Wednesday
(0)Drieu Godefridi, the Director of the Institut Hayek, looks at plans for a "new Marshall Plan" for a region of Belgium with incredulity
Politicians in Wallonia, the southern part of Belgium, think their region needs "a new Marshall Plan". Excuse me? The Marshall Plan was designed to help Europe rise from the ashes of World War II. Surely there has not been any war in Belgium since then. So what is the point?
This plan would benefit the socialists who govern Wallonia by helping their lagging economy to recover. But to recover from what? Basically, from sixty years of socialist governance.
Truth be told, Wallonia does need an urgent boost to its economy. With an unemployment rate of 18% and almost nil growth for years, Wallonia is now on the verge of being outclassed by Poland and Slovakia, countries that started from zero in terms of their economies just 15 years ago.
This "Marshall Plan" consists of massive public investments in some parts of the Walloon economy duly selected by the government. But it will not work any better than other plans the socialists have come up with over the last three decades. (Some years ago, the same socialists said that one of their plans at that time would turn Wallonia into a "Wallifornia").
What is comforting to learn is that the main goal of the Walloon government is now to encourage the creation of new businesses and to help to develop existing ones.
But these socialists need to understand that the creation and growth of companies are not only a question of political will. For businesses to be created and to grow, some basic conditions have to be put in place.
Probably the most important two conditions sine qua non for economic vitality currently do not exist in Wallonia: reasonable taxes and a reasonable level of regulation.
Belgian taxes are among the highest in the world, second only to France. Not every tax can be lowered by the Walloon government, but many of them could be. Unfortunately, Walloon politicians do not seem to understand the link between low taxes and economic prosperity. The Cour d’arbitrage, Belgium’s Supreme Court, recently struck down a Wallon law raising the rate of the inheritance tax at 90%.
The amount of regulation in Wallonia is ridiculously high. In every jurisdiction that it has inherited from the Belgian federal state, be it urbanism or environment, the Walloon Parliament and government have enacted several new regulations to restrict business, often developing new controls in new areas. The idea that the burden of such regulations should be measured, and compared with their merits, is foreign to the socialist elites.
That the politicians of French-speaking Belgium understand the need to create new businesses for their economy to thrive is good news. But to expect that anything like would happen without a plan that entails the drastic lowering of taxes and the abrogation of complete areas of nonsensical environmental and city planning regulations? That is just another Belgian joke.
Just a few more euros of someone-elses-money™ and a few more regulations ... and really - we'll make socialism work this time.
Posted by Larry Blue at August 31, 2005 09:32 PM
Collectivists have used this tactic relentlessly and unashamedly for over a century.
No matter how disastrous the outcome of any collectivist policy, never admit any question as to the theory behind it, which invariably is that state action is urgently required to alleviate some real or imagined need, but instead loudly claim the problem is not enough state action, and what is needed is more money and power so that the nomenclatura can lead us to utopia.
It fascinates me that statists can still trot this old horse out and try to sell its droppings as gold nuggets, but they do. Fortunately, not everyone falls for this stuff anymore, as is demonstrated by Vaclev Klaus' recent speech rejecting socialism and calling for more freedom of commerce and respect for individual rights.
Posted by veryretired at August 31, 2005 09:46 PM
I work for a company that has a large investment in Belgium. A few months ago they tried to get more of their employees to work on Saturdays. Like you said, taxes in Belgium are very high, and this has naturally led to the development of a successful black market. So many of the company that I work for's Belgian employees work on the Black Market on Saturdays that they cannot be enticed into working for their 'true' employer on Saturdays.
Scandalous, that there are still so many people that think socialism can solve ANY problem.
Posted by Matt at August 31, 2005 09:50 PM
Yes, it's that old socialist war cry: "This isn't working - we must do more of it!"
Posted by GCooper at September 1, 2005 02:25 AM
This plan would benefit the socialists who govern Wallonia by helping their lagging economy to recover. But to recover from what? Basically, from sixty years of socialist governance.
Has anyone tried arguing that sixty years of socialism is as devastating to an economy as WW2 was?
Posted by rosignol at September 1, 2005 04:29 AM
Is it not odd that any Belgian problem, whether economy or otherwise, nowadays becomes a "European" problem. Is the country, once described as "The Wehrmacht's equivalent of a drive-through McDonalds en route to Paris", now so inextricably tied into the EU that there is a some pervasive 'whatever Belgium wants, Belgium gets' mentality throughout the EU headquarters?
Posted by Julian Taylor at September 1, 2005 08:58 AM
As a historical side note, most of the money for the Marshal Plan went to Great Britain who used it to fund Atlee's socialist vision.
A big injection of external cash is quite often the impetus for the rapid expansion of the state. The state appears to be able to deliver the goods to the people free of charge but when the external largess disappears the people are stuck with tab of maintaining whatever got built.
You can see the same dynamic occurring in American oil producing states in early 80's. Flush with cash from oil taxes they expanded state services only to be caught short when oil-bust happened.
Posted by Shannon Love at September 1, 2005 03:56 PM
Shannon Love
Are you sure you're not mixing up the Marshall Plan with the billion dollar loan (or was it pounds) quite separately negotiated by Britain with the US?
Posted by Findlay Dunachie at September 1, 2005 05:28 PM
You'd think the Walloons would look north to Flanders (the Dutch-speaking part of Belgium) where they are doing very well. Flanders, needless to say, is more free market than Wallonia and apparently much of Europe.
Posted by Matra at September 1, 2005 06:15 PM
No wonder the Flemish are increasingly turning to separatism - Belgoslavia?
Posted by Matra at September 1, 2005 06:24 PM
Findlay Dunachie,
IIRC, 60% of Marshal plan funds went to Great Britain. There were additional loans and grants over the next decade as well. In any case, the funds that Atlee used to nationalize industries etc came from America. Without the external source of cash his programs would move been politically untenable. I image a similar dynamic occurred in Wester Europe as well.
Posted by Shannon Love at September 1, 2005 06:54 PM
