Wednesday, April 23, 2014
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Europe’s Fairness Crisis

BRUSSELS – Slowly– far too slowly – politicians in Europe are beginning to understand that the deep crisis gripping the European Union is a game changer. Even an eventual resolution of the eurozone crisis will not bring a return to the established political order. Europe’s crisis is about fairness, with widespread and growing discontent over wealth disparities now being highlighted by cases of real hardship.

The pay and privilege gap between Europe’s rich and poor has been widening since the 1980’s. Most EU countries have targets aplenty on which the public can vent its rage – whether bankers’ bonuses in the United Kingdom, or multinational corporations’ tax rate of less than 6% in Belgium, whose citizens are the most highly taxed in the OECD.

These grievances are exacerbated by austerity policies, and the political consequences are set to be far-reaching. First, the EU itself risks being scapegoated by public opinion as a source of peoples’ economic woes. Second, voters are likely to accept tough spending cuts only from newly elected governments, rather than from incumbent leaders who can be held responsible for the crisis.

For many years, Europeans viewed the EU as a catalyst for economic growth and greater “cohesion” through policies that primarily benefited Europe’s poorer countries and more backward regions. That seems less and less true of public opinion today: it is doubtful that EU institutions are still widely regarded as champions of the underdog.

The perception that the EU somehow brought about the eurozone crisis is unfair, but the eurocrats in Brussels have been doing little to dispel it. The Commission’s low profile on tackling the near-meltdown of the banks and the sovereign-debt crisis largely reflects the limits of its political mandate, but it also creates the impression that Europe’s executive hasn’t been championing the interests of the under-privileged.

More than 25 years have passed since Jacques Delors, the Commission president at the time, introduced the idea of a “Social Europe,” which the Union’s array of policies today has made into much more than a slogan. But its image has become faded, and it seems to lack any connection to the idea that the EU could somehow be softening the impact of its member states’ austerity measures.

It is difficult to assess how much the future of the EU and the cause of European integration will be compromised by popular resentment over the “fairness gap.” But it is clear that the EU has a crucially important role to play in digging Europe out of its crisis. After all, the crisis has as much to do with failing competitiveness in some eurozone countries as it does with the other factors that led to over-indebtedness, and the policies needed to streamline their manufacturing and service sectors need to be agreed and coordinated at the EU level.

It is therefore up to EU institutions to take the lead on assessing the depth of the divisions in technologies and skills between successful eurozone countries and others. They should also be encouraging an open debate on whether attacking indebtedness through austerity in fact risks delaying uncompetitive eurozone countries’ efforts to reform and modernize.

The notion that the EU has somehow fostered unfairness within Europe is only part of the problem. Equally worrying is the idea now rapidly gaining ground that a two-speed EU is now an unshakeable part of Europe’s future, with rich northern Europe (centered around Germany) and the EU’s southern and eastern members pursuing different policy goals. In fact, Europe needs to be politically united if it is to forge a strong collective response to its shared demographic problem of a shrinking workforce and declining global competitiveness.

No one can tell whether future technological advances might one day compensate for the EU’s built-in labor shortages. Meanwhile, it is plain that in most European countries social-welfare benefits are already outstripping tax revenues, and that the aging of their populations is exacerbating the problem.

Increasingly, fiscal and eventually political union is regarded as the answer to these internal European strains – and to avoiding a two-speed Europe. The EU therefore stands on the threshold of a charged and potentially divisive debate over national sovereignty, which is bound to call into question the EU’s own democratic arrangements.

After all, the choice of the European Commission’s president is negotiated secretly between EU heads of government, and the head of the European Parliament is selected on the basis of shadowy inter-party horse-trading. Demands for direct elections to these posts are sure to grow, and political parties across Europe will have to declare where they stand on the issue.

Electing the EU’s leaders is one thing; introducing greater accountability will be quite another. Nobody knows which rules and procedures would alter the widespread view that “Europe” is run by faceless mandarins who are immune to criticism or sanctions, but a move in this direction is urgently needed to safeguard the EU’s credibility.

Of course, there is a risk that making top EU posts subject to Europe-wide elections might place the Union in the hands of demagogues or political-party hacks. But it is also plain that a new set of checks and balances – and a fresh infusion of popular energy – is needed to defuse mounting resentment against “unfair Europe.”

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  1. CommentedSanford Russell

    I don't understand. If, as Giles says, there is a labor shortage why the current anti-emigration furor?

    1. CommentedNathan Coppedge

      For example, many citizens are thinking that everything is up to an architect, whether or not they think it aloud in their minds, it must be affecting them. The popularization of computer games contributes to the unconscious desire for life's editability and morphosis into something that is transciently appealing and yet permanently functional, much as 2-dimensional sprites, and corporate and religious ikona. The citizen of the future in my mind is highly mobile, with resources sufficient to secure temporary residence of dreams, or permanent satisfactory migrancy. The individual budget typically will pay for electronic utilities and any neurological stimulation that may be necessary. The future encourages the ethics of Zen consumerism, because in my mind at least, there is no shortage of consumers. Some would place this in a resource shortage category, where there is some tipsy math to be on top of the ball. Some of the priveleges that are bought these days don't actually cost much money, once someone is pushed through a few hoops. So it's kind of interesting. Maybe there's an abstract "social architect" box which refers to the upper crust, and "modular citizens" somewhere in the middle. Perhaps it would be beneficial to make "modular citizen" apply to as large a cohort as possible. It makes consumer items fashionable, and promotes the idea of a mobile society. And there will be more incentive for meaningful or meaningless differences between consumers competing for consumer value, resulting in shades or degrees of qua-permanent consumer identity. The more we transcend the innate prejudices of fixed consumer identities, the more modular citizenship is realized. That is not to say that this citizen has become an architect (although he may be deluded), but it certainly does seem like it makes life more compatible with social planning, not in a negative sense, but in a sense of allowing those with wealth to naturally control the structure of communities. If that energy is not burned on this kind of affair, it seems likely that it will be put towards more disastrous ends. In this sense it seems that Bill Gates has set a good example, even if some large percentage of his resources are not used on "mortal affairs". Perhaps even Bill Gates has not realized the nature of information. Or has money become a form of evolution? Beyond the supposed or apparent surfaces of economic reality? That seems superficial. Extracting from this, maybe someone could learn something about economics.

    2. CommentedNathan Coppedge

      Emigration refers to moving out-of-country. So unless you mean emigration within Europe, it is easy to see how it could have a negative effect. Also, in the context of a two-part Europe there might be a danger of people emigrating to Germany, potentially creating a greater debt crisis in other countries. I hadn't realized that it was such a problem, in the context of the value of real estate for instance.

  2. CommentedProcyon Mukherjee

    The Union which was more dictated by monetary objectives than any other was based on a few optimistic assumptions that would need a fresh look today. First of all the very core of the ideology that led to the monetary union was the success of the independent Budesbank that kept inflation at low levels that prompted the idea of the European Central bank. The single currency further led to the belief that it would augur well with increased trade within the Union, which was itself a large market, in absence of currency volatility; on the flip side the deflationary tendency was far downplayed. It is time that the real evaluation must be done on what marginal trade the introduction of euro brought in for the EU and what is the real impact of the deflationary tendencies in a range of economies including U.K. The benefits of a single currency seems to have been downplayed by the more marauding influence of lack of domestic demand within the Union prompted by deflationary pressures that lack of competitiveness in a range of economies have forced.

    Procyon Mukherjee

  3. CommentedZsolt Hermann

    I agree completely with the article.

    The European crisis is not a local European problem, but it is part of the whole global crisis which is a reflection of our way of life, our overall attitude becoming self destructive.

    Regardless of region, culture or political governance our inherent human nature dictates that we look at reality around us with the "maximum profit-minimum investment" attitude.

    This principle is more openly practiced in the US and usually in the anglo-saxon countries, while in Europe it was used more cunningly, seemingly hidden underneath the "social Europe" cover. But the social network is only part of the "minimal investment" part of the principle in order to give the necessary minimum to the more demanding European public, so they stay faithful slaves for the maximum profit generating machinery. The richer countries were never interested in an equal union, elevating the poorer countries to their level, they only needed the markets to sell their products.

    The problem is that this attitude, system has become unsustainable, a fact we reveal more and more each day through the crisis. In order to keep this false union on track the leaders are ready to openly abandon all the democratic principles in their spasmotic desperation to run away from the problems, instead of facing them, finding a true solution, which of course would require a complete change of attitude and relationships.

    The truth is today humanity has evolved into a closed, interconnected and interdependent network, where only an integral union of the nations, countries can provide us with a sustainable future. But this union has to be based on true mutuality and equality instead of the false foundations we have used so far.

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