Power to the People, Not to Brussels. (Leader)

New Statesman (1996), June 2, 2003 | Go to article overview

Power to the People, Not to Brussels. (Leader)


The momentum of the European Union, even when it was a mere community dedicated to free trade, was always towards greater centralisation. This was not just because of the political ideals and ambitions of its founders. Nor was it mainly because any central bureaucracy is naturally inclined to accrete more powers to itself. Far more important than either of these is brute logic. Bring down the trade barriers and a company can locate where tax rates are most advantageous while retaining its access to a continent-wide market. National governments therefore compete to lower their taxes on companies -- as Ulrich Beck has pointed out, politicians used to fear foreign military invasion; now they fear foreign corporate exit -- and that is the long-term trend in Europe, with Ireland leading the way and enjoying unprecedented prosperity as a result. Bring down the barriers to labour mobility, and the well-off will migrate to the countries where personal taxes are lowest, the poor and destitute to those where social sec urity is most generous. Adopt a common currency and investors will choose the countries where they get the highest returns on their capital -- which inevitably means those where business has the most freedom to hold down labour costs, to ignore trade unions and to practise what is euphemistically called "flexibility".

Thus, the pressures for tax harmonisation, for common principles of social security and for charters of labour rights come not so much from the grandiose visions of Valery Giscard d'Estaing, the chairman of the convention that has drawn up a new European constitution, as from the fears of national politicians and civil servants. If the EU fails to harmonise, then its member governments, no matter how devoted to a strong public sector and vigorous regulation, will be forced slowly to shrink their tax bases, scale back social security and reduce the scope of business and employment regulation. For national politicians, there is no choice between giving up or preserving their control; the only question is whether they surrender it to private corporations or to Brussels. Conservatives, who dislike active government, will not find the answer difficult; lower taxes, less social security and less regulation are what they would choose in any case. For the left, it is, or ought to be, more tricky.

France, Germany and Italy may now look like attractive "social market" countries, more committed to welfare than the increasingly Americanised British. …

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