The European Union’s problem is substance, not narrative

Seat of the European Parliament in Strasbourg (foto: Alexandre Prévot via Flickr)
Marko Bucik (foto: osebni arhiv MB)
Marko Bucik (foto: MB archive)

Author: Marko currently lives in Washington, DC, where he works as an economist consultant at the World Bank. His passions lie in politics and writing. He is a regular contributor to the Slovenian daily newspaper Večer and the on-line platform openDemocracy, where he shares his thoughts on Europe, the U.S. and global affairs.

The argument that Euroskepticism could be overcome by better ‘framing’, PR techniques or a ‘new narrative’ appeals to many ‘pro-Europeans’. Its logic is simple: the EU does good things, but they are complex by nature and thus difficult to understand. Therefore, the solution surely lies in simplifying the language, engaging the skeptics on Twitter and carry the day. Sadly, this belief reflects the ‘pro-European’ elite’s failure to grasp the deeper reality of what shapes people’s perceptions and what the EU today does.

In fact, the EU’s problem is not the absence of a catchy narrative, but the presence of a rather unpopular substance. The lack of a positive narrative is only the most visible sign of the EU’s growing institutional and ideological tensions and this is what the ‘pro-Europeans’ should really be worrying about, rather than decrying the lack of spin.

The EU’s ‘constitutional imbalance’

Let us first look at the emergence of what one could call the EU’s ‘constitutional imbalance’ by asking ourselves a question. Which are the most consequential EU competences today? I would argue that two unquestionably dominate: the internal market and the external trade policy. (Of course, the architecture of the Euro also represents a powerful EU-level competence, but since it directly affects only the Eurozone countries, let us leave it aside for now.)

The internal market defines the rules of the game inside the EU economy, mostly by ensuring the free flow of goods, capital and services, as well as by setting standards and limits on government intervention. While abstract at first, these rules mean very concrete things and some of their effects are far from an easy sell. In fact, the internal market is synonymous with fierce EU-wide competition and ‘creative destruction’ that according to economic theory should lead to greater efficiency, innovation and economic growth, yet it also leads to unemployment, destroyed lives and weakened social fabric.

By default, the internal market also favors the emergence of so-called ‘economies of scale’, since the »single market of 500 million consumers« offers sizeable economic gains from business expansion and acquisition of greater market shares. Most economists would readily argue that economies of scale bring greater efficiencies, but few among them would concede that they also lead to the not-so-benevolent concentration of economic power and unemployment. If you want to see the endgame, take a look at the largest American corporations and their domestic market shares; or ask an American friend how many locally owned coffee shops in her city survived the arrival of Starbucks.

As narratives go, things get even trickier. A recent Deutsche Bank note issued on the occasion of the 20th anniversary of the single market paints a mixed – and slightly confusing – picture. In short, it concludes that the single market has had »substantial positive growth effects«, but a rather modest impact on GDP. It also points out that other industrialized countries have grown faster than the EU over the observed period. An earlier LSE study is much more optimistic, but its conclusions are made practically irrelevant by the emergence of the Eurozone crisis and the tsunami of GDP contraction and unemployment that followed.

Then there is the EU’s external trade policy. Again, most economists would argue that free trade leads to a better allocation of resources, increases social welfare and thus potentially benefits everybody. But the emphasis is on “potentially”. In practice, those on the losing side of free trade – because of the displacement of local products, partial outsourcing, full industrial delocalization or simply business failure – are rarely compensated. Even when they are, they still have great difficulties in understanding why their lives had to change so abruptly. Was it just because somebody in a grey suit took that decision?

Sounds populist? Remember, we are concerned with political narratives and sustainability, not economic theories and long-term projections. In this respect, the fact remains that more often than not opening trade leads to the closure of factories and liberalizing the flow of capital and investments leads to the displacement of firms. The EU – historically a chief proponent of liberalized trade and capital flows – does not win many supporters outside the mainstream political and economic elites.

And there is more. Rarely do these mainstream elites gather the courage to dirty their hands with the distributional effects of EU’s policies. But that’s exactly what people care about. They want to know who is on the winning and who is on the losing side. Unless pro-Europeans can convince the vast majority of Europeans that the EU ensures they are on the winning side, the project is doomed. This is politics, not ‘populism’.

(foto via Wikimedia)
(foto via Wikimedia)

The EU’s lack of carrots

One way of winning this debate would be to argue that the EU cushions its disruptive economic sticks with an array of carrots. But the EU does not really have any. Cohesion Funds and the European Globalisation Adjustment Fund have very noble goals, but they have proven rather small for the problem at hand. In fact, among the ‘older’ EU member states very few receive any meaningful contribution from cohesion funds in relation to the size of their economies (and problems), while it is precisely there where Euroskepticism is on the rise.

The countries that have joined the EU since 2004 provide an arguably more encouraging story, yet even there the impact of the EU financial support is not as uniform as you might think: positive effects are limited to few areas and certain studies indicate increased economic inequalities within individual countries. Adding to confusion, a recent note by Bruegel, the Brussels-based economic think tank, states that »it is difficult to establish if Structural and Cohesion Funds play any role in recent growth convergence patterns in Europe.« As for the Globalisation Fund, it really only provides temporary relief for jobs lost. And since we are dealing with real people, try to explain to a 55-year old woman who lost her job, that some EU-funded job training will ensure her a financially safe retirement.

Again, we are concerned with political narratives and sustainability, not abstract numbers. The hard fact that pro-Europeans have to grasp is that for many people the EU is not at all that great. Quite the contrary: the EU imposes tough – and Impactful – economic rules, yet gives little palpable in return. To put it even more bluntly, the EU does not give out pension slips or unemployment checks to Europeans, it does not finance child support or kindergartens. Neither does it provide free healthcare or education. Or put criminals in jail and make our cities safe.

No, these are all core public policies that remain firmly in the hands of nation states. They represent very concrete things – something politicians can talk about on morning TV shows or during election campaigns. Most importantly, they are easy to understand and represent the building blocks of primary political organization – something that the EU badly needs, even more so within the realms of the current political environment, erratic and increasingly revolving around the 140 characters of a single Tweet.

(foto via Wikimedia)
(foto via Wikimedia)

The dangers of an inherently ideological EU

The Eurozone crisis has made this constitutional imbalance only more extreme and obvious. Instead of debt mutualization – which would be a perfect carrot – the EU got more punitive powers. Just think of fiscal discipline, budgetary screening and financial penalties. For many people, the EU today resembles a European IMF and that is not a good thing. While the infamous Troika and fiscal austerity are (hopefully) temporary phenomena, the new EU institutional powers are here to stay. Generating any positive news coverage about them will be an uphill struggle.

This leads to my second point. At least among the vast majority of the population, the EU has long held the image of an ideologically neutral and benevolent inter-governmental framework that has fostered peace in Europe, ensured economic growth, promoted the rule of law and championed human rights. Well, time to wake up and smell the coffee. The EU of 2014 is inherently ideological and also does less benign things.

Let us take again the internal market and EU’s trade policy as examples. They both have very concrete consequences for very specific social groups. The people that are often on the losing side are not the well-educated, highly-skilled Europeans from the top of the income distribution ladder, but rather those from the bottom. In fact, an OECD report from 2012 affirms that »inequality in Europe has risen quite substantially since the mid 1980s« and thanks to the economic crisis, the figures have surely not improved since then. Of course, it would be difficult to argue that the EU has directly contributed to growing inequality, but it is equally difficult to argue that it did not.

In terms of political narratives this is a problem, since the competences of the EU today appear ideologically predetermined. The EU promotes free movement of capital, not higher minimum wages. The EU amplifies the interests of business, not trade unions. On numerous occasions the European Court of Justice decided to favor the freedom of establishment and provision of services over workers’ rights. Ultimately, these competences are expressing the preference for one social group over the other and when drafting a sales pitch for the EU, there is little positive to pin down.

Look at the Erasmus programme for example. Sure, more than a million young Europeans have profited from it so far, but do you know that the highest monthly stipend for Erasmus students is 375 Euros? (To read some of the stories and how Erasmus students fund their life abroad, check this British Council note.) Is that really enough for a Bulgarian student in Paris, or a Latvian student in Madrid? Or a less well-off Brit in Heidelberg? Then there are lower roaming costs. Sure, a great achievement, but entirely marginal. How many unemployed people, or people with low incomes do you think travel around Europe and phone their friends? Or take the Schengen Area. It is unquestionably one of the most impressive EU achievements, but in fact of rather little value to those that are too poor to move in the first place. It is like having supermarkets fully stocked with cakes, but no money to buy even a single one.

To make things worse, some of the EU’s ideological choices have not been crafted through open political deliberation, but through expediency and institutional constraints. The much debated fiscal austerity is a great example. We should not fall into the trap of seeing it simply as the intent of one member state to preach discipline to others. I am more inclined to believe that, sadly, austerity was the only policy that could realistically be implemented within the constraints of the EU’s institutional straightjacket of the time. Thus the problem was not that little attention was paid to austerity’s devastating effects, but that little more could have been done without a major institutional and political revolution.

To many readers, (hopefully) this will be nothing new, yet it continues to surprise just how forcefully mainstream pro-Europeans tend to repress these basic realities and rather myopically believe that what is good for a small, urban, well-off and well-educated elite should be good for everybody else. Sadly, at present the opposite is true and the current rise of anti-European sentiments is an indication of things to come. The much demonized ‘populists’ clearly tap some real popular concerns about economic pressures that stem from deliberate choices made by ‘pro-European’ elites.

Seat of the European Parliament in Strasbourg (foto: Alexandre Prévot via Flickr)
Seat of the European Parliament in Strasbourg (foto: Alexandre Prévot via Flickr)

Re-frame ‘pro-Europeans’

Do not get me wrong. I too believe that leading EU political figures (let alone civil servants) have a problem with communicating why European integration is good. It was thus an admission of sorts when Commission President Barroso launched the project »A new narrative for Europe« in the hope that »artists, writers, thinkers, scientists and cultural practitioners, in the broadest sense« will give a new inspirational meaning to the EU of today. Well, if Barroso really wanted to be served a new narrative on a plate, he should have perhaps ventured among the unemployed and poor. If he was genuinely interested in finding counter-arguments to Euroskeptics, he should have gone to those people who vote for them, instead of addressing the crowds at Palazzo Clerici, described as »one the most charming building you can come across in Milan.«

The formulation of a ‘new narrative’ cannot start from a debate among a closed circle of mostly well-educated and privileged elite that already has access and political influence. The social groups that question the EU’s contribution to their wellbeing are remote from traditional power structures and are repeatedly ignored. Yet they are key for Europe’s future political sustainability.

So, what should be done?

First, ‘pro-Europeans’ should take a step back and reflect more broadly how our societies are affected by today’s EU. Some people are made worse off. There are people who do not care about roaming charges. In fact, there are even many people who care little about the freedom of movement. These are the people most likely to vote for those demonized ‘populists’ on the rise. They have a radically different perception of the EU that is not necessarily entirely misplaced. For them, the EU is turning into a powerful framework enhancing a race to the bottom, where only few win and many lose.

Second, ‘pro-Europeans’ should stop obsessing with narratives and start worrying about substance. The political sustainability of the current EU is not being questioned because of a missing European Obama, but because of its core competences and ideology. Take simple things. For example, look at the perfectly legal ‘Double Irish With a Dutch Sandwich’ tax avoidance scheme and try to explain to a random person why the EU does little to prevent such blatant depletion of public budgets, but imposes stiff rules for public intervention in struggling companies. Similar discrepancies abound and the lesson for real ‘pro-Europeans’ should be to fix them, not spin them.

Third, ‘pro-Europeans’ need to accept that the only solution in the long run is systemic. In fact, unless the EU becomes associated with benign things again, little hope remains that it will be able to survive the onslaught of ‘populism’, both from the right and the left. Its competences and policies that cause suffering, or benefit only a few, need to be balanced with something more substantial than Erasmus and cheap roaming. If not, the little popular trust that EU has left will, slowly but surely, disappear and give ground to more radical calls for its terminal deconstruction.

 

This article was originally published in openDemocracy.net.

 

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