Category Archives: Europe

Germany: The European Union’s Biggest Debtor

12 Friday Oct 2012

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Typically, Mediterranean nations such as Portugal, Spain, and Greece are identified as the weakest links of the European Union. This, of course, is speaking purely economically. In terms of foreign policy commitments and unity, though, Germany is among the weakest European Union nations.

For many years post-World War II, Germany’s military pacifism was a welcome relief from Nazi militarism for European nations and the international community at large. However, since the 1980s and 1990s, roughly marked by the fall of the Soviet Union, the European Union and NATO have expected Germany to take a greater foreign policy role. It is, after all, the economic stronghold of Europe, yet it fails to take any controversial stance on foreign policy issues precisely for the fear of jeopardizing its economic prosperity.

In particular, Germany has consistently avoided any foreign policy decisions with regards to the Israel/ Palestine conundrum. Germany was also the only NATO nation to abstain from the United Nations resolution on Libyan intervention. This creates the image of a lack of unity and, more importantly, it shows that Germany is not committed to the good of the international community. After all, like all post-Industrialized nations, Germany benefitted greatly from globalization. Now, it has a duty to the international community to instill the factors that enable nations to benefit from globalization, such as economic development and political legitimacy, in the rest of the international community.

In a way, even though Germany is currently economically mitigating the debts of individual European Union countries, it has its own debt that it has yet to repay. Germany has benefitted greatly from NATO alliances and European Union participation since World War II and thus it is Germany’s duty to align with the relatively unified European Union/ NATO foreign policy and military stances. It is time for Germany to repay its debts. It is time for Germany to adopt a more moderate foreign policy involvement relative to the Nazi regime. It is time for Germany to once again stand strong in international affairs (but maybe it could lay off of Poland for the time being).

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Georgian Elections and the Implications for the U.S.

03 Wednesday Oct 2012

Posted by in Europe, The Americas

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What could be a better preview of the American election than … the Georgian election?

As a matter of fact, the recent Georgian election represents the current American election almost to the tee.

Representing Romney is the recent incumbent Bidzina Ivanishvili, the billionaire with a net value greater than half of Georgia’s GDP. Like Romney, he mainly faces the issue of being unrelatable. Many in Georgia feel that his wealth leaves him unable to understand the plight of common Georgians. The other issue, of course, is the source of the money. Ivanishvili acquired most of his assets through controversial business in Russia through the 1990s. While Romney’s money incontrovertibly came from legitimate sources, the fact of the matter is that many Americans are unable to understand his revenue sources. They cannot believe that someone like Romney earning multimillions annually pays an effective tax rate of below 14%.

The similarities go further. Ivanishvili and Romney both seek to undermine critical alliances for their nations by instead turning to conservative allies that will have little benefit. Ivanishvili hopes to strengthen Georgian ties with Moscow which will fail to yield any positive results. In fact, in addition to leading to weakening of Georgia’s human rights record and foreign policy in general, such an alliance will almost surely undermine Georgian efforts to join NATO. In the same way, Romney’s decision to unconditionally support America’s age-old ally Israel has two main detriments. Firstly, Israel is a major drain on the U.S. defense budget. Additionally, an alliance with Israel puts the option of strengthened alliances with the Middle East off of the table. Obama has, throughout his presidency, striven to improve ties with many Middle Eastern nations, especially post-Arab Springs conflict-filled nations such as Egypt and Tunisia, nations that Obama suggests could become key American alliances in time.

Obama in the election more closely represents Mikheil Saakashvili. Saakashvili was forced to call the snap election after Georgia was swept with widespread anti-government protests over a leaked film detailing abuse of Georgian prisoners. For one thing, it is unfair to blame Saakashvili, the president of a nation, for as ‘trivial’ an incident as prison abuse. Saakashvili at no point sponsored such activity nor was he ever aware of the specific incident which left him unable to do anything but stare at the damage after the film was released. Moreover, the Georgian prison system has been plagued by human rights abuses for decades. It is unfair to blame Saakashvili for an issue he inherited. In much the same way, Obama has been blamed unfairly for both issues over which he did not have control and problems that preceded his office term. Prime example: the economy. Many claim that Obama has done little to help the ailing economy. Yet, comparing job growth rates from any point in Obama’s term relative to that at the end of George W. Bush’s term shows that Obama did far more to improve the dying economy than his predecessor. Additionally, Obama has been hammered for his foreign policy, specifically the anti-American protests in the Middle East in response to the religiously insensitive “Innocence of Muslims” trailer released by an Egyptian-American. There are two main issues with such inflammatory rhetoric. Firstly, strong anti-American sentiment in the Middle East has existed for decades if not centuries. Secondly, Obama has never had the opportunity to completely rectify the situation in the Middle East. It should be noted that Obama has taken steps such as loosening relations with Israel, withdrawing troops from Iraq and scheduling a troop withdrawal from Afghanistan by 2014 in order to quell the issue. Those in the Middle East have a better perception of America than they did under Bush. The strongly anti-American view expressed by the protestors indicates a minority view held predominantly by extremist organizations.

It should be noted that Ivanishvili trounced Saakashvili in the election and will now take over as Georgian. The idea that the failures of a country under a certain leader can be more influential than the quality of candidates is one directly applicable to the U.S. election.

Obama and Romney have a lot to learn from the Georgian election. The Georgia election with very similar circumstances to the American election indicates that the current polls showing that Obama will likely win at least 50% of the popular vote could be inaccurate. After all, as in with Saakashvili, Obama could be haunted by his supposed failure to solve issues that no human being serving as president would be able to rectify in just four years. It seems that much like his doppelganger Ivanishvili, Romney could be saved in the American presidential election simply from the ignorance of voters.

Barnard Arnault and a 75% Income Tax Rate

15 Saturday Sep 2012

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France’s richest man, Bernard Arnault, is immigrating to Belgium in light of French president Hollande’s enforcement of a 75% tax on income above 1 million Euros per year. In order to save his reputation, he has agreed to temporarily pay France’s 75% tax rate, but this is clearly only a temporary measure. It is difficult to explain his sudden immigration to Belgium without accounting for increase in the top income tax bracket.

France’s rich are up in arms in regards to this new policy and justifiably so. After all, France will not benefit substantially from this policy economically. Only about 3,000 of France’s 66 million citizens will be eligible to pay these new policies, one of the highest income tax brackets in existence currently. This policy is enacted simply as part of Hollande’s political agenda, with no regard for economic policy. Hollande was elected through populist statements such as his declaration on TV, “I hate the rich.” The new tax will almost certainly prove to be inefficient economically as it will prompt many other wealthy French to emigrate and take with them not only their taxable income but also the staff for the businesses they own and the money that they pour into the French economy.

Another cause for the frustrations France has poor management of government funds. After all, its current tax rates are similar to those of most other Western European and Scandinavian nations. Yet, its social welfare system pales in comparison to the other nations. France has universal healthcare, yet it often takes months to schedule routine appointments. Additionally, its healthcare technology is not up to date with other Western nations. Similarly, its educational system, the basis for France’s human capital development, faces a lack of funding and substandard teachers.

In normal times, Hollande’s flawed economic logic and brash statements about the rich could be popular in France given the widespread corruption, especially in the business world. However, the recession and a rise in income inequality over the past two decades in France and around the world only compounded these issues. If more of France’s citizens such as Bernard Arnault emigrate from France to European nations such as Switzerland with income tax rates as low as 20%, France will end up losing government revenue. France’s decision to drastically increase taxes on the rich sets a dangerous precedent for European nations that they can appease populist uprest simply to gain votes at the expense of fulfilling their duty to maintain the nation’s interests.

Putin and Romney: One in the Same

06 Thursday Sep 2012

Posted by in Europe, Government, The Americas

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Vladimir Putin is currently planning to hang glide to lead a flock of birds in their migration. Details on his plan are not yet available, but it appears that he will launch this publicity stint in the next few months.

This is just one of Putin’s outlandish public image campaigns. Vladimir Putin is well known for launching publicity stunts that include posing with tiger cubs, scuba diving, and approaching a wild polar bear. It is unclear what Putin’s goals are, but it seems that he wants to show Russians that he is a fierce leader, one who will not be influenced by the West.

It is difficult to liken Russian Prime Minister Vladimir Putin to Westerners and Western governments. However, his public image stunts are not too different form those attempted by American political figures in elections, especially the presidential elections. Candidates often compromise the integrity of their campaign by focusing on populism instead of the real issues.

For example, as proven by a poll in the Republican National Convention, Americans are more interested with speeches from Ann Romney regarding her husband being a family man than they are about Mitt Romney or Barack Obama speaking on their economic, foreign policy, or energy platforms. The goal of any democracy is an informed electorate, but America is simply a nation where the electorate prefers to be uninformed. Less than ½ of eligible Americans vote in presidential elections and the vast majority of those who do vote in accordance with their party affiliation as opposed to voting for the most suitable candidate.

About 20% of Americans said that they would have a problem with a Mormon president while the proportion of Americans with an issue with an African American president is even higher.

Clearly, there are gaping holes in the goals of American and Russian policymakers. In the United States, this is a result of populism, namely that government officials care more about public image and gaining votes than they do about improving the nation. In Russia, to be fair, the issue is simply Vladimir Putin’s incompetence. Russians have shown that they want a leader to better represent their political values as demonstrated by their protests in March last year. However, without robbing Putin of his iron-tight hold on Russia, such progress will be impossible.

In the United States, though, voters simply have to show their interest in the issues that will directly impact them to change the political election system. This issue is extremely important at the moment. There are many bipartisan issues up for debate in the presidential election this year, including ways to bring jobs to America, maintain America’s foreign interests in the Middle East, and offshore oil drilling, all of which will impact every American voter.  None of these issues can truly come to light, though, if Americans skew the system to force candidates to portray themselves as family men or direct candidates to make other similarly meaningless statements that detract from the professionalism of the American political system and prevent Americans from voting for the candidate that would truly match their interests.

Retribution vs. Rehabilitation in Penal Systems

24 Friday Aug 2012

Posted by in Europe, Government, The Americas

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Interior in Halden Prison. Digital image. Wikimedia Commons. N.p., 26 July 2010. Web. 24 Aug. 2012. .
Given the priority on rehabilitation as opposed to retribution, Norwegian prisons more closely resemble psychiatric wards than they do prisons.

In the United States, taxpayers often complain about the annual $60,000 fee for keeping inmates in prison. Yet, in Scandinavia, the figure for a prison sentence for a year for a single prisoner can exceed $1 million. Anders Breivik, the Norwegian madman who executed 87 people in Norway last year, most of whom were women and children, is currently being accommodated in a 3 room apartment with a bedroom, exercise room with a treadmill, and a The cost that taxpayers will have to bear for his sentence is between $1.2 and $1.7 million per year. In the United States, there would be uproar if so much taxpayer money were being spent on accommodating a mass murderer. Yet, the mentality on the penal system in Norway and Scandinavia as a whole is very different from that in the United States or virtually any other nation in the world.

The main difference between these two countries centers around the concept of justice. In the United States, the criminal justice system focuses on retribution. As such, the death penalty and life imprisonment are commonplace. In Norway and Scandinavia as a whole, the priority instead is upon rehabilitation. As such, the maximum sentence is 21 years and the death penalty is not in place. Prisoners are never ‘tortured’ as they are in American prisons. Prisoners are able to maintain contact with the outside world. They are able to have amenities such as exercise equipment and computers to pursue their hobbies. Most importantly, they have people to talk to on a daily basis such as nurses or psychologists and are thus much less likely to succumb to depression, a condition commonplace among American prisoners.

Additionally, as part of the focus on retribution, prisoners are gradually integrated into society. The penal system assists prisoners in helping them secure jobs in order to ensure that they can become valuable, contributing members of society upon their release. In this way, Norway is able to lower the rates of repeat crime. In Norway, just 20% of criminals in the penal system are or will be repeat offenders. In the United States, though, this statistic is about 80%. The results are staggering. Clearly, a system of incentives and reintegration into society is necessary for the rehabilitation of criminals. Granted, the goals of each penal system are very different and the United States does not value rehabilitation as much as it does keeping criminals off the street and granting ‘justice’ or revenge to victims’ families. However, with the highest incarceration rate per capita, the United States could afford to focus on prisoner rehabilitation in order to reduce overcrowding in prisons and excessive federal spending in this regard. Higher spending is not crucial to this process. A system of reintegrating prisoners into the workforce and ending life imprisonment and death penalty sentences will give prisoners a chance to become rehabilitated and reduce government spending in this regard in the future.

Scandinavia: The Perfect High Tax Model

12 Sunday Aug 2012

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Socialism has long been viewed by much of the international community, especially the United States, as an evil and harbinger of economic stagnation. Scandinavia, though, is rewriting this age-old trend.

By all accounts, Scandinavia is a perfect model of a high tax system. Denmark and Norway have a top tax rate of nearly 65% factoring in the countries’ high local taxes. Finland and Sweden have top tax rates of about 55%.  High taxes and unparalleled social welfare systems in Scandinavian nations Sweden, Denmark, Finland, and Norway co-exist alongside almost unmatched economic performance, quality of life, GDP per capita, and purchasing power parity.

According to the Economic Intelligence Unit’s Quality of Life Index, 3 of the Scandinavian nations (all barring Finland) rank in the top ten of all nations by quality of life. Finland, the outlier, is ranked just below at 12th in the world. In GDP per capita again, three of the Scandinavian nations rank in the top 10. Finland, once again slightly lower, is ranked at 12th universally. Norway’s GDP per capita of nearly USD $100,000 is the third highest of any country (behind only Luxembourg and Qatar). The argument has long been made, though, that the GDP per capita in Scandinavian countries are unrepresentative because of the high cost of living. This is true, but even considering the high cost of living, wages are extraordinarily high in these nations. In terms of GDP (PPP) per capita, a measure of relative purchasing power parity or GDP per capita factoring in living costs, all Scandinavian nations are in the top 20 in the world according to CIA The World Factbook.

Clearly, in Scandinavia a high tax system is not a hindrance to economic growth or citizens’ quality of life. Throughout the world, including in the United States, it has falsely been speculated that the best way to achieve growth is through a low tax, largely unregulated market. The Scandinavian high tax model can be emulated in virtually any society and work just as well; it is not just the Scandinavian culture that makes the system more feasible.

Ranked by Gini coefficient, a measure of income disparity, all four Scandanavian nations are ranked in the top 11 most equal nations according to CIA’s The World Factbook. This is made possible due to their socialist economies. While economic equality is obviously a point that societies should strive to attain, many nations such as the United States are based on fundamental values of the power of the individual and hard work. As such, even amongst the poor, social welfare is often viewed as government handouts. Interestingly, in the United States, it is the poor who support less government regulation and higher income inequality due largely to the American Protestant work ethic. Perhaps a US Tea Party member and war veteran summarized it best. Speaking on the VA, which helps US war veterans financially, he said, “If the veterans cannot work, if a veteran is unable to function because of disability from a war wound, let’s go to a charity hospital.”

The main hindrances to nations that do adopt a high tax system are mismanagement of funds and corruption. In the United States, for example, income taxes, including state taxes, for the top tax brackets are similar to those in Europe. Yet, American social welfare is nowhere near as great in the United States. The US does not offer universal healthcare, nor does it offer free education through university. Conversely, Singapore has a top tax bracket of 20%. Yet, Singapore’s social welfare system, including offering extremely competitive highly subsidized education through university and healthcare. So, for many nations, a high tax model could be applicable provided the necessary transparency measures were put in place. This could lead to a much more prosperous society. After all, it is proven that heavier investment in the public sector leads to more economic growth than investment in the private sector. In the United States, for example, since World War 2, Democrat presidents focusing on liberalizing the economy have created twice as many jobs as Republican presidents aiming to retain a conservative economic model. Undeniably, high taxes and economic growth have little to no correlation; the greater indicators of economic growth are government transparency and the management of government funds.

Hypocrisy at its Finest: US Self-Interest in Foreign Policy

03 Friday Aug 2012

Posted by in Europe, Foreign Relations, The Americas

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American foreign policy, especially in the Middle East, has been extremely hypocritical of late. While Washington blames other nations for failing to resolve conflicts in the Middle East, it continues to base much of its foreign policy on economic interests, especially on ‘black gold.’

The United States and the West have been extremely critical of China and Russia vetoing resolutions to stifle action in Syria. They have portrayed Russia and China as appeasers and, consequently, supporters of the Syrian regime. The fact of the matter is that China and Russia likely have no interest in the Middle East; neither of the nations has any shortage of allies in the region, so Syria is not a deciding factor to them. Additionally, China and Russia’s foreign policies are not unique; in fact, much of the West emulates the same level of self-interest when formulating foreign policy stances.

Take the example of Syria for example. The West has portrayed the image that its hands are tied because China and Russia have stifled any action through the Security Council with their vetoes. In reality, though, Western nations can exploit their NATO alliance to offer military intervention in Syria, as they did in Libya’s Arab Spring, to speed up the fall of the regime and limit civilian casualties in the meantime. Instead, though, Western policymakers are afraid of shattering the rosy Syrian picture through intervention, fearing that the nation may ‘descend into civil war.’ This is absurd; the nation is on the verge of collapse, and yet the West still believes that the conflict will be better resolved internally. Granted, there is now the fear of al-Assad using chemical weaponry on his people and Western troops if they enter. However, that is a recent development. The Syrian revolts began in Spring 2011 while al-Assad’s declaration to use chemical weaponry in the event of foreign intervention came up only last month. What was the West doing for the past year? Answer: playing politics. In many Western nations, presidential or prime minister elections have taken place over the last year or so. In much of Europe and America, intervention in Afghanistan and Iraq has proved extremely unpopular. At election time, therefore, it is unwise politically to intervene militarily anywhere, especially in the volatile Middle East region. Just like China and Russia, the United States and the West are placing their self-interests over international interest.

Another example of this theory was the American decision to pull out of Iraq in 2011. I definitely agree that the Iraq War was one that never should have come about. However, ending the war so hastily will be sure to damage Iraq in years to come. The nation has deep running ethnic and political divisions. Its infrastructure is subpar and not at all conducive to business or economic growth. It is plagued with rampant terrorism and insufficient security. Yet, Obama decided to pull out all troops from Iraq in late 2011, just as election primaries were beginning. This was no coincidence; much like the NATO decision to pull out of Afghanistan, this foreign policy blunder was enacted to assure greater support for Obama in his re-election campaign at a time when the War on Terror was extremely unpopular.

The issue here is not that the West exploits its foreign policy for self-interest; it is the double standard imposed by the US and the West that allows them to do so while frowning upon nations that do the same. Every nation must prioritize its own political interests over the interests of the international community when formulating a foreign policy, and the West is no exception. As such, China, Russia, and other members of the international community should be free to enforce their interests internationally as they see fit without the hypocritical ‘international police,’ otherwise known as the West, condemning them for doing so.

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America’s self-interest has often come before international humanitarian aid in its foreign policy.

The Economics of Olympics Advertising

30 Monday Jul 2012

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In discussion on the London 2012 Olympics, one recurring theme is financing. Many question whether or not London has the financial strength to host a costly international sporting event like the London 2012 Olympics, which has already seen a 300% cost overrun. Almost certainly, despite UK Prime Minister David Cameron’s predictions of an unprecedented US $5 billion profit, the UK will face a sizeable deficit from the Olympics. Advertising companies’ financing, though, is more interesting than Britain’s financing of the Games.

Advertising in the Olympics is very different from many other sporting events. Quite unlike NASCAR and English Premier League soccer, uniform sponsorship and advertising is banned in the Olympic Games. Additionally, unlike many other sporting events that see advertising from hundreds of companies, the Olympics only permits 11 companies to advertise in the Olympics. Additionally, advertising contracts are not short term for just one Olympic sporting event. Advertising contracts generally last a minimum of 8 years, or 4 Olympic Games.

The limited advertising opportunities offered in the Olympics make the competition for advertising and sponsoring Olympics stiff, especially amongst Fortune 500 Companies that have the potential to spend up to US $1 billion in advertising for just one Olympic Games. The great advertising cost of the Olympics, a result of the limited but large scale advertising deals available at the Olympics, have led to 5 of the 11 Olympic sponsors in 2012 being one of the top 20 global brands, according to consulting firm Interbrand.

While most of the Olympics sponsors tend to be larger corporations looking to solidify their brand name, some historically have actually been smaller companies seeking a place on a global stage. For example, in the 1988 Seoul Olympics, Samsung was able to leverage its advertisements to shape the company from a company unheard of outside of Korea to the presently second largest Asian company behind Toyota.

Olympic sponsorships, though, are extremely risky. The benefit of advertising a brand through the Olympics is the same as the detriment: being projected on a world stage. British security company G4S saw its stock price free fall after it failed to uphold its part of the bargain under its Olympic deal, failing to provide enough security personnel to the Games.

It is also extremely interesting to study the finances of broadcasting companies covering the Olympics. In the Olympics, broadcasting companies essentially work like advertising companies. Broadcasting companies such as NBC consistently run deficits of hundreds of millions of dollars in their Olympic coverage, but aim to make long term profits. Like advertising companies, the goal of broadcasting companies is to invest in a better brand name to help run huge profits in the future by solidifying more expensive advertisers for their broadcasting station.

The Olympics provide a unique stage for global marketing. The advertising system in the Olympics is one that benefits the host nation, advertising companies, and the spectators. The unobtrusive advertising, made possible by restricting the number of corporations that can advertise in a single Games and the prohibition of advertising on uniforms, makes the viewing experience a more enjoyable one for spectators and television viewers around the world. The revenue generated from advertising also helps the Olympics host nation, who is able to feasibly run a profit or at least break even from the Games through expensive sponsorship agreements. And, finally, the companies advertising are able to improve their brand name and generate huge profits in the long run from this mutually beneficial partnership.

Icelandic Lessons in Policymaking

27 Friday Jul 2012

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Iceland’s GDP is around US $13 billion. When the recession hit, Iceland’s banks were in debt US $100 billion. What is more interesting than the financial collapse itself, though, is how Iceland rebuilt itself. Iceland today is one of the stronger economies in Europe with a 6% unemployment rate in contrast to Spain’s 25% unemployment rate or Greece’s 21% rate. Iceland’s rebound from the worst financial collapse relative to GDP in history to a stable economy in such a short period is quite honestly astounding.

At the turn of the millennia, in 2000, Iceland’s long history of nationalized banking drew to a close in one of the most telling experiments in privatization and deregulation. With the onset of the global financial crisis, Icelandic banks’ subprime loans and massive foreign debt caused them to declare bankruptcy in 2008, thereby threatening to bankrupt the entire nation. Contrary to the United States, Iceland did not bail out its ‘too big to fail’ banks; its 3 largest banks, producing 14% of GDP, were allowed to fall. Iceland nationalized and bailed out smaller banks in the nation that did not fall. Iceland additionally borrowed money from the IMF, which it used to invest in infrastructure to create jobs. Iceland also held an immediate referendum to revise its constitution. In this way, Iceland has increased private sector regulation in order to prevent another recession due to market deregulation. Most of the West has thus far been content with keeping in place its deregulation policies. While deregulation does invariably lead to greater economic progress in the short term, it has many detriments. Most notably, it can allow corporations to act with impunity with no policies in place to prevent them from sending markets into turmoil through internal decisions. Investment banks’ exploitation of the unregulated derivatives and credit default swaps markets is a prime example of this theory. Iceland, though, now has the legislative power to prevent such dangerous corporate activities.

Quite amazingly, at no point following the financial collapse in 2008 did Iceland’s unemployment rate pass 10%. Iceland is a success story. Perhaps the greatest mark of this assertion is that the Icelandic president Olafur Grimsson, in power since 1996, has been re-elected for a record 5th strait term. It is almost unheard of for a policymaker who was in power during an economic recession, especially when it was the biggest recession relative to GDP in history, to be re-elected. Yet, the Icelandic people re-elected the leader because of his commitment to rebuilding Iceland’s economy into a balanced economy that could prosper and be a European economic stronghold in the future.

Schengen Agreement Guarantees Long Term European Economic Paralysis

25 Wednesday Jul 2012

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One of the key aspects of the European Union is the Schengen free movement zone. The Schengen Agreement was created in 1985 and has now expanded to encompass nearly the entire European Union as well as some non-EU countries. The Schengen Agreement and subsequent Schengen Convention abolished immigration and border control checks among participating nations. The Schengen Zone proved practical in a financially stable market by reducing the amount of money spent in border controls for tourists and immigrants from these selected nations. The principle of the theory was that the nations in this Agreement all had strict enough weapon control laws, so no danger could arise from a porous border. The Euro crisis, though, undermines the strength of the policy.

The issue lies for certain nations, such as France and Germany, who have more or less escaped the brunt of the financial storm. These nations have unemployment rates well below the European Union average of 10.5%. The Schengen free movement zone allows citizens of any other nation in the zone to reside permanently in these nations. Citizens from many of the nations within the Agreement, especially Spain (25% unemployment rate) and Greece (21% unemployment rate), have been exploiting the Schengen Agreement. Many of these citizens have left their home countries and effortlessly migrated to France, Germany, and Scandinavia in order to secure jobs and escape jobless markets in their home countries. As proof of this assertion, Germany’s immigration rate in 2011 was the highest in 15 years. From 2007 till present, France’s net immigration rate has increased form about 0.7 to 1.43. The Agreement actually serves detrimental to both parties. Nations with struggling economies such as Spain, Greece, and Portugal will lack competition in their markets once the economy recovers; while the job market in these nations is currently too competitive due to high unemployment, competition is one of the key foundations of capitalism that drives economic growth. In the future, once the job market recovers, unemployment in these nations will be too low to drive economic growth. In fact, historically, an unemployment rate of 5-10% appears to be the most conducive to economic growth and socioeconomic development. Nations with an unemployment rate hamper citizens’ work ethic. Conversely, nations with an unemployment rate above 10% tend to experience issues in socioeconomic development, namely that the quality of life for its citizens stagnates or actually decreases. This is the problem set to arise in strong European economies like France and Germany; the great influx of immigrants will deny jobs for natives, and will thus exacerbate already high unemployment across the board in these nations.

Financial stability in the Eurozone does not seem likely to improve; to the contrary, many economic analysts project that financial stability and unemployment in the Eurozone will get worse before it gets better. Nations such as France and Germany will only have their fiscal problems and unemployment rates rise in the near future due to the Schengen free movement zone. At the same time, larger numbers of citizens will emigrate from Mediterranean nations. While in the short term this will reduce unemployment and improve the quality of life of the nations’ citizens, it will actually prove uneconomical in the long term. Once the nations recover economically, their markets will face a job vacuum that employers will be forced to fill with incompetent or undeserving employees. This, in the long term, will hamper economic growth and, consequently, socioeconomic development. The only effective way to prevent these disastrous scenarios would be to abolish the Schengen free movement zone. By tightening immigration laws, European nations will be able to prosper economically in the long run by assuring the golden 5-10% unemployment rate in the future.

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