A Critique of EU Integration

One point often missed by some outside observers is that the backlash against European integration is driven not only by a perception not of overregulation but of too-aggressive deregulation. The populists complain about pettifogging EU regulations that ban homemade alcohol or going shirtless on construction sites; the left denounces aggressive EU deregulation drives that hollow out traditional social-state protections.

EU bureaucrats themselves — of whom I know a few — generally pose as meek St. Sebastians of politics, bound to the tree of professional discretion, penetrated by the slings and arrows of a hostile and misinformed public. But are the arrows deserved? Via Crooked Timber, a paper by Martin Höpner and Armin Schäfer at the Max-Planck Institut in Cologne on European economic integration argues that some are. The paper begins with the following interesting example:

To anyone interested in an evaluation of the current state of Europeanization, we recommend the webpage <www.go-limited.de>. The advertising company, following the European Court of Justice’s (ECJ) judgments on Centros (1999), Überseering (2002) and Inspire Art (2003), asks German businesses to take advantage of the guaranteed European freedom of establishment. Rather than suggesting the actual relocation of companies, the advertiser merely provides a vehicle for them to circumvent German company law. For 260 euros only, the advertiser offers a complete package for the establishment of a British ‘limited liability company’ (Ltd.). The advertising firm promises several advantages: among them, doing away with German bureaucracy; registration of the company in two weeks only; avoidance of strict German personal liabilities; free choice of authorized capital as long as it exceeds 1.40 euros (compared to a minimum of 25,000 euros in the case of a German GmbH ); no supervisory board codetermination if the company grows beyond 500 employees.

The authors’ thesis is that modern European economic regulation has gone far beyond simply coordinating trade and customs, and is now attempting to cause genuine structural changes in the way individual European manage their economies: "The goal of a number of recent Commission initiatives is no longer to create a level playing field among EU countries, so that market success is the judge of different varieties of capitalism; instead the Commission consciously pushes for the ‘modernization’ of European economies along the lines of the Anglo-Saxon model." This approach, the authors claim, is helping to drive the European Union’s democracy deficit. They analyze the Services Directive, the Takeover Directive, and emerging European corporate governance law jurisprudence to make their point.

I haven’t read the entire thing yet, but I thought I’d pass it along for those who are curious about this sort of thing.

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