Wednesday, August 20, 2014
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The Reconstruction of European Politics

PRINCETON – Many Europeans tremble at the likely outcome of the upcoming European Parliament election: a strong showing for anti-European protest parties, which will almost certainly try to present themselves as the real winners. But hand-wringing will not resolve the European Union’s political crisis.

And the crisis runs deep. Nowadays, anti-EU parties – Marine Le Pen’s National Front in France, Geert Wilders’ Party for Freedom in the Netherlands, and Nigel Farage’s United Kingdom Independence Party – have been the most effective at organizing themselves into a single political “family.” Meanwhile, the established families – social democrats, liberals, and the European People’s Party (EPP) bloc – have been discredited in many Europeans’ eyes.

The problem is that the old European parties’ intellectual and moral foundations have rapidly eroded in recent years, owing partly to their failure – or inability – to adapt to EU-level systems. If they do not act fast to re-establish themselves as credible and effective representatives of voters’ interests, they risk fading into the political background, allowing irresponsible populists gradually to take center stage.

Consider the social democrats, whose mission has historically been to facilitate the redistribution of resources. Given that such redistribution in Europe occurs fundamentally at the level of individual countries – which have the needed fiscal authority – it is difficult to view it as a suitable project for Europe as a whole.

Indeed, it may be impossible to Europeanize social democracy under current conditions. The more deeply integrated Europe becomes, the less capacity national governments have for redistribution, because individuals, companies, and jobs can simply leave countries with higher tax rates, as has already happened in countries like France. And an EU-level social-welfare state funded through taxes on corporate or personal income would require large transfers among countries, exacerbating already-high tensions among EU member states.

Economic liberals’ capacity to appeal to a broad electorate has also suffered. In the wake of the global economic crisis, voters have demanded government intervention, suggesting that many have lost confidence in the lightly regulated systems of the past.

Finally, there are the EPP’s center-right Christian Democratic forces, which emerged in the immediate post-World War II period with a religion-based emphasis on social solidarity that provided an alternative to the inhumane collectivism of fascism and communism. Since then, however, Western Europe has secularized considerably, and the notion of basing political decisions on Catholic social teaching now strikes voters as quaint. As a result, the center-right parties appear intellectually thin – do-nothing parties that resist change and offer no new ideas.

As it stands, the anti-EU parties’ enthusiastic embrace of Russian President Vladimir Putin, with his profoundly anti-liberal economic and social policies, may well be the only thing working in the established political families’ favor. But it does not have to remain this way. With a new political vision shaped by current trends and imperatives, Europe can create an effective political system fit for the twenty-first century.

Such a vision, like all of Europe’s most effective conceptions, would be a blend of French and German ideas. France is currently gripped by the massive success of economist Thomas Piketty’s book Capital in the Twenty-First Century, which analyzes how inequality rises in the absence of exceptional levels of economic growth. The book’s message – a call to address rising inequality and a plea for stronger economic growth – has strong policy implications. But Pikettism does not require income taxes, so much as wealth taxes.

The idea of using a wealth tax to overcome Europe’s debt crisis also has considerable support on the eastern side of the Rhine River, but for different reasons. Germans remain worried that they will be called upon to bail out the over-indebted governments of southern Europe. Such a transfer of public debt would be unfair, Germany contends – not least because high levels of public debt are often accompanied by higher levels of household wealth than in northern Europe. This argument, made by the Bundesbank, seems to support a wealth tax.

In fact, a wealth tax could spark economic activity and growth. Empty houses and uncultivated fields – a common feature of southern Europe – represent a relatively secure investment that does not cost much, owing to low property taxes. A higher tax rate would spur owners to sell, leading to the restoration and improvement of land and buildings – effectively acting as a large stimulus package.

Given that a wealth tax would be used primarily to pay down high levels of existing public debt, it would be applied in the context of the individual member states. Its basis in real estate means that it would not depend on a precarious attempt to tax a mobile factor of production. And presenting the tax as a one-off levy to address the legacy of bad policy in the twentieth century would ensure that it did not deter future economic activity.

The upcoming European Parliament election could be the wake-up call that pro-EU parties so desperately need. Fortunately for them, there is a compelling way to combine the fundamentally French concern about the dangers of inequality with the fundamentally German concern about excessive public debt. That is why property and wealth taxes are likely to become the foundation of a new political alignment in Europe.

Read more from "Europe's Ever-Closer Disunion"

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  1. CommentedPaul Daley

    How large would a one-time levy have to be to make a dent in public debt? An annual levy is probably what's called for.

  2. CommentedEdward Ponderer

    There are two ways to look at it--from a unified European level, or from a European nation perspective. The analysis from the former is that Europe is cutting off its nose to spite its face. From the latter perspective, its countries are holding their breaths until they turn blue in the face. Pretty much the same dualism in anti-unity perspectives from individual competitors up to international blocs and cartels.

    We are in a globalizing system by nature, not politics. We are entwining as body, organ systems, organs, tissues, and cells -- the whole evolutionary shebang. The only politics is that of egoism, and if we don't get over this fractal disease quickly (muscular dystrophy and cystic fibrosis from above and flesh-eating bacteria and tuberculosis from below), the inevitable integral humanity is going to arrive on the scene as one very sick puppy...

  3. CommentedZsolt Hermann

    There is indeed no political solution for Europe's unity problem as there is no economical or financial solution either.
    As long as everybody, even the most ardent proponents see the Union and the common currency as a "necessary evil" they need to swallow for economic, financial or even political purposes, as long as there is nobody who could "sell" the European idea as a positive, attractive idea that everybody benefits from, each and every new attempt will fail, and those benefiting from the chaos and problems will take even what has already been established apart.
    As with all the other facets of the global crisis, people think bad things will only happen in the future sometime, underestimating the actual crisis we are already in, thus the potential devastation of the forthcoming European elections is also significantly downplayed.
    There is no other solution but a comprehensive education program for every social layer, every age group, national, educational and cultural subgroup, from leaders to the last person on the street to explain what it means to exist in a globally interconnected and interdependent system, and that in such integral system only mutually complementing collaboration can give us a platform for the future.
    And not partial unions, partial alliances, but a full integration.
    We already have all the necessary scientific research, field data from the daily events of the crisis, we just have to put the whole picture together for everybody to clearly see we have no other option but connection and integration, and not simply to save our sinking ship, but in order to elevate our lifestyle, existence to a previously unprecedented higher quality level.

      CommentedEdward Ponderer

      There are two ways to look at it--from a unified European level, or from a European nation perspective. The analysis from the former is that Europe is cutting off its nose to spite its face. From the latter perspective, its countries are holding their breaths until they turn blue in the face. Pretty much the same dualism in anti-unity perspectives from individual competitors up to international blocs and cartels.

      We are in a globalizing system by nature, not politics. We are entwining as body, organ systems, organs, tissues, and cells -- the whole evolutionary shebang. The only politics is that of egoism, and if we don't get over this fractal disease quickly (muscular dystrophy and cystic fibrosis from above and flesh-eating bacteria and tuberculosis from below), the inevitable integral humanity is going to arrive on the scene as one very sick puppy...

      CommentedEdward Ponderer

      There are two ways to look at it--from a unified European level, or from a European nation perspective. The analysis from the former is that Europe is cutting off its nose to spite its face. From the latter perspective, its countries are holding their breaths until they turn blue in the face. Pretty much the same dualism in anti-unity perspectives from individual competitors up to international blocs and cartels.

      We are in a globalizing system by nature, not politics. We are entwining as body, organ systems, organs, tissues, and cells -- the whole evolutionary shebang. The only politics is that of egoism, and if we don't get over this fractal disease quickly (muscular dystrophy and cystic fibrosis from above and flesh-eating bacteria and tuberculosis from below), the inevitable integral humanity is going to arrive on the scene as one very sick puppy...

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