Monday, July 13, 2015

Welfare, democracy and federalism in Europe

When the US founding fathers discussed the US independence and the constitution they discussed democracy and economic policies and institutions in the same package. They were aware that economic arrangements for efficiency and distribution had to do with democracy: "no taxation without representation". In The Federalist Papers, written my Hamilton and Madison, the discussion was not only about the division of powers between the federal government and the states, but was also about the separation of powers at each level of government and about the economic role of the states and the federal government. Economic policy, democracy and federalism were part of the same discussion. These days in Europe, we are in a similar position. The controversy surrounding the recent referendum in Greece shows that the quality of democracy belongs to the same discussion as the solution of the economic and financial problems of the euro zone. These problems cannot be solved without trying to fix at the same time the governance and democratic deficits of the euro zone and the European Union. A federal Europe with a significant transfer of sovereignty from the member states to the Union would contribute to solving many of the current economic problems, but this step requires increasing the democratic nature of the decision-making process. A common fiscal policy requires a treasury and a significant budget, but then... "no taxation without representation", and the powers of the European Parliament should be significantly increased. One day, a European president should be chosen by universal sufrage. A political career would necessitate voters in most countries of Europe, and not only from a single electorate. A democratic federalism would then be able to decide on legitimate policies and the Europeans would be able to pool their resources to become a more secure welfare powerhouse.

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