From: rtp1@quads.uchicago.edu (raymond thomas pierrehumbert)
Subject: Re: Pros and Cons of EU (was Re: Increasing EU opposition in Denmark)
Reply-To: rtp1@midway.uchicago.edu
Organization: University of Chicago Computing Organizations
Date: Mon, 6 Apr 1992 17:58:45 GMT


>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.  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?

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.  Mississippi provides very minimal welfare 
benefits, whereas Illinois and New York state are comparatively
generous.  Yet there are still plenty of poor people left in
Missisippi. Why didn't they all move to Illinois?  Probably 
because people have a lot of self-respect and don't really
want to sponge off society.  Also there are family ties
and cultural issues (Mississippi is probably about as
different from Chicago culturally as Britain is from Denmark,
though of course there isn't the language barrier).

Nonetheless, the Northern cities cannot offer too much of
a good thing, since if the incentives to move become
strong enough, people will indeed begin to move in
greater numbers.

An interesting wrinkle is that Minnesota is contemplating the
introduction of a statewide health-care system, that would
be roughly equivalent to what is provided in, say, Sweden.
It should be interesting to see what happens.  If people
move to Minnesota just to get the health care, the
state economy could suffer.  On the other hand, if 
highly desirable workers and employers decide to
locate in Minnesota because the health care environment
makes the state attractive, then the economy will benefit.