From: delval@Csli.Stanford.EDU (Alvaro del Val)
Subject: Re: Pros and Cons of EU (was Re: Increasing EU opposition in Denmark)
Organization: Stanford University CSLI
Date: Tue, 7 Apr 1992 21:15:33 GMT

In article <1992Apr6.175845.19058@midway.uchicago.edu> rtp1@midway.uchicago.edu writes:
>

[I wrote:]
>>So, I don't see why a decrease in social services of any kind should
>>accompany the EU.
>
>I think there are two main arguments that would predict a decrease
>in social services by the "high service" countries.  

I admit the issue is more complicated than I thought (well, I hadn't
thought much about it anyway, so...).

>The first is
>that economic competitiveness will put countries that spend
>a lot on social services in a disadvantange.  You could argue
>that high social services (good medicine, education) build
>infrastructure and in the LONG RUN improve economic competitiveness
>(e.g. think how much the U.S. spends on medical care of "crack
>babies" and other severely damaged children, when preventive
>medicine could have head off the problem at much lower cost), but
>the key term here is LONG RUN; the short term bottom line is
>a high cost. Anyway, do you really want to have to justify all
>social services in terms of corporate profitability?
>

Certainly not, but economic competitiveness is not just a matter of
corporate profitability, but of higher standards of living for the
society as a whole. In fact, you cannot sustain a high level of
services if you allow the country's economy to stagnate (which would
typically imply a higher demand for those services coupled with a
diminished ability to draw resources to accomodate that demand). If,
as has been extensively argued, the opening of markets within Europe
is necessary to avoid long term stagnation, then it could perhaps be
argued that the EU is *necessary* to sustain a high level of services
over the long run.  (One could then counterargue, however, that open
markets along EFTA lines is all we need, rather than a full-fledged
union. I'm not sure how to answer to this.)

>It is true that the competitiveness issue is already there without
>the EC, given the role of exports in the Nordic economy, but
>anything that tends to unify the market more will tend to
>accelerate the trend toward reducing costs of social benefits.
>
>Still, I think it's a somewhat weak argument.
>
>The stronger argument:  If there are no restrictions on who can live
>where, then those individuals with the most need of social
>services (e.g. the chronically unhealthy or unemployable) will
>tend to move to the country with the highest benefits.  For example,
>if Sweden offers free AIDS care while Britain does not, British
>AIDS patients will just move to Sweden (hypothetically).  Of course,
>many AIDS patients will not move if they have gainful employment
>in Britain and can't get it in Sweden, but given high medical
>costs, the incentives to move are clearly there.
>
>The United States provides an interesting laboratory for how
>such things work, though the interpretation of the results
>is far from clear.  
[rest of text deleted]

This is an interesting point. But how much of an incentive is it? Is
there any country in the EU which doesn't offer universal health care,
for example?  (The only possible exceptions are Portugal, Greece and
Ireland, about which I must confess my ignorance, though I would
assume they do offer it). There might be (wide) variations in the
quality, scope and waiting times of the health services offered.
Those differences might become an incentive for quite restricted
portions of the population but I don't think it would make a
significant difference in migration patterns or demand for services
(*). What would provide a very strong incentive for a statistically
significant part of the population is the difference between having
universal health care and not having it(**), but not the kind of
differences one can find in Europe, I think. The situation is less
clear with other services such as unemployment benefits. One
possibility would be to have these benefits paid by the state in which
the unemployed person last had a job. I think one should be looking at
this type of solutions before deciding to oppose the EU on these
grounds.

At any rate, the alternative to trying to find solutions along these
lines would be to restrict residence rights, something which I find
very unpalatable, too close in spirit to the movements favouring
restricted inmigration policies. 

Regards, 

Alvaro


(*) AIDS combines very high costs with a significant affected
population, and thus might be a counterexample to my claim. For this
type of cases, why not have the EU *require* every country to provide
the necessary services, or at least share the costs? 
(**) That's one of the reasons why the US example is rather misleading;
another reason is that the language barrier does make a lot of a
difference in terms of migration patterns.
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