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Executive Sadman

Eu Federalism And Free Movement...a Longer Term Fiscal Disaster?

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One of the major problems being faced in the US currently is local pension schemes going boom, Detroit, Chicago...

One of the major driver's of this is the freedom of movement between the states. The northern states had large population's during the time of the baby boomers being economically active, now stagnant or dropping. This means local governments had large workforces from the 1960s-1990s and thus associated large pension schemes. Ie, Michigan population in 1980 - 9.2 million, 2010, 9.8 million...even worse if you take individual municipalities like Detroit.

Meanwhile, the southern states had much smaller populations...Texas 14 million in 1980, 25 million in 2010, meaning the past pension obligations there are comparatively low, and easy to fund allowing lower local taxes...thus driving further internal immigration

It seems to me with 1 million new NI numbers issued in the UK in the last year means there are massive numbers taking advantage of somewhat more favourable age demographics in the UK and thus somewhat lower taxes just as many US citizens have moved from Northern to Southern states, East to West.

However, when the boomer generation dies off, places like Italy and other countries with very low post-boomer birthrates will have very low pension fund obligations indeed, with small workforces and low pension obligations, driving emigration away from the UK...already a lot of UK pensioners do this to spain, but with a new generation of europeans in the UK with little cultural or genetic ties to the UK, I would imagine this would be on a far greater scale.

Just something I feel is overlooked...often we hear of the stupidity of having common monetary policy in the Eurozone, but separate fiscal policy, but I think over the longer term having separate fiscal policy but open border's could prove to be just as chaotic, even, or perhaps, especially, given the effect of remittances and an exodus out of sterling.

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We have a similar problem, with lefties destroying eastern Canada, then moving out West and voting for exactly the same policies that caused the destruction there.

We're going to have to wall off Ontario before long. America's going to have to wall off California.

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The top income tax rates in the Czech Republic and Hungary are 15% and 16%, versus 45% in the UK. The current set up of the EU is nothing but a scam whereby rich people in Eastern Europe don't pay tax to support a welfare system, and the working class in the West pay the price as East-West migration lowers wages and increases competition for services, something which the rich in the West are perfectly happy with. The EU is not a federalized fiscal system, with taxes collected across the whole area to be redistributed from rich to poor. The US does actually collect Social Security/Medicare taxes across the country and then re-distributes the money to poorer areas. It is fundamentally flawed in this respect, not that the elites in government want to talk about it.

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It was the British who vetoed harmonisation of social policies. We only have our goyvernments to blame for the logical mess of free movement and free trade yet separate fiscal and social policy. It is set up to encourage the race to the bottom and chip away at people's rights, wages and benefits.

Harmonization alone without a shared fiscal regime would be worse. Hungary and Poland would pay peanuts in absolute terms, while the UK would pay a fortune (and suck in migrants) or pay little and see its own citizens living on the street. The standard of living is too divergent. The rich across the EU need to subsidise the poor across the EU.

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