Sozialpolitik, Europäische Integration, Sozialstaat, Europäische Wirtschafts- und Währungsunion, Social policy, European integration, Welfare state, European Economic and Monetary Union

Giuseppe Bertola

English

Research Papers in Economics

CESifo Forum 4/2003 35
Pro and Contra
PRO:A N EU-LEVEL SOCIAL
POLICY
GIUSEPPE BERTOLA*
By Hans-Werner Sinn’s own Selection Principle,
governments should address problems that mar-
kets cannot solve efficiently.And if that criterion is
fulfilled then, just because those problems are not
well addressed by competitive interactions,compe-
tition among governments is not a good thing.
The EU’s ever closer integration of factor and prod-
uct markets implies that uncoordinated national poli-
cies simply cannot achieve the redistribution they
deem desirable in light of financial market imperfec-
tions and political cohesion objectives. Directly or
indirectly, via migration and capital mobility or via
market interactions, tax bases react elastically to tax-
ation and benefits are effectively paid to members of
jurisdictions other than those legislating them.
If markets imperfectly address the relevant issues,
relying on competition among also imperfect policy-
making systems is unlikely to yield better outcomes
than a well-informed policymaking framework that
addresses the relevant tradeoffs coherently. To pre-
serve both redistribution and economic integration,
elements of social policy must be centralised or co-
ordinated.In an integrated European economy,deci-
sion-making power in the social field must not be
exclusively national, for this would either make
social policy ineffective or,more realistically,let calls
for protection from foreign social dumping strength-
en old and new barriers to trade and factor mobility.
Of course, the pitfalls of centralized policies must
be avoided. Misguided application of homogenous
rules and tax systems to heterogeneous economic
entities can stifle economic development, as in
Italy’s Mezzogiorno and Germany’s eastern län-
der. But harmonization does not imply uniformity,
and a European layer of social policies cannot be
avoided. Citizens’ social concerns must be
addressed at the same level where economic inter-
actions take place, for choices made at lower levels
too easily heed resentment against economic inte-
gration as a source of unfair competition and
reduction of already inadequate protection.
Such a layer cannot be done without. It already
exists, albeit in the limited and imperfect shape of
EU agricultural, regional, and structural funds, and
of a relatively small but intrusive body of regulation
in the social field. Both are motivated by concern
about the possible adverse effects of economic inte-
gration on distribution and on the governments’ will-
ingness and ability to address them. That concern is
politically strong in Europe and it is not surprising to
hear it expressed in the same treaties that extol the
virtues of economic integration.
What is missing, and needed, is a translation of that
desire into a clear system of rules and adequate
financial resources addressing the relevant trade-
offs coherently. EU-level financial and regulatory
interference with national social policy is far from
negligible, but its opacity and complexity fail to
generate goodwill:quite the opposite,each national
government only sees incentives to retrieve funds
that are not perceived to address common concerns
at the European level. Redistribution should occur
transparently across national borders, to the poor
from the rich, who should understand that this use
of resources can be motivated, rather than by soli-
darity, by the need to ensure that nobody feels left
out of the efficiency gains accruing to the rich from
trade and specialization opportunities.
If you want to comment on this topic or react to the opinion expressed here, please visit the CESifo
Internet Forum on our web site: www.cesifo.de
A SOCIAL UNION FOR THE EU?
* Università di Torino.

A Social Union for the EU? Pro: An EU-Level Social Policy

http://www.cesifo-group.de/portal/page/portal/DocBase_Content/ZS/ZS-CESifo_Forum/zs-for-2003/zs-for-2003-4/forum4-03-pro.pdf

A Social Union for the EU? Pro: An EU-Level Social Policy

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