Europe – update (6)

I have come up with a good question for a psychology, economy or political studies school exam. Let us imagine that a group of individuals has to, collectively, stump up some cash. The individual contributions to the common fund are expressed as a percentage of what one owns. There are three ways the financial burden can be spread between the not so well-offs and the wealthier:

A/ 6.75% – 9.9%
B/ 3% – 12.5%
C/ 0% – 40%

Now the question. In a democratic governance system, which of the above options will be selected and enforced? The question is too easy for high school students but could possibly be used in primary schools.

Those of you who have read the recent posts on da-boss will realise that I am talking about Cyprus. Yes, in the latest plan thrashed out by the Cypriot politicians the bank deposits under 100 000 Euro will not be touched and those over 100 000 will be docked up to 40%.

Earlier, Cyprus’s finance minister earlier confirmed that depositors with more than 100,000 euros could see 40% of their funds converted into bank shares. But Michalis Sarris also said that Cypriot depositors with less than 100,000 euros in their accounts “will not be hit”.

This is perfectly consistent with my May 2012 post:

which professed:

But when the new crop of populist governments in Europe hit the proverbial wall of monetary realities things will get much more ugly. What my crystal ball shows are vindictive, envy-driven, Bolshevik-styled legislative attacks on “the rich”. Remember – as long as 51% of the electorate think it is a good idea to shaft the other 49%, democracy will facilitate it.

Politics and, more generally, the history of mankind, are viewed as complex, confused processes but in essence there are some very basic instincts at play. Human beings will generally act in what they believe is their own best, short-term interest. This includes getting others to pay for what we want. A natural justice does not come into it. The arbitrary arrogance of fleecing the “rich” is mind boggling and the logistics of the theft highly perplexing. What if one person had a number of bank accounts – are they going to be treated as one, for the purpose of calculating the levy? What if the accounts were at different banks? What if spouses had separate bank accounts which add up to over 100 000 Euro – are they going to be levied? What if they are separated and do not live together?

My grandfather had a small taxi company in pre-WW2 Warsaw. He kept his cars well maintained and his savings in the bank. After the German attack in September 1939 the Polish Army requisitioned some of his cars for military transport. After the collapse of Poland the German occupiers took the remaining vehicles. His bank deposits were also lost. Then he managed to trick the Russians – when they came in January 1945 he had nothing they could take. But he picked himself up one more time after the war and started a dairy transport company. Then, in late 1940s, the Polish communists decided that private enterprise would no longer be tolerated and deliberately destroyed the non state-owned businesses through taxes.

What is the moral of the story? Social or political turbulence invariably brings about escalating violations of private property which culminate in a wholesale theft. This is what Europe is heading for and the precedent has been set in Cyprus. We live in interesting times, indeed.

Europe – update (7)


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