaw centre and the airport, that hardly anyone uses (due to more convenient bus, hotel transfer and taxi connections).

    billions of Euros on new motorways, some of the most-expensive to build, per kilometre, in Europe. While private investors still seek to make money through toll charges, in spite of the EU funding.

    countless new flyovers, including near where I used to live in Warsaw, a flyover to take drivers on a RIGHT turn at an intersection between 2 busy roads.

    on a farm in the South of Poland where I once stayed, an EU subsidy for the farmer to look after a field, on which nothing grows. The only condition – that the farmer has to mow the grass.

    Then there are the more “cultural aspects” – such as EU-funded books aimed at young children presenting a series of gay couples looking to bring up families.

    In fact, EU funding is such a big business here that I personally know quite a few “specialists” whose job is to advise people on the feasibility of obtaining EU funding for their projects. All while Britain and other “wealthier” countries are facing endless “austerity” measures…

      • Now, HSR is IMO slightly different… how much middle Eastern oil exports would be saved by passengers taking the train instead of a car/plane? And 100,000 passengers a day – even if lower than the official estimate, still seems very high. A lot more than on Eurostar from London to Paris. And infinitely times more than on Warsaw central to Warsaw airport, on the 3 or so empty trains per hour.

        Is it worth the money? A different question. But should we not be trying to consume less of that oil, which then directly helps our adversaries?

        • I can’t speak for everywhere, circumstances change…

          But, in America, aircraft use about 8% of the fuel required by long distance rail travel.

          I know, you can’t believe it. It’s shocking.

          Why? Short flight times through extremely thin, high altitude, air = low friction and no meals on rails — and s l o w traveling trains.

          The above figure is from US government statistics, compiled over all routes during whole years.

          So, trains can’t even make the ‘energy argument.’

          When you back in all of the massive infrastructure — the American long distance passenger train is dead.

          Even tourist runs are brutally uneconomic. They have horrifically low equipment utilization — and labor efficiencies. Cooks and conductors can’t shift from train to train — there is but the One Run. So the run from LA to Seattle, by rail, costs more than a first class air ticket — and is a gusher of red ink, still. No amount of speed up can close that gap.

          • @blert – “aircraft use about 8% of the fuel required by long distance rail travel.”

            Not sure what figures you’re using, but fuel consumption for the Boeing 737 – typical for short-haul – seems to be around 3 litres per 100 km (or around 79 mpg in US money). For high-speed rail, I’ve seen quotes of around 2 litres per 100km. But that’s only hypothetical – as the electricity can be from coal, nuclear, wind, solar or other sources. So – whatever the “miles per gallon” used for trains is – it’s not gallons of oil. Unless oil is what’s used to generate the electricity to propel the train. Which is rarely the case.

          • The low figures for high speed rail don’t match up with actual practice.

            One crippling problem that non-engineers make is to look past the air resistance a train fights — which goes up at the CUBE of the speed — and which is amplified by ground effects.

            Typically, salesmen, for that’s what they are, pitch the energy efficiency of ‘drag’ freight — while the matter is that of passenger service. Further, they always leave off the need to heat or cool the cabin. They also omit the need to cook food. And they absolutely omit the need to wait and wait and wait.

            This last factor is through the roof on American rails.

            If they get their own dedicated rails — then the capital cost of that railway/railroad is so brutally high has to make the matter absurd.

            Railroads were winners when there were no other options. The minute the automobile showed up — everyone fled the train. When the freeway showed up — no one would even take long distance trains. They only seem romantic because Hollywood took out the click-clack (maddening) out of the sound tracks. Compared to that, the roar of four jet engines was music to the ears.

          • @blert – air resistance goes up with speed SQUARED, not cubed. See equation here… in any case, the speed of a train is many times lower than that of an aircraft. And its cross-section area is lower – there’s no need for wings, and carriages can be stacked up behind each other. Hence pressure drag is lower.

            yes, when roads were built, everyone fled the train. Yet before that, there were trains everywhere… what does that telly you? Would it have been the case if railroads had been so impossibly expensive to build?! Yet after roads were built, suburbs and exurbs built up so much that everything is now built on the assumption of having an automobile to get there – and, consequently, on the assumption of cheap oil. With that being less and less the case, America is hence now doomed to facing the higher gas bills with no alternatives. High-speed rail is an attempt to build such an alternative.

            I’m an aerospace engineer, btw.

  8. Swedes pay 300 percent in tax!

    A few years after the notorious Reinfeldt government took office you could read that Swedes were no longer the EU’s most heavily taxed people – the lead had been taken over by the Danes. It is of little consolation.

    Those who work can not fail to notice how high taxes are. It is said clearly on the pay slip as a pre and post total. The income tax is 30+ percent when state and local government have taken their tribute.

    What many do not know is how much higher the tax is than what it is said on the pay slip.

    First and foremost, we have the so-called payroll tax (arbetsgivaravgift, some 32%). That is an ingenious name, it makes almost everybody believe that it is the employer who is responsible for it, not the employee. In reality, of course, it is just an ordinary tax deducted from the employee’s total salary, even if it is not visible on the pay slip.

    The locale employee who monthly have a salary of 25 000 SEK ($4000), pays some 30+% in general tax and gets 19 454 SEK in his hand.

    The total wage costs for his employer is 32 855 SEK .

    That is: the employee gets 19 454 in his hand after tax — and the state has grabbed 13 396 SEK in total taxes.

    You get a little more than half. So you think you get the most? No, so it obviously is not. Taxes are also paid when the money is spent (VAT 25 % – tax on car ownership – on petrol, on electricity, etc, etc almost in absurdum) and tax is paid, do not forget, also by the one you spend the money on.

    In an illustrative example, we have Sven Svensson, who is watchmaker and also is repairing watches. Sven wants to get his hair cut by Anders Andersson. Anders wants 100 SEK for the haircut AFTER he has paid the taxes. Therefore he must charge 208 SEK per haircutting to be able to pay the VAT and other taxes.

    For Sven to get together the 208 SEK after taxes, he must repair watches for the price of 432 SEK. When Sven then has got his hair cut and Anders
    has received the netto 100 SEK for the cutting, the state has taken 332 SEK in taxes. For Anders to get 100 SEK income in his hand – 332 SEK has been grabbed by the state in total taxes.

    Imagine that the next day, Ahmed Mohammad comes in and wants to get his hair cut – this for welfare money. In practice that means that the money that Anders have to pay in taxes, is used to pay him for another haircut and more taxpaying – a total merry-go-round of the money.

    The tax system is designed so that common people shall never be able to become rich, they shall remain in debt – and have no power – and the state shall have total control over the economy.

    Produced values have a life of no less than a few transactions before the Swedish state has confiscated everything. 100 SEK is reduced to 20 SEK when it has changed hands four (4) times – the rest has gone to the Treasury.

    Despite enormous technological development and efficiency increases [computerization!!) in the latter half century, the Swedish State currently taxes common people more than ever. Developments should reasonably have gone the opposite way: Less work, more freedom, more leisure time, better education, more money resulting in a proud population of supreme rulers of their own land.

    Why is there no public outcry, no uproar, no revolution in democratic Sweden? Why do the ingenious Swedes willingly pay for being replaced by people from MENA and South of Sahara?

    Are the Swedes too dumb?

    • 300%, per se, is poor argumentation.

      While you’re correct, that modern government has its hand in deep — at every turn — a 300% causes readers too much shock — disbelief.

      Swedish taxation is known worldwide for its bizarro extremes.

      That argument is pre-sold.

      =========

      The consequent ‘dark economy’ of Sweden is much less well known.

      As your haircut template shows: most service labor in Sweden is transacted ‘under the table’ / off the books.

      You would do well to emphasize that Sweden’s tax regime makes it, de facto, impossible for anyone to rise-above-their-station. Personal capital accumulation is only possible when a Swede leaves Sweden.

      Naturally, the folks at the top, stay at the top. Unlike America, there is essentially no turn-over in the ranks of leading Swedish firms. More than Swedes can bear to face: Sweden is, de facto, a corporatist state — all the while spouting socialist dogma.

      Ironic, no?

      BTW, such intense, layered, taxation guts the value of any individual’s earning power/ buying power. The Swedish state is spending it for him/her — because ‘Stockholm knows best.’

      So, naturally, her national politicians are importing ignorance, intollerance and poverty on an epic scale. At least the police, courts and prisons will have plenty to keep themselves occupied.

      Without immigrants, they’d die of boredom.

  9. Note that the reciepient nations are Eastern Europe & Spain/Portugal. Eastern Europe’s economy and peoples were ravaged by communism after WWII. Spain & Portugal’s economies and peoples were ravaged and decimated by Islam over an 800 year span ending in 1492. Now, the EU is the predator taking funds from the rich nations and redistributing them to the poorer nations. Nations that were once sovereign but have had their elite leadership class trade that sovereignty for – what? An attempt to reduce the chance of wars? Maybe so, but this weakened state of socialism/marxism has allowed a worse case scenario – Islam who is marching in and just taking over. This second revolution on the continent without a shot being fired.

    • Poland not corrupt? Funniest thing I heard! Not long ago it was placed below Kenya in a corruption index. And in my home city, Lodz, a corruption affair was even uncovered involving injecting old people, after an ambulance arrived, with Pavulon – a drug to make them die. Funeral directors would then pay the ambulance a proportion of the money for their funeral. Corruption is here every step of the way – especially when it comes to government contracts. And doubly so for road-building.

    • “Free Money” is never free because such government ‘cheese’ is only had by jumping through qualification hoops.

      That process has a cute name in economic circles: rent seeking.

      The most efficient mechanism for getting ahead of those in the ‘cheese’ line is to corrupt its decision makers — by giving them a split.

      A straight percentage is so ugly — and tacky — that rent seeking has evolved culture appropriate alternatives. Some of them were delightfully illustrated in the film “Schindler’s List.”

      In America and Japan, promoting a ‘player’ up ‘into heaven’ (board member, no-work senior staffer, connected lobbyist) after his civil service career/ political career is considered proper form.

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