Death by Demographics - Fate of the EU

Welcome to Finance & Fury’s Furious Fridays… This week we continue looking at the EU.

If you didn’t catch last week’s episode, you might want to check it out here. It explains what the EU is, and what their role in Europe actually looks like.

This week we dive a little deeper and look at the two issues faced by the countries who are considering leaving the EU - Loss of sovereignty & Immigration. Loss of sovereignty

A lot of nations (Hungary, Czech Republic, Slovakia, Poland) lived under brutal authoritarian governments – for most of the 20th

They swapped Nazi rule, for Soviet rule and now the EU rule The Internet Censorship Bill is a great example of loss of sovereignty Article 13 – the new Copyright Directive involves the creation of a crowdsourced database of "copyrighted works". Platforms such as FB, Youtube etc must take this into account and block “copyrighted works” from being posted on their sites. Billions of people around the world will be able to submit anythingto the blacklists There is no onus to prove you actually hold the copyright, and no punishment for false submissions Article 11 simply gives publishers the right to ask for paid licenses when their news stories are shared on online platforms. This would destroy FB and Youtube. Good or not – this is where a lot of people get their information, updates about current events and news. It’s all shared content. The thing that was the turning point for most was realising how little Sovereignty they have when considering the current immigration crisis There are two complicated issues – The Schengen Agreement and The Dublin Regulations These will probably cause the downfall of the EU Schengen Agreement- border checks on internal borders (i.e. between member states) are abolished Restricted border checks to external borders only – Meaning free travel for anyone inside the EU Some nations aren’t a part of it – UK still has customs, even on the train between France and the UK Almost the same as moving from QLD to NSW to Vic The Dublin Regulation- the EU member country that an immigrant first reaches MUST process the asylum application Prevents asylum applicants in the EU from "asylum shopping" – moving to the country of their choice, typically the country that will provide better welfare. This wasn’t well enforced until 2016, but now it’s placing too much responsibility on the member states on the EU's external borders – Italy, Greece and Hungary – who receive the most immigrants on their doorsteps. Italy – boats from Africa, Hungary and Greece – Turkey Spain – from Morocco

The new proposal would introduce a "centralized automated system" to record the number of asylum applications across the EU and presents a "reference key" based on a Member State's GDP and population size.

The country is essentially given a quota of how many migrants they have to accept. The populations of the country have no say on immigration policies If a Member State chooses not to accept the asylum seekers – it will have to contribute $250,000 per application as a "solidarity contribution". This got me thinking – that is a LOT of money per person – especially given the narrative that there is massive “economic benefit” in migration  So, what are the economic effects of migration?

There are two sides to the coin, and it all depends on who is moving where.

Immigration – the words is now used as a collective term for both legal and illegal migrants entering a country, including refugees.

The “Sending” countries experience both good and bad effects off emigration.

“Brain Drain” - the loss of trained and educated individuals to emigration – This is generally through legal immigration. Currently more African scientists and engineers working in the U.S. than there are in all of Africa, according to the International Organization for Migration (IOM). Africa only retains 1.3% of the world’s health care practitioners – UN Population Fund 2006 With almost 17% of the world’s population and 64% of the population with HIV/AIDs Remittances - funds that emigrants earn abroad and send back to their home countries Estimates at $530bn in 2012 Money leaving the shores of a country reducing the multiplier effect in the nation the money is being sent from because it’s not money that will be spent in that nation. Might have small currency pressures, and also props up the sending country with higher spending

 

The “Receiving” countries

Population growth is heightened – More people buying things, and paying taxes (that is, for the portion of immigrants who are working) This helps to address skills shortages but may also decrease domestic wages This can also add to public burden (though this is negligible for skilled migration) There are a lot of hidden costs of immigration; Welfare, Education, Healthcare, Infrastructure, Housing Increases unrest and economic inequality CIS study concluded that, “immigration has dramatically increased the size of the nation’s low-income population” Disparities between immigrants in Germany and native Germans; 49% of non-Germans falling below the poverty line compared to 23% of original native citizens.   This is due to immigrants being less likely to be employed – 81% for natives to 66% of non-Germans. “The consequences are segregation, housing problems and divided cities” (Traynor, 2010)   Who does this benefit? Migrant workers often fill low-wage jobs as supply of labour (e.g. agricultural and service sectors). Helps to lower costs for big companies and increase supply of labour at a greater rate than demand for labour …which of course means lower wage growth. For example: Why do celebs want to open borders in the US? Who else will clean their 12-bedroom mansions (ironically, they don’t let refugees stay with them) inside giant walls of their own. Economic effects – Doesn’t tell a good story Netherlands: Each Muslim migrant costs $1,150,000 in total over their lifetime Germany: Total migrant cost was $86bn over 4 years. This equates to 12 Germans needing to work to pay taxes for 1 migrant Italy: Spent $4.2bn on migrants in 2017 (about one seventh of Italy’s budget) UK: $120bn pounds over 17 years Sweden: $18.6bn in costs for migrants in 2017 (19% of their Government budget, and 3.2% of GDP) 60k Euro is spent per migrant per year, whilst the average Swedish household income is only 29k Euro. Let that sink in.

 

The real world effects It comes back to legal immigration vs illegal/refugee intake. There is a massive distinction. In 2015 the EU had 1.8m illegal immigrants in the one year Accepting a massive number of refugees compared to rest of world US: 38k refugees per annum Australia: 18k refugees per annum Italy: 150k refugees per annum Sweden: 160k refugees per annum (2% of their population) You hear in the media it is a “refugee crisis” but in reality, it is economic migration. A recent report showed that the reality is only 1 in 5 are coming from a ‘war zone’. Estimates at over 8m people have migrated to the EU in the past 6 years, with a staggering 75% being young men – not woman and children like you see in the media. System was broken – 65% of child refugees were actually found out to be adults. This number is even worse in Sweden at 85%. This really hurts the sending countries – there’s now slavery again in Libya through human trafficking. 78% of EU citizens want tighter control over borders and immigration.

 

Beyond economics – the current state of the EU

Remember, these are the statistics; simply reality and the facts.

The UK leaving the EU because the people feel the damage is already done Most common boys name is now Mohammed (or one of its variants) In London the white British people are a minority, Savile Town has 1% white: 48 out of 4,050 Unfortunately, it has created a clash of cultures The UK is the acid attack capital of the world – there were 77 in 2012, and 465 in 2017 Grooming gangs with underage girls (Oxford, Rotherham, Rochdale, Newcastle, the list goes on) has been going on for over 10 years. Not going to go into details but look it up, but be warned if you start to research this yourself. It’s horrific. Sweden In 2015 Sweden took in almost 180k refugees (2% of their population) This caused unrest (putting it lightly) Arson attacks – 100 cars were burned in a coordinated attack a few months ago Back in 2016 – 40 hand grenade attacks – more recently on cop stations as well “No go” zones (this has been rebranded to “Vulnerable Areas”) There were 61 ‘no go zones’ in 2017 – 23 were ‘especially vulnerable’ This is just rebranding. Whilst it’s technically true that you can still go to these places you might end up like the reporters who have gone there. Not. Good. Sanandaji Has been a sharp increase in welfare payments, 60 percent of which go to immigrants Sweden expects to spend about 7 percent of its $100 billion budget next year on refugees – double what was spent in 2015 Only 25 percent of Somali refugees (age 25–64) were employed in the formal economy in 2010

This brings us back to the EU motto from last Furious Friday episode; “United in Diversity”…but how well is that working?

There is a massive difference between Racial and Cultural diversity.

Race means nothing, everyone should be treated the same Culture is the cohesion that keeps a country together and the ability to communicate and cooperate, with everyone playing by the same rules, building towards the same thing, is what keeps a country together. It’s like building a house – What happens if the carpenter, tiler, builder, architect all have their own ideas about what it should look like? What if they don’t pay attention to the plans and try to make it how they want it? The EU population is annoyed as their figurative houses are falling down. And, they have little say when it comes to this. There is a difference between legal and illegal immigration, and refugee/asylum migration. One has been selected to come in and one hasn’t. It’s hard to conceptualise at the global level. But here’s a question: do you lock your doors? Or have a fence around your place? Why? To protect yourself, family or stuff from other people/strangers. A Government has one role – look after the interest of its citizens. Almost all the time that is achieved through good relationships between countries and peace. Immigration policy is the same thing as locking your doors at night, or conversely, leaving them open for anyone to come in.

 

History of migration Nations were built on immigrants? Very true – key word her is ‘were’. Migration has changed. In the old days it was in reverse – People from Italy, Ireland, Greece, England were moving to places that were harder to live in than their homelands - were going to make something for themselves. Flow of migration was from richest parts of the world to the poorest Where would you have rather lived – London or Australia – in 1788? Compared to today, both options don’t look great. But back then London was one of the better places to live in the world. Things were hard: for example, almost half of the original colonists in the US starved in the first few years. But thanks to socialist policies once they were given property rights things took off. Today the opposite is occurring. Major net migration has reversed over the past 200 years. I am all for immigration, but not if it hurts the local population or if it hurts the immigrants (think people smuggling, slavery, human trafficking, and the dangers of actually getting themselves to the new country). Imagine that you move to Syria, Afghanistan, Iraq. How hard would it be to integrate? Language, culture, etc. Naturally most would isolate themselves and want things to be like home. I wouldn’t dare move to another country and try and make it like Australia – what is the point then of moving? Anyone who wants to have a Socialist government can move to Venezuela – the UN released a report showing 3m people have left their due to their socialist economy.

 

In Summary – We’re looking at Death by Demographics Bringing these facts to bear – Not only is this restricting economic growth of the EU, it is costing more through migration We’re finishing up this topic next Friday by looking at the flow on effects of the EU breaking up; on the Share Markets, Bond markets and on economic growth.

As always, if you have a question or topic you’d like to know more about, contact us at www.financeandfury.com.au/contact

 

Here are some links to some of the information we’ve been looking at:

http://www.opennetwork.net/wp-content/uploads/2016/05/Tent-Open-Refugees-Work_V13.pdf

http://migrationcouncil.org.au/wp-content/uploads/2016/06/2015_EIOM.pdf

https://foreignpolicy.com/2016/02/10/the-death-of-the-most-generous-nation-on-earth-sweden-syria-refugee-europe/

http://bruegel.org/2017/01/the-economic-effects-of-migration/