Written by Jurek Wötzel, Head Writer
Europe needs to get ready for the future. The nation-state has lost all its benefits of scale and needs to be abolished. If we finally took the principle of subsidiarity seriously, we would shift power to Brussels – and the regions.
Why The Nation-State Is Useless
“We want to be an independent, self-governing, normal nation”, lead Brexiteer Nigel Farage said in his speech to the European Parliament after the United Kingdom had voted to leave the Union. He was trapped in an illusion. It seems to me that it is a rather problematic image of independence and self-governance that Mr. Farage had in mind when he arrogantly mocked his fellow MEPs in a rush of revenge. He would have done well to include a concrete outlook on how any European nation-state could truly be independent in the age of a globalized economy.
National leaders around the world find themselves torn between poles. On the one hand, they face the imperatives of global power politics and economic interdependence, on the other hand they are accountable to the needs of their citizens.
The narrative of the race-to-the-bottom is well-known: as countries compete for business investments, governments cut corporate and top-rate taxes. Italy, wanting to attract the wealthy to stimulate investment and consumption, just granted tax breaks on foreign income in exchange for a 100,000 euro flat tax. The Dutch, who together with Ireland and Luxembourg make sure that big corporations practically pay no EU taxes, want to further reduce corporate income taxes and to abolish dividend taxes this year. The worldwide prisoner’s dilemma of tax cooperation spares no one.
When an overwhelming majority voted OXI (NO) in the 2015 Greek referendum on the bailout deal, Prime Minister Alexis Tsipras should already have known what was lying ahead. In spite of the immense popular resistance against the conditions of the bailout package displayed in the vote, the government was eventually forced to cut pensions, unemployment benefits and increase the VAT yet again. Minister of Finance Varoufakis was smarter and resigned, foreseeing the inevitable surrender to EU political forces.
One can only speculate why Farage decided to resign just after the Brexit vote. Perhaps in a short moment of epiphany, he grew aware of the massive economic and political struggles that Britain would go through in the years to come.
Brexit has resulted and will result in a range of economic and political hardships for the UK. The pound plummeted directly after the vote and is still far from reaching pre-referendum levels. The Bank of England issued a statement warning that bank resettlements will cost the British about 75,000 jobs, loss of the all-so-important finance sector is hanging over Britain. For a little irony of fate, the 490-million-pound deal for producing the post-EU British passports went to a French-Dutch firm.
This scenario was of no interest to Farage, though. “What the little people did, what the ordinary people did – what the people who’d been oppressed over the last few years who’d seen their living standards go down did – was they rejected the multinationals”, he had announced on that fatal 28th of June. ”They rejected the merchant banks, they rejected big politics and they said actually, we want our country back, we want our fishing waters back, we want our borders back.”
Naturally, these words hit a sensible spot. Upset with their politicians’ inability to make binding decisions even in domestic affairs, citizens across Europe are seeking shelter under the umbrellas of nationalist demagogues. These reactionaries are summoning the demon that is largely the root of the current political stalemate in the first place – the nation-state. However, there is a crucial conclusion to be made from this movement: politicians have been unable to sustain proximity to the electorate. This development has led citizens to realize that the principal-agent relationship of national representative democracy has ceased to work.
Yet, just as the underlying trigger of this is not the EU, neither is the solution a strengthening of the nation-state. European countries aren’t turtles that can simply retreat into their shells and wait till the evil outside goes away. Britain with its less-than-one percent share of the global population is a dwarf on the global political landscape. So are Germany, France, Italy, Spain, the Netherlands. The dynamics of the global economy cannot be altered by the decision of a single nation.
The Farages, Le Pens and Gaulands of our time provide easy answers to complex questions. It’s time for some complex answers. For a start, let’s acknowledge that the nation is absolutely useless as a counter-balance to the power of global corporations. It has failed in its core business: sustaining a healthy connection between representatives and the electorate. The nation-state is a relict mobilizing its remaining resources in a last awakening.
The Superstate of Regions
Without claiming that a United States of Europe would be strong enough to enter the ring against big business, it would at least be strong enough to exert serious pressure. In total, the EU has 508 Million inhabitants, and its GDP amounts to 17.1 Trillion Dollars, making it the second-biggest economic power next to the United States. To put this into perspective, it is useful to look at the actions of the superpower across the Atlantic. While European countries were hesitant, the US imposed a 4.3 Billion Euro fine on Volkswagen in the aftermath of the emission scandal. While European countries were hesitant, the US imposed a 7.2 Billion Dollar fine on Deutsche Bank and a 5.28 Billion Dollar fine on Credit Suisse for their part in the economic crisis.
Admittedly, large states come with great perils, too. One obstacle to popular support for European integration is undoubtedly the undemocratic structure of EU institutions. Moreover, Brussels is in the eyes of many synonymous with lobbyism, technocracy, and general political degeneration. But please, EU-critics, I ask you: do you secede from your country when your representatives in the capital don’t listen to you? The issues of EU institutions exist in national institutions, too, only there we tend to particularise the problem and address it. If there are institutional problems, we tackle the problems, not the institution.
The answer must be reform, not resignation. Give the European Parliament the power of a parliament, let the people elect a European government, make Europe a democracy!
Of course, establishing a United States of Europe must be done right. The complexity and the sheer scale of political decision-making created a feeling of powerlessness that has catalyzed the populist turn. A larger state will have more power, but a reduction in the power of an individual voter may just amplify the angst among the population. Centralisation must, therefore, go hand in hand with regionalization.
Europe needs to be divided into regions, smaller entities than the current Member States. This way, there can be a re-politicisation of regional or even local policy. It would give us a more proximate instance where the effect of our voting behavior can be seen, where we can understand accountability structures, where we can observe where tax money goes. Only some policy areas should be Europeanised: fiscal & monetary policy, foreign policy & defense and aspects of social welfare.
Regionalisation will also make Europe a lot more resilient. In his book “Antifragility – Things that Gain from Disorder” Nassim Nicholas Taleb classified many kinds of structures as fragile, robust, or antifragile. Based on considerations of probability, large structures are inherently bound to be fragile, at risk of complete breakdown in case of disorder. However, dividing Europe into many smaller entities could make it antifragile. It would allow a range of policies to be tried out. If a policy fails, then the whole system would gain from knowing how not to go about tackling a problem. If there is vast disorder, the likelihood that one region will find a successful policy and set an example for the others is higher. Most importantly, the likelihood of fatal mistakes is drastically decreased.
“What happened last Thursday [Brexit Referendum] was a remarkable result – it was a seismic result. Not just for British politics, for European politics, but perhaps even for global politics too”.
Those were Farage’s words. To be honest, I even hope he was right. What he and I disagree on, however, is what Europe should make of this seismic result.
The past two years were both promising and frustrating for the hopeful European. Yet, those who firmly believe in the project of a European unity that ensures peace, freedom, and prosperity ought to take matters into their hands. The current halfhearted muddling-through approach won’t suffice to put up with global and domestic challenges. Let’s get real and move Europe into the future!