Nightcap

  1. Why Angela Merkel has lasted so long Wolfgang Streeck, spiked!
  2. United States of Greater Austria Wikipedia
  3. Afghanistan and liberal hegemony Lawrence Freedman, New Statesman
  4. Diary of the guy who drove the Trojan Horse back from Troy James Folta, New Yorker

Monday’s frivolous, flimsy, frail flailings

Or, some Monday links on flavors, figurative flags and fails

I mean, it would be impossible to have a business like this in the States, a wood-burning fire – illegal, the meat – illegal, the dog – illegal, the cheese sitting out uncovered – illegal. Basically, everything that makes this place good would be illegal in the United States.

Anthony Bourdain: No Reservations ep. 1 – 01 France: Why the French don’t suck (Jul. 2005)

The other day, Brandon highlighted (the review of) a cultural history book, one that documents the postwar shift of cultural gravitas from Paris to New York. So, the talk is about the big league, the respectful duo of countries that gave us, among other things, modern constitutionalism and an understanding of the natural hue of fundamental rights. Here, I venture to present a sincere, if arbitrary (and somewhat superficial, since I never learned French, to my mother’s disappointment) selection of other Franco-American bites, that shadowed greater trends, or even shaped them.

160 years ago, chef Charles Ranhofer, a Frenchman, traveled to the US for a second time. A year and a false dawn at another premise after, he was hired at Delmonico’s in New York, an already established name. There, he proceeded in making it the definite flagship of American fine dining for the next 30-35 years.

A note issued by the restaurant at the time chef Ranhofer joined the team (1862) – source

His achievements include the invention of renowned dishes, innovations in the dining business model and a massive Franco-American culinary encyclopedia (The Epicurean, 1894, complete with nearly 1000 dishes and thorough guidelines for the proper tables/ menu setting, depending on the occasion). The story fits well in the Gilded Age picture, though I would guess not at front center.

Our own Escoffier (Los Angeles Times)

My pastry trilogy came a full circle only last year, having started some ten years ago: a Mississippi mud pie, a cheesecake (early 2010s, both under the guidance of my wife) and a tarte Tatin (May ‘20 lockdown, unsupervised, our then nearly-5-year old provided merry company). Of the three creations, the final was the most refined, as deserves to a French recipe from late 19th century. Like, it needed some real – if basic – technique, not the average ingredient gathering I was used to. It was also a mild failure. I followed a modern take, one to safely blame without retort. Will try again, someday. There are relevant recipes aplenty, though not in its contemporary Epicurean.

Deconstructing tarte tatin, the classic French dessert (National Geographic)

The Gilded Age was nearing its end when the famous Lochner v New York decision was delivered (1905). The Supreme Court struck down a New York state law on regulating working hours, as a breach of the liberty of contract, which was protected under the Due Process Clause of the Fourteenth Amendment. A few decades later, in United States v Carolene Products Company (1938), an interstate trade case, the Court lowered the standard of review for economic legislation, effectively demoting economic liberty vis-à-vis the other personal liberties.

Both decisions refer to the food industry, bakeries and milk manufacturers respectively. They hold vast importance and warrant further study (for starters – note to self – judicial activism in Lochner, individual rights in Carolene).

As a certain minstrel in a certain fantasy realm would have it, the truth of these decisions became something bigger than the facts. The two cases work as handy banners of the paradigm shift from “unrestrained economic liberty” to “state interventionism”, which happened as right/ left-wing totalitarianisms convincingly challenged the prewar liberal order. Liberal-minded thinkers from the two sides of the Atlantic tried to revitalize the liberal creed in the interwar years. Some of them convened at Paris – few months after the Carolene decision – to honor the visit of the American journalist/ author Walter Lippmann, a notable critic of the New Deal.

There were deep differences, but also a strong agreement on the threat posed by central planning and some tentative overlapping on the perceived failings of “old” classical liberalism and, interestingly, the potential of the state in enhancing personal freedom by pursuing limited social goals. The – middle – way forward needed free markets in a solid, impartial legal frame, which would enforce competition and even provide for a modicum of social justice. By one account, it was during this meeting that the term “neo-liberalism” took root (other ideas included “left-wing” or “constructive” liberalism. Chicago theorists – not represented at the Colloque Lippmann- had previously written about “positive” liberalism), though the term is older. The resolution led to nowhere in particular, since World War II broke out shortly after. It is nonetheless considered a kind-of precursor to the Mont Pelerin Society, the well-known organization founded after a conference in 1947, at the invitation of Hayek.

The neoliberal position is nicely summarized by Milton Friedman (who was present at the 1947 proceedings) in a short piece from 1951:

Neo-liberalism would accept the nineteenth century liberal emphasis on the fundamental importance of the individual, but it would substitute for the nineteenth century goal of laissez-faire as a means to this end, the goal of the competitive order… The state would police the system, establish conditions favorable to competition and prevent monopoly, provide a stable monetary framework, and relieve acute misery and distress.

Neo-Liberalism and its Prospects (Hoover Institution)

The term can also be found in scholarly papers from 50s-60s, but upon closer inspection they mostly focus on its German variant, “ordoliberalism”, which was closely associated with the “social market economy” – the postwar platform that defined West Germany (though voters could hardly tell what it exactly was).

My understanding is that, at some point postwar, the French involvement dwindled. Also, some German theorists fell from grace in the Mont Pelerin Society context, while US membership increased in number and clamor. The whole approach tilted closer to classical liberal/ libertarian (another note to my – European – self, Edwin van de Haar offers precious nuance regarding such terminology in a fresh post) and away from the “free market, strong state” convictions of Colloque Lippmann. However, Hayek retained cordial relations with the University of Freiburg – where the original ordoliberal theses formed.

Then the shade of neo-liberalism faded, only to be invoked as a nebulous catch-all characterization of free market policies a couple of decades later, almost devoid of its competitive and social security chops. It got a life though, since it was fleshed in the founding Treaties of the EU of the 50s. The institutional apparatus of the Union smugly radiates “free market within the properly defined lines” (the US influence is not be discounted, of course. Case in point, competition law).

EU, as with the Colloque: The French grabbed a coffee with the Americans and threw a party. Then, they took a step back as the Germans stopped being shy and hit the decks.

Back to the kitchen. Late 60s and into the 70s, gastronomic developments trace the retooling of society-at-large. That was the time various “new” national cuisines rose, with the French Nouvelle cuisine once again leading the way and the New American Cuisine taking clue from it (in Greece we usually talk about the “(new) urban cuisine” of that period, as the country experienced a rapid urbanization wave in the preceding decades).

Fantasy unchained: A cooking center in 1980 as imagined in 1973 – source

In the meantime: Political turmoil, be it protests or terrorism, there go Bretton Woods arrangements, productivity flattens, environmental concerns kick-in, enter competition from Asia, human rights against the Soviet Block, university studies expand, telecommunications and transport improve, oil crises, the lights go out in Britain and elsewhere, inflation runs, and so on and so forth. The next decade coincided with the emergence of new political leaderships across the West, as the turbulence discredited the previous guard.

The consensus got a drift for privatizations, deregulation and liberalization of international transactions, with US and Britain adhering to it (though to say that they indeed rolled-back the size and scope of State is questionable). This time, the Nobel Memorial Prizes in Economic Sciences awarded to Hayek (1974) and Friedman (1976) served as a flag (or a scarecrow) for the transition to market-based prescriptions.

The endgame was meant to play out in France. In May 1981, Mitterrand won the presidential election on a pretty standard socialist agenda. The program of nationalizations, hiked taxation, capital controls, grants and subsidies run its course till 1983, when the bad results in deficit, employment, inflation and the exchange rate – underlined by an equally poor performance in local elections – prompted a turn to anti-inflationary rigor and a realignment with more market-oriented policies (Spain and Greece, btw, more or less copycatted the French experience).

In a twist in the myth, three Mitterrand guys even went to assume head posts in international bodies, like the IMF (a member of the unholy trinity of the “Washington Consensus”), and promote capital account liberalization from there.

Endnote: The No Reservations show of late Anthony Bourdain had a role in our family’s inconsistent knack for things cooking/ baking. While writing this, I found out that a documentary on the man’s life just premiered at the Tribeca Film Festival.

‘Roadrunner: A Film About Anthony Bourdain’ Review: The Insatiable Life and Enigmatic Death of a Foodie Superstar (Variety)

Encore: To France”, Mike Oldfield’s cover by power metal band Blind Guardian, from their The Forgotten Tales album (1996). Pas mal.

Supranational (political) entrepreneurs

[…] the basis of the functional (Coasian) theory of international regimes advanced by Robert Keohane: If interstate transaction costs were very low, relative to the gains at stake for each actor, decentralized negotiation among voluntary actors with property rights would generate efficient outcomes. In summary, we may define informal supranational entrepreneurship as exploitation by international officials of asymmetrical control over scarce information or ideas to influence the outcomes of multilateral negotiations through initiation, mediation, and mobilization. […] Most existing studies of entrepreneurship fail to address this central puzzle. They focus on characteristics of supranational entrepreneurs and their actions, not the nature of alternatives.

The link (pdf) is here, and it’s a good read despite the jargon. You’ll notice that neither the Federalist Papers nor Hayek are cited in the piece. Libertarians have a chance to become relevant again in international affairs, if only they came to re-embrace the ideas of Madison, Smith, and Hayek, by abandoning non-interventionism and alliance free-riding and recognizing that federation is both a foreign policy and a type of government.

Monday’s Reserved Judgements (and Satisficing Hopes)

Or, some Monday links on central banks, manners over matters and hard-boiled decisions

That bond salesman from the Jazz Age was right. Reserving judgement, at least sometimes, allows for a fairer outcome. Take for example the Brick film (2005), a neo-noir detective story set in a modern Southern California high school. Here in Greece it made some ripples, then it was forsaken for good. Not sure about its status in the US or elsewhere, but “overlooked”/ “underrated” seem to go with it in web searches. I agree now, but when I first watched it, its brilliance was lost to me ( and no, it was not allegedly “ahead of its time”, as some lame progressive metal bands of late 90s hilariously asserted when they zeroed in sales…).

The theatrical release poster – source

The film’s peculiarity was obvious from the titles. A couple of gals left the theater like 10’ in. My company and I were baffled for most part, by the gritty atmosphere. And I have not even begun with the dialogue. The language was something from off the map. As late Roger Ebert noted:

These are contemporary characters who say things like, “I got all five senses and I slept last night. That puts me six up on the lot of you.” Or, “Act smarter than you look, and drop it.”

You see, the whole thing was intended to serve tropes, archetypes and mannerisms from the hard-boiled fiction of 1920s-30s. A manly man vs crime and (corrupted) government, and so on and so forth. We went there, un-f-believably how, clueless about all these. We did, however, make a recurring joke from the following lines:

Brendan: You and Em were tight for a bit. Who’s she eating with now?
Kara: Eating with?
Brendan: Eating with. Lunch. Who.

Seen in this light, everything made sense to my gusto. Anyway, seems that reserving judgements not only does better assessments, but also protects the lazy unaware.

Now, I have previously indicated that I have a soft spot for the “technology of collective decisions” that are central banks. I usually reserve my judgements on them, too. This comment summarises recent developments, including a few interesting links:

In which the Rich Get Richer (Economic Principals)

A new paper by Carola Binder examines central bank independence vis-à-vis a technocratic – populist merge in the age of digital media:

Technopopulism and Central Banks (Alt – M)

The author argues that central banks, supposedly the bastions of technocratic approach, tend to “respond” (i.e. be nudged by and directly appeal) to a perceived “will of the people”, as it is expressed on-line or via events like the “FED Listens” series. This bend acts as a claim to legitimacy and accountability, in exchange of trust and extended discretion, leading to a self-reinforcing circle almost beyond the democratic election process. In other words, not quite the “Bastilles” contra “modern Jacobinism” (to remember how Wilhelm Röpke deemed independent central banks in 1960). A way out could be made, concludes the author, by introducing of a rule-based monetary policy.

Central banks, as institutional arrangements developed mostly during the 20th century, share a common mojo and tempo with the FED. They gradually assumed more independence, and since the emergence of modern financial markets, (even more) power. This rise has been accompanied by increasing obligations in transparency and accountability, fulfilled through an ever-expanding volume of communication in terms of hearings, testimonies, minutes, speeches etc. This communication also plays a role in shaping economic actors’ expectations, a major insight that transformed our understanding of macroeconomic outcomes. Andy Haldane talks all these, along with other delicious bits, in an excellent speech from 2017 (his speeches have generally been quite something):

A Little More Conversation A Little Less Action (Bank of England)

Plot twist: The endeavor of more communication has a so-so record in clarity, as documented by the rising number of “education years” needed to follow and understand central banks’ messages. The same trend goes for the pylons of rule of law, the supreme courts, at least in Europe. We certainly have come a long way since that time at the 70s, when a former Greek central bank Governor likened monetary decisions to a Talmudic text, ok, but we are not there yet.

As a parting shot, let us return just over a year back, when the German Federal Constitutional Court delivered a not exactly reserved decision (5 May 2020) about the European Central Bank’s main QE program. The FCC managed to:

  • scold the top EU Court for flawed reasoning and overreach in confirming the legality of the program in Dec 2018 (the FCC had stayed proceedings and referred the case to the Court of Justice of the EU, for a preliminary ruling in Jul 2017. Europe’s top courts are not members of the Swift Justice League, apparently).
  • indirectly demand justifications from ECB, which is beyond its jurisdiction as an independent organ of EU law, by
  • warning the German public bodies that implement ECB acts to observe their constitutional duties, while
  • effectively not disrupting the central bank’s policy.

Notorious FCC, aka Bundesverfassungsgericht – source

The judicial b-slapping provoked much outcry and theorising, but little more, at least saliently. The matter was settled by some good-willed, face-saving gestures from all institutions involved, while it probably gave a push to the Franco-German axis, to finally proceed in complementing monetary policy measures with the EU equivalent of a generous fiscal package. The rift between the EU and the German (in this case, but others could follow) respective legal orders may never be undone, though. If anyone feels like delving deeper into the EU constellation, here is a fresh long slog:

Constitutional pluralism and loyal opposition (ICON Journal)

I don’t. But then again, maybe I will act smarter than I look.

EU-China trade talks: More than just economics

The in-principle agreement between the EU and China over the EU-China Comprehensive Agreement on Investment (CAI) is significant both from an economic and geopolitical standpoint.

The first round of talks for EU-China CAI began in January 2014 (it was only in 2016 that there was some agreement between both sides on the broad contents of the CAI). Ties between the EU and China too had witnessed a sharp deterioration in the aftermath of the covid-19 pandemic, and a number of EU member states, including Germany, Spain, and Italy, had tightened FDI regulations with an eye on preventing Chinese takeover of companies, especially in sensitive sectors like security.

In the month of September, while commenting on the possibility of the CAI, the European Commission President Ursula Von der Leyen had stated: “China has to convince us that it’s worth having an investment agreement.”

Key contents of the agreement

The CAI will ensure a uniform arrangement for the whole of Europe with China. The key issues which will be addressed through the CAI include; resolution of disputes, greater transparency with regard to Chinese state subsidies, and curbs on China’s practice of asking foreign investors to share their technology in lieu for market access.

China has also agreed to address issues pertaining to sustainable development – such as environment and climate (China has agreed to implement the Paris Agreement on climate change). Beijing has also agreed to implement the International Labour Organisation (ILO) conventions.

According to an EU official, substantial commitments have been received from China on three issues: market access, level playing fields, and sustainable development. One of the strong backers of the CAI has been the German Chancellor Angela Merkel.

The deal will provide the EU greater access to China’s market. While the EU provides a significant amount of market access to China, the same can not be said of Beijing. Beijing is supposed to have made a firm commitment to the EU towards greater market access, especially in manufacturing (which makes up more than half of EU’s investment in China, including the automotive sector and basic materials).

Geopolitical implications

The deal has an important geopolitical dimension to it. While in the aftermath of the covid-19 pandemic, ties with the Western world, including the EU, had witnessed a downward spiral, this deal is important in terms of symbolism. Chinese media publications have hailed the finalization of this agreement, emphasizing the point that the EU has adopted an independent stance vis-à-vis China and not followed Washington’s line.

Gao Jian, a scholar at Shanghai International Studies University, states:

Deeper China-EU ties will decrease possibility that the US will be able to hijack Europe for its anti-China chariot. Hopefully, the completion of the China-EU BIT talks will sound an alarm bell to the US administration and send this message: cooperation is the only way out for China-US relations.

If one were to look at US reactions, it is not only officials in the Trump Administration (which has a little over two weeks in office) who have been skeptical, but those from the incoming Biden Administration as well. Matt Pottinger, Trump’s Deputy National Security Advisor, has stated:

Leaders in both U.S. political parties and across the U.S. government are perplexed and stunned that the EU is moving towards a new investment treaty right on the eve of a new U.S. administration.

One of Biden’s key thrusts has been on working with the EU, and his pick for NSA chief, Jack Sullivan, had said that the US would like to work with the EU on common concerns vis-à-vis China’s ‘economic practices.’ Many observers argue that the decision of the EU could drive a wedge between the EU and the US, and this was one of Beijing’s main aims. It has also been argued that trilateral economic cooperation between Japan, the EU, and the US vis-à-vis China could also be impacted by the CAI.

Conclusion

In conclusion, the EU has sent out a clear message: that it would like to chart its own course given that it has its own economic interests, and not necessarily toe the US line vis-à-vis Beijing. For China, it is important in terms of messaging, as is evident from the tone of the Chinese media who are trying to dub this as a snub by Brussels to Washington DC. While US President-elect Biden has sought joint cooperation with the EU, the EU and the US will need to be on the same page with regard to dealing with China.

Nightcap

  1. The return of European intellectual life Perry Anderson, LRB
  2. The age of dreampolitix in America Ross Douthat, NY Times
  3. Psychedelics versus modern philosophy Bill Rein, NOL
  4. Does libertarianism favor labor? Arnold Kling, EconLog

Hazony’s nation-state versus Christensen’s federation

Yoram Hazony’s 2018 book praising the nation-state has garnered so much attention that I thought it wasn’t worth reading. Arnold Kling changed my mind. I’ve been reading through it, and I don’t think there’s much in the book that I can originally criticize.

The one thing I’ll say that others have not is that Hazony’s book is not the best defense of the status quo and the Westphalian state system out there. It’s certainly the most popular, but definitely not the best. The best defense of the status quo still goes to fellow Notewriter Edwin’s 2011 article in the Independent Review: “Hayekian Spontaneous Order and the International Balance of Power.”

Hazony’s book is a defense of Israel more than it is a defense of the abstract nation-state. Hazony’s best argument (“Israel”) has already been identified numerous times elsewhere. It goes like this: the Holocaust happened because the Jews in mid-20th century Europe had nowhere to go in a world defined by nationalism. Two competing arguments arose from this realization. The Israelis took one route (“nation-state”), and the Europeans took another (“confederation”). Many Jews believe that the Israelis are correct and the Europeans are wrong.

My logic follows from this fact as thus: the EU has plenty of problems but nothing on the scale of the Gaza Strip or the constant threat of annihilation by hostile neighbors (and rival nation-states).

The European Union and Israel are thus case studies for two different arguments, much like North and South Korea or East and West Germany. The EU has been bad, so bad in fact that the British have voted to leave, but not so bad that there has been any genocide or mass violence or, indeed, interstate wars within its jurisdiction. Israel has been good, so good in fact that it now has one of the highest standards of living in the world, but not so good that it avoided creating something as awful as the Gaza Strip or making enemies out of every single one of its neighbors.

To me this is a no-brainer. The Europeans were correct and the Israelis are wrong. To me, Israelis (Jewish and Arab) would be much better off living under the jurisdiction of the United States or even the European Union rather than Israel’s. They’d all be safer, too.

Nightcap

  1. Emptying the Soviet bread basket Donald Rayfield, Literary Review
  2. The real sexism problem in Economics Victoria Bateman, Aeon
  3. Europe’s hard problem of capitalism or democracy Mark Mazower, New Statesman
  4. A new Gilded Age, or Old Normal? Luria & Zabala, American Affairs

Is Dominic Cummings a hypocrite, or does the EU’s Common Agricultural Policy just suck?

Tedandralph

On Saturday, The Observer revealed that Prime Minister Boris Johnson’s recently appointed chief of staff received around £235,000 of EU farm subsidies over the course of two decades in relation that his family owns. Dominic Cummings is often portrayed as the mastermind behind the successful referendum campaign to Leave the European Union. So he is currently enemy no.1 among remain-supporters.

I am unconvinced this latest line of attack plays in Remainers’ favor (I was a marginal Remain voter in the referendum and still hold out some hope for an eventual EEA/EFTA arrangement). Instead, this story serves as a reminder of probably the worst feature of the current EU: the Common Agricultural Policy.

The CAP spends more than a third of the total EU budget (for a population of half a billion people) on agricultural policies that support around 22 million people, most of them neither poor nor disadvantaged as Cummings himself illustrates. Food is chiefly a private good and both the interests of consumers, producers and the environment (at least in the long-term, as suggested by the example of New Zealand) are best served through an unsubsidized market. But the CAP, developed on faulty dirigiste economic doctrines, has artificially raised food prices throughout the European Union, led to massive over-production of some food commodities, and denied farmers in the developing world access to European markets (the US, of course, has its equivalent system of agricultural protectionism).

These economic distortions make an appearance in my new paper with Charles Delmotte, ‘Cost and Choice in the Commons: Ostrom and the Case of British Flood Management’. In the final section, we discuss the role that farming subsidies have historically played in encouraging inappropriately aggressive floodplain drainage strategies and uneconomic use of marginal farming land that might well be better left to nature:

British farmers currently receive substantial subsidies through the European Union’s Common Agricultural Policy. This means that both land-use decisions and farm incomes are de-coupled from underlying farm productivity. Without the ordinarily presumed interest in maintaining intrinsic profitability, farmers may fail to contribute effectively to flood prevention or other environmental goals that impacts their output unless specifically incentivized by subsidy rules. If the farms were operating unsubsidized, the costs of flooding would figure more plainly in economic calculations when deciding where it is efficient to farm in a floodplain and what contributions to make to common flood defense. Indeed, European governments are currently in the perverse position of subsidizing relatively unproductive agriculture with one policy, while attempting to curb the resulting harm to the natural environment with another. These various schemes of regulation and subsidy plausibly combine to attenuate the capacity of the market process to furnish both private individuals and local communities with the appropriate knowledge and incentives to engage in common flood prevention without state support.

Our overall argument is that it is not just the direct costs of subsidies we should worry about, but the dynamics of intervention. In this case, they have led not only farmers but homeowners and entire towns to become reliant on public flood defenses with significant costs to the natural environment. There is limited scope for the government to withdraw provision (at least in a politically palatable way).

Turning back to The Observer’s gotcha story, it isn’t clear to me that Cummings is a hypocrite. I think the best theoretical work on hypocrisy in one’s personal politics comes from Adam Swift’s How Not To be Hypocrite: School Choice for the Morally Perplexed. In it Swift argues that the scope to complain about supposed hypocritical behavior, especially taking advantage of policies that you personally disagree with, can be narrower than intuitively imagined, mainly because of the nature of collective action problems. Swift’s conclusion is that, in some circumstances, leftwing critics of private schools are entitled to send their own children to private schools so long as others continue to do so and burden of doing otherwise is too strong. Presumably, this also means that strident libertarians are not hypocritical to use public roads so long as a reasonable private alternative is unavailable.

In an environment where every farmer receives an EU subsidy, it might be asking too much of EU-skeptic farmers to deny it to themselves. Instead, it seems legitimate and plausible to take the subsidy while campaigning sincerely to abolish it.

Nightcap

  1. Europe’s Ancien Régime returns Jäger and David Adler, London Review of Books
  2. Monetary imperialism in French West Africa Ndongo Samba Sylla, Africa is a Country
  3. In defense of George W Bush Feaver & Inboden, War on the Rocks
  4. Justice Ginsburg on Justices Gorsuch and Kavanaugh Jonathan Adler, Volokh Conspiracy

From the Comments: Yes, the EU is, and will continue to be, democratic and voluntary

Here’s Barry countering a good, common, anti-EU argument:

Denmark Maastricht Treaty: after a referendum rejected it, opt outs were negotiated and the Treaty was approved by referendum with the opt outs

There was no referendum in Italy on the Nice Treaty, or if there was evidence appears to have disappeared from the net. Maybe it’s a beneficiary of the right to be forgotten law.

France and Netherlands: Constitution was dropped. Replaced by less ambitious Lisbon Treaty.

Italy: same comment for Lisbon Treaty as for Nice Treaty

Greece: Euro bailout referendum The rejection of the bailout package was a referendum held in Greece only for an agreement affecting all member states of the Eurozone. They did not wish to change the terms of the bailout and how would it be democratic for a vote in one state to override the wishes of the elected governments in other states. The elected Greek government was free to choose to leave the Euro if it was not willing to accept the terms for a bailout, The elected government and the national assembly chose to stay in the Eurozone and continue bail out negotiations on terms acceptable to the other states.

All states choose freely to remain in the EU apart from the UK, which has not provided a brilliant example so far of the advantages of withdrawal. When the UK voted to leave, the EU respected the result and entered into negotiations while the UK Parliament failed to agree on a withdrawal plan. States which stay in the Union are to some degree constrained by other stages of the union, as applies to the member states of the USA or the states which make up federal Germany.

Here is more from Barry on Brexit. And here is his stuff at NOL on the European Union. Tridivesh has some interesting stuff on the EU, too.

For a more skeptical take on the EU, try Edwin. Or Chhay Lin.

The Centre Holds: European Union Election

Summary 

There is no populist right anti-EU surge. Voting participation increased. The old centre-right and centre-left in the European Parliament declined but the centre holds with a  stronger role for Greens and Liberals. The European Union is not anti-democratic and does not impose its will on member states. Its decision-making is complex, but that is to achieve consensus, not to eliminate democracy. The EU and the Euro currency are more popular. At least for the moment, the EU’s institutions, democracy, and projects are strengthened.

Turnout

Elections for the European Parliament (the Parliament of European Union) the took place between 23rd and the 26th of May this year. The official results can be found here. The turn out was the highest since 1994 at 51%. This is higher than for the US Congressional Elections of last year, though that was the highest turnout in an ‘off  year’ (a year in which the President is not up for election) for over a century. There is no equivalent figure to the President of the United States in the European Union. Roughly speaking the US President is equivalent to a combination of the President of the European Commission and the President of the European Council, neither of which are directly elected, and have a tiny bureaucracy compared with the machine of the United states federal government, at their service.  There is no reason then for European Union elections to generate as much voter participation as US elections when the President is elected. Even so, such elections in the United States have only generated marginally more participation than EP elections, 55.5% in the 2016 election. It seems reasonable to conclude that the European Parliament has had some success in establishing itself as a representative institution, even compared with an elected body as old as the Congress of the United States.

Political Groups in the European Parliament

The European Parliament is mostly composed of Members (MEPs) who sit in transnational political groupings, which usually have a transnational party, essentially serving as a framework for co-operation between national parties. The political groups in the European Parliament are prone to change in their political boundaries and composition, but the four biggest groups have existed in a mostly stable way over multiple elections. They are:

  • European People’s Party (EPP, also referred to as Christian Democrats, centre-right),
  • Progressive Alliance of Socialists and Democrats (S&D, often referred to as the Socialists, centre left),
  • Alliance of Liberals and Democrats for Europe (ALDE, also known as the Liberals, containing classical liberals, left liberals, various moderates and centrists),
  • Greens/European Free Alliance (G/EFA, often referred to as the Greens, left leaning environmentalists plus leftwing regionalists).

The other groups, which have been less stable so far or have not existed for very long are:

  • European United Left-Nordic Green Left (GUE/NGL, left socialists, communists and left-wing greens),
  • European Conservatives and Reformists (Eurosceptic right),
  • Europe of Freedom and Direct Democracy (EFDD, Eurosceptic right and centrists),
  • Europe of Nations and Freedom (EFN, nationalist right).

Results 

I take results from here, focusing on percentage of seats as the easiest way to understand  the proportional support of these groups both within the EP and the EU electorate. It makes comparison with the last Parliament (elected in 2014) easier as the number of seats has slightly increased (from 749 to 751) and most importantly because defections, expulsions and reconstruction within and across groups means that a comparison with the seats for political groupings of the 2014  parliament at the end of its term is easiest. Percentage of seats in the outgoing EP in brackets.

  • EPP 23.83 (28.84)
  • S&D 20.37 (24.70)
  • ALDE 13.98 (9.21)

(This result relies on assuming Emmanuel Macron’s Renaissance list in France and and the Save Romania Union will join ALDE though this has not been confirmed. It does seem overwhelmingly likely. )

  • G/EFA 9.85 (6.94)
  • ECR 8.39 (10.28)
  • ENF 7.72 (4.81)
  • EFDD 7.19 (5.61)
  • GUE/NGL 5.06  (6.94)

(the remainder is composed of non-aligned MEPs)

Stories and Trends

The big story in the build up to the election was whether there would be a populist right/eurosceptic breakthrough. The political groups that could be classified as such are ECR, ENF and EFDD. Their total at the end of the 2014 Parliament was 20.7%. Their total now is 23.3%. There was a swing in this direction, but only of 2.6% of seats which is a good deal less than a breakthrough. It is a long way short of the 30% which might have enabled them, presuming they could co-ordinate, to block the EP from progress in the wrong direction, from its point of view, though the way committee memberships and chairs are distributed. GUE/NGL is sometimes classified as left populist/eurosceptic, though it contains a variety of views. It fell back and if we add it to the right-wing eurosceptic seats, we still only get a total of 28.9%. There is little prospect of the right-wing groups co-ordinating closely and none at at all of close co-ordination of these three plus GUE-NGL.

The big story as the results came in was less the right-wing eurosceptic swing than the swing within the groups which support the EU with as much power as it has now, or movement towards more EU powers.

There was a notable shift from EPP and S&D to ALDE and G/EFA, so from the centre-right and centre-left to the liberal centre, greens, and regionalists.

Generally speaking the EPP has moved from previous domination by a grand coalition of EPP and S&D to  a more fragmented or pluralist situation in which a centre ground, pro-EU middle ground requires ALDE for a majority and is also likely to bring in G/EFA, with the place of the Eurosceptic right consolidated.

The Liberal swing is largely based on Liberal Democrat success in the UK and the new Macronist list in France. The Green swing is based in northwestern Europe. S&D remain comparatively strong in Spain and Portugal, with a good result in the Netherlands. ENF is dominated by the League in Italy and the National Rally in France. ECR is dominated by PIS in Poland.

Traditional centre-right and centre-left parties had very bad results in France and the UK. The radical and populist left has fallen back, particularly in France, Spain, Greece, and Ireland.

Misunderstandings

Despite what some reporting might lead you to believe, hard Brexit did not win in the UK and Marine Le Pen’s National Rally did not have a big success in France. The Brexit Party was the single most popular party in Britain, but even if its vote is combined with the United Kingdom Independence Party (from where its leader Nigel Farage came from), the no-deal hard Brexit vote (33.8%) was distinctly less than the combined vote for second referendum and remain supporting parties (39.8%): Liberal Democrats, Greens, Change UK, Welsh and Scottish Nationalists, Alliance Party (Liberal Democrat partners in Northern Ireland). The European trend for the traditional centre-right and centre-left to collapse was heightened by the inability of both the Labour and Conservative parties to find a clear direction on Brexit and achieve internal unity on the issue. UK participation in the election was the result of the failure of the pro-Brexit Conservative government to find a Brexit policy with majority support in the UK Parliament.

In France, despite transforming the National Front into the National rally with the aim of broadening support, Marine Le Pen lost ground compared with the 2014 European election. National Rally was slightly ahead of Emmanuel Macron’s Renaissance list, but given Le Pen has not increased her base and given that Macron is clearly ahead of all non Le Pen forces, it is likely that the next Presidential election in France will be between Le Pen and Macron again, with another victory for Macron.

Democracy, Law, and Bureaucracy in the European Union

Two ideas circulate widely about the European Union that cannot both be true, though the same people often state both. 1. The EU Parliament has no power. 2. The European Union imposes over-regulation and bureaucratisation on member states to an oppressive degree. As the European Parliament’s main role is as co-legislator in matters of regulation, it is a major actor in this issue. It co-legislates on regulation with the European Council, an assembly of government  ministers from member states varying according to the policy area in question.

The European Council and the European Parliament act under the direction of the Council of the European Union, which is composed of heads of governments of member states and the heads of EU institutions. The European Commission drafts legislation. It has the sole power to initiate legislation, but only under the direction of the Council of the EU and with the agreement of Parliament and the European Council.

Despite what is frequently assumed, the Commission is not an oligarchy of unaccountable permanent civil servants commanding a vast expensive, complex bureaucracy. The Commission is nominated by member states and is very largely, if not entirely, composed of commissioners who have been elected politicians at a senior level and not civil servants. The Commission has to be confirmed by the Parliament which can also forced the Commission to resign. The Commission did resign in 1999 before the Parliament could force it to do so. The Parliament has the right to suggest legislation to the Commission, and since it can sack the Commission, it cannot be ignored. The bureaucracy of the Commission is no greater in numbers than the larger units of local and municipal government in the UK.

The EU structure of decision making is complex and indirect. It is not anti-democratic rule  by bureaucrats. Laws and decisions are made by bodies  which are either directly elected by the citizens of the European Union or are made up of members of elected governments. The Commission can only exist through the will of elected member state governments and the Parliament. The President of the Commission tends to be the public face of the European Union, though recently that has been shared with the President of the Council of the EU. This public role tends to create confusion and exaggerated ideas about the power of the Commission. Though in EU thinking, the Commission is the civil service of the Union, it also a political body appointed to guard the treaties that have constituted the EU. The role of defending agreed basic law is not obviously an anti-democratic conspiracy, it is surely part of a stability of law necessary to the functioning of any political institution. Clearer lines of decision making would be preferable in some respects, but is difficult to achieve so long as the EU operates on a consensus between member states.

Those who are most hostile to the idea of a fully federalised European Union with strong decision making powers are also those most likely to claim that the EU is a bureaucratised conspiracy against member states, lacking clear and direct lines of political decision making. Decisive decision making by directly elected bodies would go beyond what is politically feasible now or in any feasible future. Such clear decision making would require a far far larger bureaucracy and much more intervention in member states. The EU works by consensus between member states and institutions. Unfortunately at any one time it tends to suit some people to claim that the EU is a conspiracy against member states, or a member state supposedly under siege from other members state, or the Commission turned into some monstrosity of unaccountable power which has no basis in reality.

I would certainly welcome less enthusiasm for regulating from above in the European Parliament and other institutions. The drive to the administrative and regulatory state long precedes the European Union and is a universal phenomenon across the globe of the last two centuries. There is no reason to think the member states of the EU would be less regulatory outside the Union. By creating common regulation, the EU at least ensures that regulation does  not impede continent wide trade.

The EU does things to promote trade that no existing free trade agreement has ever done. It has uniquely achieved a single market in services and human capital (that is labour), as well as goods, over a continent, over hundreds of millions of people. The creation of regulation at the EU level is a necessary aspect of this, which still leaves considerable scope for countries to have a relatively less statist approach, with a wide variety within member states regarding the scope of the state in the economy. This can be confirmed by careful examination of the Cato Institute’s Human Freedom Index.

The Political State of the European Union

Despite fears and hopes of a eurosceptic ‘populist’ right surge in the European Union leading to its weakening and possible disintegration, these political forces have stabilised at less than one-quarter elected seats in the EP. Support for the European Union and for the Euro currency (frequently pronounced dead in the past by sceptics) has increased in recent years. The continuing political confusion regarding Brexit in the UK has discredited claims about the benefits of leaving and have made it increasingly uncertain that the UK will leave.

Participation in European level voting has increased. The EU has been strengthened in credibility in recent years. Donald Trump’s enthusiasm for trade wars, and  bypassing the World Trade Organisation, has undermined claims that the UK could seek a place in the world after Brexit based on free trade with the US. An EU trade agreement with Japan soon after Trump pulled the US out of the Trans Pacific Trade Partnership, which includes Japan, has undermined the idea that the UK would be better off outside the EU in pursuing world trade. Trumps’s tolerance (along with Congress) of an ever increasing federal deficit in the US looks highly imprudent compared with the fiscal prudence imposed by Euro currency institutions and regulations.

Not everything is great about the EU, there are certainly some things the US does better with regard to innovation and regulation, but the EU is increasingly popular and and weakening or breakup would weaken a single market under a unified, predictable regulatory regime. The concentration of powers in national governments is not advantageous to liberty, as the Framers of the US Constitution recognised when they turned thirteen ex-colonies in a loose confederation into components of a Federation based on balance of powers and consensual decision making across institutions.

Will the conservatives usher in a federal Europe?

Bill Wirtz does a great job reporting, in the American Conservative, on recent developments in European politics. Basically, the “populists,” who are socially conservative by European standards and anti-immigrant, are not actually opposed to the European Union. In fact, these right-wing parties are building international coalitions as you read this in order to better wield the dormant power of the EU; nobody is “actively seeking to leave the EU.”

Wirtz concludes that the anti-immigrant populist parties will spell the end of the European Union as we know it, but how can this be if these populists now want to use the EU rather than leave it? Wirtz is a great reporter but I think he wanted to mock Europhiles and the dreams of Euro-federalists rather than think things through. I’m happy to pick up where he leaves off, though.

For example, what if these populists succeed in federating Europe, rather than breaking it up? It’s not as radical as it sounds. The populists are small-d democrats. The populists are actively working with each other in an internationalist framework. The populists share the same anti-immigrant goals. The populist parties of Europe share the same opinion of Western civilization and believe their way of life is under threat. The populists realize that the EU can help them achieve their goals, and they share an affinity for some semblance of local (“national”) sovereignty. The ideological underpinning of these populist parties seems to be, then, that their way of life – their freedom – is under threat, and that they are not united and therefore susceptible to outside threats, and that the European Union is a great way to help them achieve some semblance of unity and security. Why not federate? Why not cure the mischiefs of faction?

Conservatives have a long track record of supporting radical change if it suits their worldview, too. The best example of this in politics is Otto von Bismarck, the Prussian diplomat who patched together a unified German state in a federal manner, but you don’t have to stop there. Examples abound everywhere.

The populists and could-be federalists aren’t going to usher in a new era of fascism, either. Today’s anti-immigrant sentiments are very different from the anti-Semitism that has plagued Europe for centuries. While I am disappointed that the European elections were essentially won by the anti-immigration faction, I am not surprised. I would not be surprised, either, to see a strong federalist push by these populists.

Populism versus Constitutional Democracy

What is the difference between a conservative and a reactionary? A conservative knows when she has lost.

A conservative respects the status quo for the sake of stability. The reactionary rebels against it. Unfortunately, it is the reactionary impulse within Brexit that now threatens to hem in the liberties of British citizens, and threaten the rights of foreign residents, for a long time to come. A looser but productive relationship that Britain could have had with the European Union was lost, first at Maastricht in 1992, then again at Lisbon in 2007. A conservative recognizes this loss and adapts her politics to the new landscape. The reactionary tries to reconstruct those lost pasts in vain as the chaotic debates in Britain and the increasingly disappointing outcome illustrates.

Does this mean that referendums are bad? Do they only embolden radicals and reactionaries? It depends. If referendums are used to rubberstamp the decisions of a party in power, or as a way of deferring political judgement, then they are useless at best, dangerous at worst. By contrast, if they are part of the fabric of a democracy, and act as a real veto on constitutional change, rather than a populist rallying point, then they can be enormously valuable. They act as an additional check on the political establishment that might be irrationally fixated on some new governance structure. It ensures that every major change carries with it some level of majority support.

Ten years ago, I wrote a monograph Total Recall: How direct democracy can improve Britain. I advocated supplementing representative democracy with a norm or statutory requirement for referendums on constitutional issues and new local initiative powers. I focused on direct democracy in US states that mean that US state elections often involve both voting for representatives and on propositions. Referendums are required for state constitutional changes. In some states, citizens can initiate new legislation through propositions.

There are parallel constitutional requirements in force in parts of Europe, particularly in Switzerland, Norway and Ireland. It is hardly a coincidence that direct democratic mechanisms have slowed down European integration wherever they have had statutory rather than merely advisory force. Ireland had to go to the polls several times to get the ‘right’ answer but at least this meant that a majority of Irish eventually accepted the new EU arrangements. By contrast, Switzerland and Norway, against the wishes of their political establishments, took European integration only so far before settling with generous trade relations and much more limited political integration. The cost-benefit calculus of their arrangements are up for debate, but few would deny their legitimacy. Britain’s future position, by contrast, may turn out to look much worse and all because its people never had the chance to say ‘no’ until long after the facts on the ground changed.

It’s the ability to say ‘no’ that’s important, with the implication that the status quo must still be a viable option. A people cannot be legislators. Mass votes can’t add up to complex judgements to inform actionable law. Hence the Brexit referendum for leaving the EU for an unknown alternative was bound to lead to chaos which, in the long run, may undermine the legitimacy of representative government, let alone popular democracy, rather than strengthen it. There is no status quo ante to return to.

At the time I was writing Total Recall, the spirits of referendums never voted on haunted British politics. Referendums were promised on adopting the Euro and the European Constitution. Both were abandoned when the Government realized they would almost certainly lose. So we stayed out of the Euro but signed what became the Lisbon Treaty. This turned out to be a deadly combination that eventually led to Brexit. The Euro is quite badly managed as an economic scheme. As a political mechanism, however, it binds members of the Euro much closer together. Leaving the European Union, as Britain is doing, is perilous and costly. Leaving the Eurozone would be even more difficult as it would involve establishing a new currency from scratch. If New Labour had been serious about putting Britain in a federal united states of Europe, it should have gone all in with the Euro from the beginning.

So Brexit could have been avoided but not by ignoring majority sentiments. If British referendums were constitutionally mandated rather than the random outcome of internal (in this case, Conservative) party politics; if referendums were required to change the status quo rather than a mechanism for a belligerent minority to relitigate past losses, then, like Switzerland and Norway, we would be in a much better position now.

Will our political leaders learn this lesson for the future? That I doubt.

Nightcap

  1. Why sadness is better than happiness Adam Roberts, Aeon
  2. Stan wojenny and memories of Poland in the 1980s Branko Milanovic, globalinequality
  3. Macron ramps up EU power play with pitch to liberals Maïa de La Baume, Politico
  4. Is This Gary Johnson’s Last Campaign? Todd Krainin, Reason