Adam Bartha // 6 March 2019
Macron is right: Brussels cannot continue with business as usual after the European Parliament elections. In his recent open letter to the citizens of Europe, the French president outlined a vision for the EU where “people will really take back control of their future”. An idea that liberals and free-market supporters of all political stripes can rally behind.
But, as always, the devil is in the detail. Speaking about individual responsibility and pan-European cooperation means little if your solutions contradict these ideals.
President Macron identifies the problems correctly: populists surging left and right throughout the continent, the EU losing one of its most important member states, and European leaders often sleepwalking into problems, instead of taking swift actions to resolve them.
However, after identifying the correct problems, he continues to offer the same old – and incorrect – solutions as his predecessors did.
Unfortunately, President Trump and President Macron have more in common than their shared love of military parades. Their views on international trade and competition between nation states are equally misguided.
When Macron proclaims protectionist China and USA as the examples for Europe to follow when it comes to economic openness, alarm bells start to ring. His ideas of having a “European preference” in public procurement and banning businesses that threaten “strategic interests” are just the same old recipe of economic nationalism as of those populists whom he tends to criticise.
Protectionism on the European scale is not much better than protectionism on the national scale. As in the past, the price of such policies will be paid by European consumers and taxpayers, who will need to foot the bill for higher public expenditure and lower quality, more expensive goods.
Protectionism always hurts the poorest segments of society, which in the case of the European electorate is primarily from new EU member states at the eastern and southern borders. Former communist countries of the east have come a long way in the past three decades and have developed well-performing market economies that became an important part of the global trading system. Nevertheless, average wages are still only a third of their western counterparts, although continuously catching up.
As a solution, Macron proposes to reinstate the centrally planned structure of wages. His idea of “introducing a social shield for all workers, east to west and north to south, guaranteeing the same pay in the same workplace, and a minimum European wage appropriate to each country” would mean the end of pan-European convergence and spell the death of the EU as we know it.
Combined with the tax harmonisation process that the French European commissioner for economic and financial affairs, Pierre Moscovici, proposed, this would mean that poorer and newer member states would be unable to compete with their western counterparts, and forced to rely on to continuous – and inefficient – transfers of wealth from the north and west to the east and south. This would lead to increased Euroscepticism both in older member states, whose taxpayers would likely feel ripped off, and newer member states, whose citizens are forced to rely on the goodwill of foreign taxpayers, instead of their own skills and talent.
President Macron has outlined a vision for Fortress Europe that will soon turn the continent into a museum if his reform proposals are implemented. Liberals have rightly critiqued the nationalism and isolationism of various countries throughout the past decades and we should continue to do so. People who only revolt against finding common solutions for international problems won’t get far either. But just because the noble goals of individual freedom and progress are emphasized by self-proclaimed liberal politicians, it doesn’t mean that their policy prescriptions will actually contribute to realising these goals.
“Freedom, protection, and progress. We need to build European renewal on these pillars.” Indeed, let’s do this Mr President.
But let’s make Europe freer, by letting European businesses breath and innovate in all regions of the continent, instead of stifling them with more bureaucracy and an EU-wide, Brussels-imposed minimum wage.
Let’s protect European consumers, by embracing free trade and providing cheaper goods to the poorest segments of society, instead of providing them with welfare so they can afford goods made artificially expensive by high taxes, tariffs, and compliance with thousands of pages of regulations.
Let’s make progress, by concentrating on innovative solutions in the digital sphere that could provide the answers to many of our problems. Want to reduce CO2 emissions to fight climate change? Let’s not stifle with burdensome regulations startups which could create lab-grown meat and cut emissions close to zero. Want Europe to “create jobs” and avoid massive unemployment after the fourth industrial revolution? Let’s not attack digital companies with sector-specific turnover taxes which would ensure Europe falls behind in the technological race permanently.
It’s time for liberal politicians to embrace liberal principles not just in rhetoric, but also in action. The European electorate yearning for authenticity and economic prosperity would certainly thank politicians who are brave enough to do that.
This article was first published on 1828.
EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).