The EU enters into the business of redistribution – but to whose benefit?

Posted on 15. January 2013

by Leticia Díez Sánchez

Leticia Diez Sanchez NEWOnce upon a time, the European Union was considered an entity in charge of addressing market failures from a strictly technical perspective. The pursuance of the internal market was something about harmonising pipe standards and the like – a business for the technocracy and independent agencies. Time has shown that the EU exceeded this regulatory nature. Most obviously, the EU budget clearly benefited identified groups of people (farmers, inhabitants of depressed regions and perhaps researchers). Slightly less obviously, the functioning of the internal market promoted the interest of transnational companies and middle class mobile citizens over SMEs and those who don’t have the resources to exercise their right to free movement. Finally, more hidden perhaps, the Euro crisis has provided the EU with the powers to control the sound finances of its Member States, and even established the possibility of unlimited fiscal transfers between Euro countries.

Let us speak plainly. The EU lacks the traditional national axes of taxation and welfare provision. However, the limitation of borrowing and accumulation of debt increases levels of national taxation and decreases levels of welfare provision, which in turn interferes with the domestic capacity to transfer resources from certain groups to others. Furthermore, the EU framework serves now to use German money to help Spain. And all that is called redistribution of wealth.

That the EU enters into the business of redistribution is not necessarily bad news. In the end, some should be compensated losing out on the internal market, and it is arguable fair that those gaining the most out of it should compensate them. Yet what the EU really lacks is the social fabric to support the noble aims. There is no feeling of solidarity among Europeans, let alone democratic credentials in the EU, for the EU to claim itself as a redistributive regime. Why should we bailout people we do not consider as part of our community, and why should we accept rules affecting the fundamental structure of our society if we have not had a say in shaping them?

The democratic deficit of the EU and the lack of European demos are looking increasingly set in stone. We all know they are problematic – but we don’t know how to resolve them. In the meantime, the EU is also lacking the imagination to look for alternatives. Europe might be doomed to be less democratic than its Member States, but perhaps it can still aspire to be more representative. For some expected that decisions at EU level could take into account the interest of those largely disempowered at domestic level: civil society, non-economic interest groups or just those citizens without the resources to become organised and influential. Supranational policy-making is clearly re-structuring wealth – we just don’t see it benefiting those who need it most.

The emergence of an EU redistributive regime calls for a bigger effort to integrate civil society in the decision-making process. While it does try to do so, it does not do enough. Think-tanks and NGOs do have the experience and technical resources to provide much needed advice, but social movements and educational institutions might have a say too. The current situation also invites a re-configuration of what we understand by decision-making process. Influencing the content of EU policies should not entail going to Brussels. Perhaps it is time for the Economic and Social Committee and (particularly) the Committee of the Regions for an effective dialogue with those they are meant to represent. Lastly, the “man on the street” does not feel the crisis is hitting all equally. Some (financial) actors, while contributing to this devastating economic crisis, are not suffering its consequences to the same extent as lower sectors of society and youth.

Moving on from a regulatory to a redistributive regime has its burdens for the EU. As Spiderman would put it, with great power comes great responsibility. Some of us believe the EU has got the institutional structure to face many of them. However, it seems to lack either the will or the political culture to do so. And even accepting so, the strategy of the EU does not seem efficient in the long term. Brussels should beware of those suffering the most from this crisis, for they are the ones voting and revolting tomorrow; or even worse, the ones giving up the political game because they do not see the incentive of taking part on it.