Jim Rogers and Marc Faber - The European Welfare State

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When East Germany joined with West Germany, there were a lot of problems. When countries join together, there are always winners and losers. A lot of centers of prosperity will move east. You might not notice any difference between eastern and western Europe in 10 years.

The price level in the old Soviet Bloc is still significantly lower than in Western Europe. You will see a certain amount of arbitrage. In Eastern Europe, the purchasing power and standards of living will move up. We don't want them to emulate the high taxes of the countries in the west. The low taxes are an incentive for foreign investment into those countries.

Politicians are not what they used to be. The government of Poland is full of scandals. But when taxes are lower, you are not dependent on the government to allocate the money. Even if Eastern countries governments are bad, at least they are far cheaper than the western governments.

The choice for Europe is simple. Either the easterners will move to the west, or production will move to eastern Europe. This means that the unions will lose their power. But the demographic problem in Europe is terrible. The low birth rate is because it is very expensive to have babies. The divorce laws are also very unfavorable. And if economic conditions improve, many more babies could be born. There are high taxes for the welfare state that Europe has built up, and it is unsustainable. Europe cannot survive without new young people being born. The social welfare state has replaced the family. Now people go to the government in order to solve their problems. But most people don't want to give up those benefits. We need someone to explain to the people that there will be short term pain, but in the long term there will be tremendous benefits.

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[EconCat88]

I see Faber and Rogers, but who is the third guy? 

[lisajason111]

starting at 3:20 you will know the third guy is completely clueless how the phony booms were created!!!!!!!!!!!!!!!!!!!!!!!­!!!!!!!!!!!

[ShortBusTrading]

The third guy in this video is Antony Burgmans - Unilever : ERT

[hume1234561]

i wish more of the sensible economist had an informal discussion in the manner we're seeing here. micheael krieger (of zerohedge), rogers and don luskin (for the contrary viewpoint).

i know jim doesn't suffer fools so i'm not sure how he would see this line up.