The constitutional crisis in the EU has been rapidly over-run by the budgetary crisis that now absorbs the attention of Europe’s beleaguered leadership. In this brief note, Jyoti Banerjee asks whether the Common Agricultural Policy, a major budgetary battleground, can be defended in an era of intense competition among the rich and hunger among the poor.
On a number of occasions, this blog has pointed to Europe’s poor showing against the US when it comes to the measures relating to R&D performance, productivity, technology and competitiveness. A 2004 study by the European Commission pointed to Europe lagging America on 11 out of 12 such measures.
This is particularly apposite discussion material when battle is being waged for the heart of Europe: will Europe be a competitive economic force competing with the Americans and the Asians, or will it be a social welfare state that helps out those of its citizens that struggle to keep afloat in a world that is changing around them?
What is interesting to me is that the protagonists on both sides of the European argument seem to believe that their kind of Europe precludes the other kind. My own view is that a competitive productive Europe is more likely to be able to afford to be a socially hospitable place for its citizens; though, inequalities in the distribution of income at the margin can prevent any of its gains ever reaching the people who need that assistance. However, a Europe constructed purely on social principles without paying attention to competitiveness and productivity will eventually fall behind the other economic blocs to such an extent that there will be no money to float the boats that have run aground. Using the terminology of the mathematical theorists, neither approach provides sufficient conditions for success but putting competitiveness top of the agenda seems a necessary condition.
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