World War III insurance premium of €1,000 a year
August 7, 2011 1 Comment
I came across this quote recently combining physics and economics, nice:
There is no politician who will ignore the laws of physics when building a bridge. But there is a tendency in politics in every country to suppose that the laws of economics are flexible and can be adjusted to political necessity
Quite timely given the events in Europe.
The Treaty(ies) of Rome, signed in 1957, established the EEC.
In a rush to get the ratification process completed, the signing ceremony was scheduled before the agreement was reached:
They signed a bundle of blank pages. The first title existed in 4 languages, and also the protocol at the end. Nobody looked at what was in between – Pierre Pescatore
By 1968 a Customs Union of these founding 6 members – Benelux, France, [West] Germany, Italy – was fully in place.
The overall resultant uplift in GDP 5 years later, apportioned to being from the extra free trade created amongst these 6 contiguous states, was… 0.15% (Balassa, 1975). Small wonder that European integration has been described as being more about political integration, rather than economic integration.
Yet all the while there is a remedy…it is to re-create the European family, or as much of it as we can, and to provide it with a structure under which it can dwell in peace, in safety and in freedom. We must build a kind of United States of Europe – Winston Churchill, 1946
Today, the 27 member states each contribute roughly 1% of their GDP, which is then redistributed around Europe in the form of subsidies, projects, etc. The net benefit, per person per country, in Euros, has Luxembourg – the richest country by far – doing very well, thank you very much:
In fairness, these are not easy calculations to do, and it gets trickier for smaller countries where the beneficiary of a grant can be an MNC, with a HQ that happens to be in that country. I’ve seen a figure closer to €2k for Luxembourg in another source.