The most significant outcome of the emergence of China as a foreign investor in Europe (rather than a market or a competitor) is the certainty that Europe is the way forward rather than a collaboration of Member-States.
The increase in multilateral inter-governmental political bargaining of the past decade, and its significant setback after Donald Trump, reached an hiatus just yesterday as Commissioner Vestager demonstrated the French-German ideology does not necessarily display the most adequate ideas for Europe.
Whereas European public good is a debatable concept amongst those that work on it past the political cycle, is it more obvious than in an exclusive competence of the European Commission – the guardian of the Treaties: Competition policy.
The request of Germany and France ignores two current facts and assumes the resumption of a trend that is, to a broad extent, past : multilateral economic stimulus.
What seems to elude the most fierce advocate of multilaterism is that its main beneficiary, China, is stepping back from its multilateral economic stance in reply to demands for a greater role of domestic consumption in economic growth.
Second order effects in raw materials (refusing to continue its role in recycling plastic), rural-urban inequality (the relentless Balassa-Samuelson/Podpiera effects, the politics upheaval), debt are signs that China is closing upon itself.
Not understanding that nursing conglomerates contributed to Japanese stagnation or that China can’t be both customer and supplier would be a significant mistake. The French-German offer shows precisely this misunderstanding: that Europe may grow past its size in just a few countries.
This same reasoning was very evident in previous years when negotiating Europe. An excessive focus on short-term growth and capital mobility (contrasting with people mobility, in upcoming work) shifted effective per capita growth (household wealth) to the center of Europe leading to the creation of a handful of Chinas in Europe.
The upheaval of values and firms, of production methods and private initiative in return for relatively low wages as technological dependence – that is the bargain presented to the Czech, Slovak, Polish and Hungarian voter and politician. A bargain that is very known from yesteryear.
The election of strongly conservative governments and workers’ demands of higher wages and more pay (Hungary’s extra work law and Audi wage increases) hints at this defensive posture that was aggravated through the past decade as wealthier Member-States, fuelled by media discourses despite the Barroso Commission, dismantled the Union’s principle of compensation to institute another principle of solidarity.
What becomes evident is that Europe won’t move forward by maintaining a Europe of yesterday, unproductive and broadly reliant on unfair pay elsewhere, nor by upholding a Europe of tomorrow, over-productive, out of ideas and broadly dependent on external technology and innovation.
Both must combine (RSA link here) but there’s little political thrust to do so in as much as the Commission does Member-States’ bidding. The Commission should not behave democratically because it is an institution.
That would be the same as saying we should give way in a queue just because fifty people say so – the Commission should hold its place, it upholds the Treaties and doesn’t swing to Governments (and its financiers, today firms tomorrow the people – cf Barrack Obama) but rather defends a higher interest, a more stable moral ground that goes beyond individual State power bargains.
That is, for the Commission it should’ve been indifferent that the market net payers bought access to through the European Budget was not paying off and was now causing losses – the losses in itself are solidarity (pay for market access, suffer the consequences of overleveraging) and led to a deep rethinking of the Institutions rather than the institution of a guaranteed return for investment, a so-called solidarity.
Make no mistake – EFTA countries pay for market access because the grand bargain of the budget is to compensate poorer countries for the nefarious effects of entering the customs and monetary Union.
“(The Werner Report) argued that compensation should be provided for the economic rigidities imposed on state budgets by the path of monetary unification.”
“Concerned about the competitive threat of the internal market to their economies, which already suffered from major regional (and national) development challenges, both countries (NB Portugal and Spain) had a strong case for demanding a revamped regional development policy, and were pivotal actors in altering the coalition of Community interests in favour of cohesion.”
The converse goes for net payers.
But it wasn’t. Either way, it’s clear today Germany and France are not indicating the way forward to Europe – it is doubtful they could, as do most economists. It must be a non-political Commission to do so not by punishing and restricting only but by planning and advancing.
We need new Stateswomen like Vestager (and Statesmen too) – not more nationalism, frankly.