Thursday, February 7, 2013

The EU Budget

EU budget discussions are always depressing affairs. The total EU budget amounts to something like the rounding error in the US budget, even though Europe produces more than the US, so the idea that the European budget is a useful macroeconomic instrument is silly. On the other hand, specific items within the budget--Britain's "rebate," France's disproportionate share of the "Common" Agricultural Policy, etc.--mean a lot to certain domestic political players in various countries and can therefore be counted on to generate bitter polemics. This year, with the specter of crisis and even breakup haunting the discussions, the atmosphere is even darker than usual.

But so is the sense of unreality. Because while no one is sure that the EU will survive this crisis, no one believes it's going to break up over its annual budget squabbles either. David Cameron is posturing for the folks back home, and his partners are willing to humor him up to a point: they, too, preside over unruly coalitions.

When I think of the future of Europe, I look to the generation or two after mine. Their attitude toward Europe is, I suspect, quite different from my generation's. The memory of World War II matters less; economic judgments matter more. As a postwar baby boomer, I'm in something of an in-between position. I don't have firsthand memories of Europe's devolution into catastrophic hypernationalism, but my sense of history is dominated by the history of the 1930s.

So European unity maters to me in a visceral way. It also matters to me from the standpoint of cold economic analysis. I think a large single market for goods and unified but well-regulated financial markets are Europe's best shot at maintaining global competitiveness and preserving the social-democratic welfare state, which I think is Europe's singular contribution to contemporary political thought and human well-being. Yet I also recognized that the disequilibrium of those same markets has become the greatest risk of renewed hypernationalism and political collapse.

Oddly, I was lamenting the other day the results of French polling that showed strong majorities in favor of "vigorous," not to say authoritarian, leadership to restore order at the national level. And yet when I think about Europe, I have to recognize that some of my own complaints about the EU's present leadership reflect a similar belief that lack of coordination is the root of all evil. Of course, I'm careful to say "lack of coordination" rather than "political bickering and ideological chaos," but really these contrasting formulas point to a similar impatience with existing mechanisms of governance, multiple veto points, fundamental disagreement over economic doctrine, etc.

I wonder if the next ten years won't see a new phenomenon emerging as an increasingly important determinant of Europe's future. Some firms, it seems to me, have made good use of the past 20 years in taking advantage of the single market to position themselves as truly international producers, while others have simply used the expanded market to increase their sales while remaining fundamentally nationally oriented in organizing the productive process. These two types of firms will have very different political interests in the evolution of European institutions. But how will those differences play out? Will the truly multinational firms favor a Europe that looks more like a superstate, because a superstate is what is required to impose order on a supermarket? Or will they rather favor a weakened Europe in order to enhance the scope of their own supremacy?

Conversely, will the nationally organized firms want a strengthened superstate in order to level the playing field and redress imbalances due to different state burdens on each firm's competitiveness? Or will they prefer a more intergovernmental European process in order to press their own interests through their national governments?

Answers, anyone?

1 comment:

Anonymous said...

I do wish social, tax and labour laws were harmonised within the EU, it is now a mockery when companies play on these differences.