Wednesday, 9th June 2004

Professor Roland Vaubel 

- The speakers -
Simon Heffer Broadcaster and Columnist	Professor Roland Vaubel Economist
Wednesday, 9th June 2004 The British Academy 10 Carlton House Terrace, London SW1
For further details contact: Robert Oulds, Director The Bruges Group, 216 Linen Hall, 162-168 Regent Street London W1B 5TB, UK Tel: +44(0)20 7287 4414 Fax: +44(0)20 7287 5522 E-mail: info@brugesgroup.com

Simon Heffer

Mr Heffer is a well known broadcaster and columnist with The Daily Mail. He is known and respected for his cogent views. He was a Leader Writer and Party Sketch Writer for The Daily Telegraph where he was also Deputy Editor. Simon Heffer was also Political Correspondent and Deputy Editor of The Spectator.

Simon Heffer’s publications include Like the Roman: the life of Enoch Powell and Nor Shall my Sword: the reinvention of England.

Simon Heffer will talk on the EU Constitution.

Professor Roland Vaubel
Why the European Conventional wisdom is a threat to freedom

The European Conventional wisdom assumes that government in Europe ought to be centralised. But the centralisation of government is always a threat to freedom because it gives government more power over the citizen. There a two reasons for this.

First, political centralisation raises the cost of exit for the citizens: if a local or national government raises taxes or imposes tighter regulations or begins to persecute minorities, it is not very difficult to escape to a neighbouring country. But if all governments do it, there is no escape, and the state is much more powerful.

Second, the centralisation of government reduces the scope for comparison - i.e., yardstick competition - among governments. If the citizens cannot compare their government's performance with the performance of other governments, democratic control is impaired. Democracy benefits from decentralisation.

In the last 500 years, political decentralisation has been the secret of Europe's success as David Hume, Immanuel Kant, Edward Gibbon, Max Weber, Eric Jones and Douglas North have pointed out. Europe's fragmentation - the competition among rulers - explains why modern science and technology, the enlightenment and the industrial revolution have developed in Europe and not in China, India or the Ottoman Empire which, at about 1500, were still at a comparable level of civilisation.

Last year, the European Convention for the Future of Europe has proposed a Constitutional Treaty which would increase the centralisation of government in Europe. Its proposal is a threat to freedom for essentially five reasons:

1. It provides for a lowering of the upper quorum for qualified majority decisions from 72 to 60 per cent. Calculations show that, looking at all possible coalitions, this would raise the probability of qualified majority decisions from 2 to 22 per cent, i.e., more than tenfold. The lowering of the quorum is likely to have disastrous consequences especially in the field of regulations: It would increase the state's interference with the freedom of contract.
   Since the early nineties, the European Union has been very active in regulating labour markets, financial markets, product qualities, etc. Usually, the majority of highly regulated member states impose their high level of regulation on the minority of less regulated member states - the so-called "strategy of raising rivals' costs". As competitive pressure from the more liberal countries decreases, the regulation-prone majority of member states can afford to expand their domestic regulation even further. They then impose these additional regulations on the minority. A vicious circle develops.
2. According to the draft Constitutional Treaty, many decisions which at present require unanimity could be taken by qualified majority, e.g., concerning industrial policy, "services of general interest", the tasks, priority objectives and organization of the Structural Funds, and the instruments of the European Central Bank.
3. The Constitutional Treaty extends the competencies of the Union to and in a number of fields, e.g., the coordination of social and health policies, research and technology, energy, sport, civil protection and space policy. This opens additional avenues for regulation. Moreover, the centralisation of these policies gives state more power over citizens (as I have explained at the beginning).
4. The Constitutional Treaty would extend the general enabling clause for Union action from "the operation of the common market" to all "objectives set by the Constitution" including, for example, labour and financial market regulation. The European institutions would be empowered to legislate in all these fields even though the parliaments of the member states have not conferred the necessary powers on the Union. Once more, political centralization would give government more power over the citizens.
5. The Constitutional Treaty includes the EU Charter of Fundamental Rights which so far has not been binding. This Charter contains not only personal liberties but also many legal claims to government action, notably regulation. For example, it asserts a right to "fair and just working conditions", "protection against unjustified dismissal" or "housing assistance". Since the European institutions are obliged to "respect" these rights and "promote the application thereof", the Charter necessarily modifies, and in many respects increases, their powers.

Let me conclude: The Constitutional Treaty proposed by the EU Convention is a recipe for ever tighter regulation. It would impair Europe's competitiveness in the global economy, and it is a serious threat to freedom.