Why Europe’s high productive performance is discredited?

Jean-Claude Marcourt, Belgian Deputy Prime Minister of the Walloon Government and Minister for the Economy, SMEs, Foreign Trade, New Technologies and Higher Education, 1st from the right, Antonio Tajani, Vice-President of the EC in charge of Industry and Entrepreneurship, 1st from the left, Wolfgang Eder, President of European Confederation of Iron and Steel Industries (Eurofer), 2nd from the left, and Arnaud Montebourg, French Minister for Productive Recovery, 3rd from the left. (EC Audiovisual Services).

Eurostat, the EU’s statistical service, released data on Eurozone’s foreign trade showing that during 2012, euro area trade in goods recorded a surplus of €81.8 billion, outperforming the most optimistic predictions. This is not however the only good news for Eurozone external accounts for last year. Traditionally Eurozone records also a hefty surplus in international trade of services of the order of around 0.5% of GDP.

Given that the seventeen Eurozone countries’ GDP was around €9.5 trillion last year, it means that the surplus of trade in services with the rest of the world left a net gain of €47.5bn. This excellent performance of Eurozone’s’ real economy in its relations with rest of the world in 2012 was not an exemption. Surpluses revolve around those numbers for many years now. It must be noted that the trade balances in goods and services with the US are positive for Europe and negative for the United States.

In detail the entire European Union of the 27 countries’ trade surplus increased with the USA to €80.2bn euro in January-November 2012, compared with €64.6bn in January-November 2011. In short Europe objectively repels in practice the accusation that its productivity is low compared to that of the US and it needs to be increased, using the well-known unpopular measures. All first year students of economics already know however that the trade between two economies is an infallible witness of their comparative competitiveness. The more productive one would export more and import less.

In short, the one of the two which records surpluses in their bilateral trade relations is by theory and practice more competitive. Now let’s answer briefly the question why a lot of people in the European Commission, the European Central Bank and a number of European governments promote the lie that Europe is not productive enough and has to do unpleasant things to the many, to increase it. Incidentally the European Sting’s writer Maria Milouv has answered this question in an article entitled “It’s a lie Eurozone isn’t competitive”.

A world-wide fallacy

It’s not only some European leaders though who insist that Eurozone is not competitive enough. This lie has spread all over the world like plague and one can hear it being repeated in Washington, Beijing, Moscow, Tokyo and practically all over the world. While Maria Milouv has found why this lie is being promoted by the European leaders themselves, there are more reasons why all the rest of world’s rulers, elected or not, in developed and developing countries alike want their own people to believe that Europe is not competitive and its economic model non viable.

Let’s follow the facts. All the working people in the rest of the world, the US and China alike, know and believe deeply in their minds that in western European countries education, health care, social security, unemployment benefits and justice are more or less guaranteed to all and are paid by the government, out of strongly progressive taxation. For them all that are just a dream.

Discrediting the EU model

The problem is however that in the US all the governments, before President Barack Obama, worked hard to cut down taxation for the rich and thus reduced the ability of the state to offer to Americans all those beautiful things Europe is still offering to its citizens. As a result the unholy efforts and campaigns of some politicians for even lower taxation for the rich, has to go hand in hand with the discrediting of the west European economic model. That is why the majority of main stream American media, promote the idea of lazy and unproductive Europe. They want the model of high taxes for the rich, to be totally discredited.

The same is true for the developing world. Peoples in Asia, South America even Africa have to be convinced that the west European model is not viable and has to be avoided. All over the world the rich want to avoid the prospect of paying for example 60% income tax, above say the level 100 times the lowest salary. To be reminded that in the US of Franklin D. Roosevelt’s New Deal the rich were paying income taxes up to 78%. Mind you Roosevelt was not a communist! He is the only US President elected more than twice.

Today’s rich do whatever they can to erase this historical fact from the memory of people. Exactly in the same manner as some politicians keep repeating the lie, that Europe is not competitive nor its economic model viable. Their aim is to avoid high taxation for the rich and deny quality social services to the poor. The unholy part of this story is that even the European politicians participate in this campaign of shame to discredit the generous social model of post war Europe. The European Sting writer Maria Milouv has elaborated on that and will continue to analyse the different facets of this  phenomenon.

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