democracyEarlier this week, Debating Europe attended a panel discussion at the Italian Cultural Institute in Brussels involving Professor Andrew Moravcsik of Princeton University. Professor Moravcsik is one of the foremost scholars of European Integration in the world, and we had the opportunity to put a question or two to him during the event.

During his opening remarks, Moravcsik set out his take on what had caused the current crisis. In essence, his argument was: “be careful what you wish for, because you might just get it.” The expanded version, beginning with the underlying reasons behind the foundation of the single currency, was as follows:

You had a set of weak currency countries that had been devaluing for some time [whose] major goal was to reduce domestic interest rates. You had one big country in the core (Germany), and some of its neighbours, that didn’t like the fact that monetary turmoil in Europe tended to drive its currency value up… Both groups got what they wanted out of the euro at the same time. Interest rates did go down in the periphery, and Germany did end up with an undervalued real exchange rate and a large trade surplus. The problem is: that’s not a stable equilibrium…

If one wants to resolve the crisis, one needs to get rid of the fundamental disequilibria that were induced or calcified by the euro in the first place… To move towards what economists would call an ‘optimal currency area’ [one would need] to regulate such things as general macroeconomic behaviour, inflation rates, wage-setting, labour markets and the relationship between the tradable and the non-tradable sectors of the economy and where investment goes. In other words: European economies need to converge at a very fundamental macroeconomic and microeconomic level in order to make currency union work. This was known at the start, [but] each side bet that the convergance would occur on the other side.

If the above policy areas were ever actually regulated at the EU level, it would represent a fairly radical step forwards in the process of European integration. With public animosity towards the EU already on the rise, would such a level of policy coordination really find popular support? Many of you have sent in comments arguing that the EU already has a ‘democratic deficit’ to contend with before it takes on board any more policy areas. Jovan, for example, recently sent in a comment arguing that “the democratic deficit exists because you need to get a university degree in European studies in order to understand how the EU works.”

Professor Moravcsik has rebuffed such arguments in the past by countering that, as well as possessing an extraordinarily effective system of constitutional checks-and-balances, the EU doesn’t deal with much in the way of ‘salient issues’. In other words, the issues that voters prioritise as important and are motivated to organise systematically around (healthcare, pensions, welfare, etc.) are usually handled at the national level. But the issues that Moravcsik lists above – general macroeconomic behaviour, inflation rates, wage-setting, etc. – are salient issues. Does this mean the democratic deficit is bound to become a serious problem?

I’m particularly suspicious of the current state of the debate, which goes something like this: the current proposals can’t solve the problem. We need these very large proposals of which publics will be suspicious, for all kinds of substantive reasons, because current policy is forcing people to do things (and policy changes would force other people to do things) that are extremely costly to them. And the solution to this would be some kind of airy notion of democratic legitimacy, like ‘lets discuss more things in the European Parliament’ or ‘let’s turn more things over to national parliaments’, as if a procedural solution will make people feel better about a substantive problem. That is not just naive and sentimental, it’s actually empirically wrong in the research. People do not judge the legitimacy of political outcomes based on how much they participate; it’s just empirically wrong as political science. They don’t like institutions that are highly participatory, and generally they hate parliaments (even national ones), and elected politicians they hate even more, generally speaking, compared to judges and other things. What they judge is results, so the euro needs to be generating results that people like.

So, what’s the solution? On this question, Professor Moravcsik seemed reluctant to overtly prescribe the best way forward for Europe, preferring to let us make our own minds up. However, here’s what he had to say about the future of the euro:

Europeans should make a very hard-headed, pragmatic decision about whether the euro is a good policy or a bad policy for growth in Europe over the next ten or fifteen years, and act accordingly….

[There is an argument that] either we move forward, or [we will face] the dissolution of the EU; this Wagnarian conclusion. I say no. I say Europe has a choice about monetary policy: take it, or leave it. But, either way, the rest of the European project remains and it’s the greatest single success in international cooperation in the history of the world. And its last 25 years are more successful than anything it’s ever done, whether or not the euro proceeds.

What do YOU think? Is there a democratic deficit in the EU? And is it growing wider as the EU starts to impact increasingly on the issues people truly care about (such as healthcare, pensions and welfare)? Would giving more powers to the European Parliament help, or do people only care about economic results? And would the EU’s record be a success even without the euro? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.

IMAGE CREDITS: CC / Flickr – looking4poetry

16 comments Post a commentcomment

  1. avatar
    Vicente Silva Tavares

    Professor Moravcsik is absolutely right when he says what countries were looking from the euro. Could Germany be in the actual economic position if it was outside of the Euro? I joke sometimes, saying that the best solution for the Euro would be Germany leaving the Eurozone. The euro would loose immediately its exchange rate, lowering the export prices of euro goods and Germany would see its Marks growing up putting difficulties to the German industries. Of course, if we had a policy of reciprocal custom tariffs, would benefit greatly the European economies.

  2. avatar
    Marcus Heer

    The first and the important step is we need a political Union in Europe. Without a political Union a common Currency can not exist in the long term Future. Let me say some Words to the Euro: The Problem is not Germanys Membership in the Eurozone, the Euro has a Confidence Problem. People have lost the Confidence in their Currency that is fact. And a other one is 17 completely different Economies can not exist under a common currency. Second is we have a Sovereign Debt Crisis the is grown to a Euro Crisis. A Europe without the Euro can be success why not? My personal Opinion is, we build an “new” European Union based on the Maastricht Treaty and without a common currency. We should think about this..

  3. avatar
    Albert Saxén

    Well, the two r intrinsic. Meaning they’re linked.
    yea, customs, tariffs 1890s there were a lot less barriers..and alot more trade.

    It’s ironic, even that the WTO, whose mission is to remove these , is actually putting them up.

  4. avatar
    Nikolai Holmov

    I have to say I agree with the Professor that the Euro is not the glue which holds the EU together. Keep it or lose it, the EU will survive, and possibly for the better without it.

    Why will the EU survive? Because almost all the member states are nothing on the world stage without the collective economic and diplomatic weight of the entire EU mass.

    Exceptions maybe be the UK, France and Germany, the first two being permanent UNSC members, have old empires with ties still existing globally and Germany because it is an economic powerhouse in its own right.

    Apart from that, and with no disrespect meant, how much influence would Hungary or Luxembourg or Slovenia have on the world stage without the collective mass of the EU behind them?

    Therefore, whilst there is a mechanism to magnify their concerns through a supra-structure that represents (supposedly) the interests of 27 (soon 28) members, if that structure champions the cause of otherwise unimportant nation A, it becomes a de facto international player of consequence on occasion, instead of terminal irrelevance.

    The EU can be a megaphone and also a security blanket for most of the small component parts which make up the whole. The political will for that apparatus to survive from the majority of EU members will continue regardless of the existence of the Euro.

  5. avatar

    I always like to compare the EU system with the German bicamerial system: Germany has one chamber of parliament that is elected directly by the people, and another one, which is filled with representatives of the individual states. These are not elected directly, but of course the parliaments in the member states which supported the member states’ governments are. No one would doubt that both chambers have a democratic mandate – they just get it in different ways.

    Similarly, the council of ministers is very much democratically legitimate. While its members have not been supported by ALL citizens of the Union, they have been put where they are by the people in their home country.

    The key difference between the German system and the EU system is the importance of the chambers: In Germany, the directly elected chamber is the focus of legislative work and the second chamber chiefly serves to act as a corrective and ensure the rights of the member states are not being stepped on. But there, of course, a lot of the actual initiatives do not come from parliament itself, but are actually brought forward by the government. In the EU, of course the directly elected parliament does not have the power to initiate legislation autonomously at all. This then is the is perhaps a key factor – and I fully agree that the rights of the EP should be strengthened. However, on an overall level, I do not see the democratic deficit as being as large as some want us to believe.

    I do not think you need any higher education to understand how the EU works than how any other government or large administration works. People might believe they know how their government works, but the intricacies and procedures are usually not very well know. How many decisions are actually made in open parliament and how many are made in committees and subcommitties with parliament at best simply waving the decision through? What are the specific types of sessions that exist and the means of parliament to request information from the government? Which Briton could recount offhand how a question gets raised at Prime minister’s questions and how it is decided when it is asked? Which random German could immediately describe the difference between a “Große Anfrage” and a “Kleine Anfrage” and what the role of the “Fragestunde” is?

    I think it is very worthwhile to strengthen the rights and tasks of the EP, but the “democratic deficit” is all too often used as an excuse for general lambasting the EU.

  6. avatar
    Nikolai Holmov

    As for the democratic deficit, it is a matter of perception.

    It is a democracy that functions at State level or at citizen level? Quite obviously the vast majority of the EU citizenry will perceive it to be a democracy of States rather than a democracy of the people.

    Here in is found the perception (real or otherwise) of the democratic deficit of the EU.

  7. avatar
    Eusebio Manuel Vestias Pecurto

    O Euro logo de inicio apresentava falhas porque alguns estados do Eurogrupo não fizeram as reformas restuturais é uma tarefa que é inportante dendro de cada pais e os arranjos institucionais defeituosos Hoje a crise é politica e económica Agora temos os bancos o sistema bancário é apoiado por cada governo da zona do Euro Se o desgaste de um governo acontecerá o mesmo acontecerá com os bancos Na minha opinião era o eurobonds e um fundo de solidariedade poderia promover o crescimento e estabilizar as taxas de juro enfrentadas pelos governos em crise se o Euro cair Alemanha ficará sempre numa situação dificil se o euro ou as economias periféricas entrarem em colapso os custos para a Alemanha serão elevados

  8. avatar
    Christos Mouzeviris

    why do you even ask? of course it does.. when the people are not being involved or informed on what is being discussed, debated or compromised in the EU Council summits, in the EuroParliament plenary sessions and what the EU Commission decides and why, and our national governments are meddling and misinforming their citizens to present their failures as something coming from EU, while they are behind all EU laws…..well it is a fine mess if you ask me… i am radical and I would like to scrap the EU Council, limit the powers of the Commission, placing them only in a admin role, and give full power to the EP…No our national parliaments won’t be scraped as so many fear, rather we will be governed in 3 levels: local one, with local regional municipal government, national one, with our national parliaments deciding our national interests, and the EP, deciding and having FULL authority in matters pan-European…only then democracy in Europe will prevail…

  9. avatar
    Daniel Pluskota

    European authority should have bigger influence on financial managment of each country. Now we can only grant $upport, but it is helpless if we cannot reapair the cause deficit….

  10. avatar
    Ralf Grahn

    Until the European Union is a functioning representative democracy, it has a democratic deficit.

    In addition, the current EU and especially the union which best serves the interests of its citizens has real powers in areas well beyond technical standards for motor vehicles and the like.

    The prolonged and possibly catastrophic euro crisis shows the lack of powers, robust structures and effective decisions, which can only be based on the citizens at the European level.

  11. avatar
    Tünde Novák

    Minden egyes tagorszg mskppen li meg a tagsgot.Az indulsnl 1989-ben mr risi vltozs ment vgbe.Nmetorszg egyeslt a keleti felvel,gy gazdasgilag talpra llt.A tbbi orszg s?t Magyarorszg minden fel?l csak srtsben s bntsban rszeslt.Vajon valban demokratikus az Eurpai Uni???T

  12. avatar

    The EU lacks a common demos, that is, a population which can imagine itself as a single people, similar to the “single market” or “single currency”. Hence, all attempts to make the EU more democratic are flawed. The EU has already damaged democracy on level of member states, and any further integration means less democracy. What euphemistically is called “pooling of souverignty”, is actually building an imperial state with oligarchic and autocratic power structures. This is the experience of the last two decades. It turned out, that contrary to what its supporters claim, the EU is no “sui generis” structure, but just a repetition of the pre-national political systems in a modern dress. If we want democracy, then we must keep EU centralization and coordination on a low level. For example, budget matters must not be decided in Brussels but in parliaments of the member states.

  13. avatar
    Peter Schellinck

    We have voted the EU Parliament into office so let them do their job and close down duplication on national fronts. Hence save billions, create jobs and open a truly internal market.

  14. avatar
    Peter Schellinck

    When insinuating democratic deficit one has to agree on a norm or reference to which one refers. On the other hand the concept of a democratic deficit is the idea that institutions of the EU lack democratic accountability and legitimacy compared to the national governments of its member states. So do we really have a common definition for “democratic deficit” or are we just brain storming?

    It seems that most critics compare the EU to an ideal plebiscitary or parliamentary democracy rather then judged against prevailing standards in existing advanced industrial, and the actual functioning of national, democracies. Hence concern about the EU’s ‘democratic deficit’ is misplaced. Looking at the practices of existing nation-states and in the context of a multi-level system, there is little evidence that the EU suffers from a fundamental democratic deficit.

    However curtain constraints might lead to diverting away from the real issue and land up viewed as a deficit. This overall trend toward insulation of certain functions is in turn driven by considerations that should be given normative weight, such as the complexity of many policy issues, the rational ignorance and apathy of many publics, the desire to protect minority rights, and the power of certain special interests in situations of open political contestation.

    The development and consolidation of democracy is the central concept and foundation of all politics within the EU. Within the “project Europe” there is the “project for democracy” with a special budget under the European Initiative for Democracy and Human Rights (EIDHR) initiative. Hence, it is necessary to analyze the democratic legitimacy of the EU within its own structure, since democracy is a core value for the EU as understood from its activities and proceedings.

    Besides fully integrating a monetary union, please let’s keep the EURO, it is also time to proceed on a common army, common tax policy and social policy. This will neutralize any debatable democratic deficit.

  15. avatar
    catherine benning

    Now here is an interesting video. it tells us that we are going to be run by anonymous indidviduals who will be unaccountable in any way for whatever they do.

    Is this video teling us the truth? Is it biased? And if it is, who made the video and what is their interest in how we will run and set up the EU which they feel does not suit them? Is this North America telling us they don’t like the way we are moving forward? Or, is it North America that is leading this change to the ESM and someone else doesnt feel they will be able to manipulate it to their advantage.

    Was it made by UKIP? If it was why did they use an American female voice as the orator? In other words, who is at the back of this propaganda and doesn’t want to be up front on any level regarding their interests in the EU?

    Here is a guy telling us what really goes on in the financial sectors of Europe that this undemocratic set up doesn’t tell us about. Whilst it uses the tax payers money to bail out their cheating bankers at the same time as it forces those States already broke to starve their people to death.

    And what they are telling us is waiting in the wings.

    And the outcome of doing nothing leads to a kind of anarchy European leaders have no idea how to deal with.

    What you don’t see on European TV as they don’t want you to know what hapens in the US when people are divided by rich and poor.

  16. avatar

    great issues altogether, you simply received a new reader.
    What might you recommend about your put up that you made a few days ago?
    Any positive?

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