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In need of true Europeans

August 19th, 2011

The nation state cannot provide a refuge from the global debt crisis, warns George Soros. The Hungarian-born American investor says European economies can only be saved through further integration and centralization. Soros advocates progressive taxation for economic and social reasons.

Total independence, isolation and the idea of turning to someone else [outside the European Union] is an illusion. If it becomes a popular idea, the strengthening of the nation state will have catastrophic consequences,” George Soros says in an interview in Heti Világgazdaság.

The Hungarian-born investor also sees promising signs in the crisis, for example that Germany and France have realised that the monetary union can only be saved by joint action. Soros is hopeful that in the near future Euro bonds will be issued, and a central EU Finance Ministry will be set up. Until this happens, uncertainty will prevail and markets will be volatile, Soros suggests.

As for Hungary, Soros acknowledges that strengthening national independence and sovereignty in small European states has become fashionable. But if anti-integration movements become influential and the idea of the sovereign nation-state revives, trust in the European Union will weaken, which may further destabilize the European economic and financial system, he warns. In order to counter nationalist movements like the True Finns Party in Finland, EU member states would need “True Europeans” he suggests.

Though Soros claims not to be sufficiently familiar with the specificities of the situation in Hungary, in general he endorses the idea of progressive taxation. “I fully support Warren Buffet’s proposal that the rich should pay,” Soros says. He adds that paying higher taxes would not frighten the rich away from investment, and “cutting the taxes of the poor while increasing the tax burden of the wealthy has a very important social and political message,” in such precarious times.

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