Sunday 19 September 2010

European Fiscal Federalism (Part 5): Democratic deficit, Budgetary empowerment, institutional competition and shifting the status quo

Steps in this direction:

In the previous posts ( 1, 2, 3) I have described the economic logics for an EU fiscal policy and the political economy argument for delegation of such powers to the European Commission (4). In this context, I would like to highlight the recent report that a group of European Socialists are lobbying their party to pursue US style primaries to appoint their candidate for the 2015 European Commission Presidency. There is an equivalently irrefutable logic behind this type of process, which has been explored by Hix and Follesdal in a 2006 article on the EU's democratic deficit. This initiative could also be the beginning of something along the lines of the Wallstrom candidacy imagined by Hix.

In the image below, I've summarised the arguments that have been brought to the fore supporting the view that the EU suffers from a democratic deficit. The part that is crossed is so because it is an argument that has been disproved through argument or recent reform.

The point is that this decision to have a single candidate for one of the EU's biggest parties, if it ever materialises, may lead to an increase in the debate of EU policies, mobilising the different camps with established interests and biases, thus increasing the saliency of the policy issues under the EU umbrella (if one assumes them to be endogenously formed). Doing this should help to solve the issues left untouched by the Lisbon treaty. It would transparently bring public debate on the EU to the public forum and it would create actual competition between the sides. If Schattschneider and Hix and Follesdal are indeed right and saliency is endogenously formed, then this public process of competition should indeed lead to the mobilisation and emergence of the conflicting biases necessary to get the public interested and involved in the process. This mobilisation process assumes that people get involved, that they invest their time and may be even their resources, thus taking a stake in the success of the party of their choice and in the successful implementation of at least some aspects of its electoral programme. This is an important and logical assumption. However, because of its abstract nature, it is one which is probably impossible to prove or disprove. Nonetheless if it is true, than it is one which matters a great deal. If the heart of the democratic process is that the electoral losers accept to be in the opposition at least until the next election is called, the brains of democracy is that those who appointed the government remember (more or less) the promises that were made during the campaign and hold them accountable for fulfilling those promises, within the limits of the electoral majority acquired.

Moreover there seems to be consistent anecdotal evidence for the fact that there is a clear relation between budgetary relevance (how big is their revenue, how big is the expenditure and how each is configured).

In conclusion, if the people take a stake in the process and in one of the competing policies, they’ll get involved. As that happens, the European Commission will at least be on a equivalent level of democratically legitimacy to the member states. Only then can it compete for power and influence, and argue the irrefutable logic of levying its own taxes, be them on income, on mobile products or on activities that create negative externalities. Whether this ought to be the first battle that such a legitimated commission should fight can however be argued.

To be honest this whole debate is very specific and I wouldn’t expect the majority of the public to be able to bear through the first three posts of this series(by the way, kudos reading all the way until here! I won’t take much longer… ;) People have lives that they need to attend to. They don’t necessarily have the time or the inclination to get this much information. Thus, the issue is how to advocate this path of policy evolution, honestly but also appealingly. How can we "market" this policy line, without boring the constituent? I believe that this argument should be presented as fact, in the same manner as it was provided in my brief introduction. The details can then be explained to whoever requests an explanation.

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