Their preoccupations are plainly visible, both in the debates that accompanied the drafting of the U.S. Constitution, and in the resulting text. They wanted to be certain that laws could not be passed without consent, nor taxes levied except by the will of elected representatives. They wanted the president to be controlled by Congress, and knew what they were doing when they placed the legislature in Article One and the executive in Article Two. They wanted the individual to be protected against arbitrary government or punitive levies. They wanted jurisdiction to be dispersed, with the federal authorities exercising limited and contingent functions while residual authority was vested in the states.
By and large, they succeeded. There have been alterations to the system they planned. The twentieth century saw the White House grow at the expense of Congress, and the federal government at the expense of the states—both, as we shall see, with unhappy consequences. But, relative to other countries, the United States has retained a remarkably devolved and democratic form of government. The Constitution did precisely what it was designed to do, limiting the growth of central power and encouraging the development of a pluralist polity. All the peculiar features of American democracy that we discussed in the preceding chapter—referendums, recall votes, term limits, open primaries, dispersed jurisdiction, direct elections—are the result of the exalted doctrines that were committed to paper at the old courthouse in Philadelphia in 1787.
Unfortunately, the EU is also a child of its time. Its Founding Fathers, no less than Washington or Madison, designed institutions to prevent a recurrence of the troubles through which they had recently passed. They had come through the terrible experience of World War II, and were determined to prevent future conflicts at any price. This they hoped to achieve by pooling, first the economic resources, and then the administrative structures, of Europe’s nations, so that wars between them should become logistically impossible. The objective of political integration was seen as overriding: more important than either personal freedom or democratic accountability.
Most of the framers of the U.S. Constitution had been involved in a rising against an undemocratic regime, and consequently saw representative government as a defense against tyranny. But the experience of the Euro-patriarchs, above all Jean Monnet and Robert Schuman, had been very different. They recoiled with horror from the memory of the plebiscitary democracy that had preceded World War II. They fretted that, left to themselves, voters might fall prey to unscrupulous demagogues. Accordingly, they were determined to constrain the ballot box and moderate the will of the people.
The system they designed vested supreme power in the hands of an appointed European Commission. Not only is the Commission the EU’s executive, equivalent to the White House; it also has a monopoly of the right to initiate legislation. This extraordinary and outrageous concentration of power is rarely remarked upon, possibly because it has become familiar through time. But it is worth contemplating the paradox that the twenty-seven members of the EU, all of them democratic in themselves, have submitted themselves collectively to a system of government in which supreme power is wielded by appointed officials who have been deliberately made invulnerable to the ballot box.
When the EU swats aside inconvenient referendum results, it isn’t behaving perversely. It is faithfully obeying the creed of its founders, who believed that public opinion often needed to be tempered by a class of sober functionaries. After all, had the EU been democratic, and had each successive transfer of power from the nations to Brussels been referred to the voters for permission, the project never would have taken off.
Which brings us to another critical difference between the two federations. In America, there was a sense of common nationhood prior to the formal federation of the old colonies. Most of the characteristics that define nationality—a similar culture, compatible religious practices, comparable historical experience and, above all, a common language—already existed in America, and it is striking that, when the Constitution was being negotiated, the word “nation” was generally applied to America as a whole (although the word “country” was more often used for a particular state). Although there was a strong and laudable tradition of localism, there was also a tangible American demos: a community with which Americans identified when they used the word “we.”
Almost no one in Europe feels a comparable sense of pan-Continental affinity. There is no European public opinion; there are no European media. Although the EU provides lavish funds to incentivize the creation of cross-border political parties, politics are played out entirely on a national basis. There is, in short, no European demos. If you take the demos out of democracy, you are left only with the kratos: the power of a system that must compel by force of law what it cannot ask in the name of civic patriotism.
__________
The paradox is that, in pursuing political integration without the consent of their peoples, the leaders of the EU are turning their backs on Europe’s heritage. The richness of European civilization has always resided in its diversity, its pluralism, its variety. Yet, comparing the political structures of the United States and the EU, we see that those values, exported across the Atlantic centuries ago, are thriving better in their new home than on their native soil. Rather as several varieties of European grape survived in California when the nineteenth-century phylloxera blight wiped out the ancestral vines in Europe, so the political structures that brought Europe to global hegemony are better preserved in North America than in the Old World.
What was it, after all, that made Western civilization the dominant force of the past five hundred years? Europe started with few advantages. Compared to the great Oriental civilizations—the Ming, Mogul, and Ottoman monarchies—the squabbling nations at the western tip of the Eurasian landmass seemed to have little going for them. Technologically, they were nowhere near as advanced as the great Asian empires, which far surpassed Europe in their knowledge of astronomy and mathematics, of cartography and medicine, of canals and gunpowder, of paper money.
Why, then, did Europe become the hegemonic power of the modern age? Why didn’t the Chinese, as one might have expected, sail round the Cape to discover Portugal? The most convincing answer was offered by the Australian historian E. L. Jones in his 1981 book The European Miracle—although Jones’s hypothesis was later carried to a much wider audience in Paul Kennedy’s The Rise and Fall of the Great Powers.
To condense an elaborate and subtle dissertation, Jones argued that Europe’s success resided in the fact that it never became a unified state, but rather remained a states system. Where the Oriental empires became centralized, bureaucratized, and heavily taxed, Europe’s princedoms were constantly competing one with another. New ideas were trialed in one country and, if successful, copied by others. The lack of a strong central authority encouraged a culture of enterprise and adventure, of exploration and mercantilism.
It tended also to encourage political freedom. Many European advances were driven by the phenomenon of the refugee. As long as there was somewhere to flee to, the power of the autocrat was checked. As long as there were competing states, no dictatorship would be secure. As Edward Gibbon put it in his masterpiece, The Decline and Fall of the Roman Empire:
The division of Europe into a number of independent states, connected, however, with each other by the general resemblance of religion, language, and manners, is productive of the most beneficial consequences to the liberty of mankind. A modern tyrant, who should find no resistance either in his own breast, or in his people, would soon experience a gentle restraint from the example of his equals, the dread of present censure, the advice of his allies, and the apprehension of his enemies. The object of his displeasure, escaping from the narrow limits of his dominions, would easily obtain, in a happier climate, a secure refuge, a new fortune adequate to his merit, the freedom of complaint, and perhaps the means of revenge.
This observation was already demonstrably true in Gibbon’s time. Britain’s ascendancy over France began w
hen, with the Revocation of the Edict of Nantes, the Bourbons expelled their Protestant subjects, thereby driving some of their most enterprising and inventive people to settle in competitor states. It was to be vindicated again in the story of the defeats of Bonapartism, Nazism, and the Soviet tyranny.
Which is why it is so tragic to see Europe abandoning the pluralism that was its greatest strength, and instead pursuing the Ming-Mogul-Ottoman road toward uniformity, mandarinism, and central control. Most EU member states are coy about admitting what percentage of their national legislation comes from Brussels. In Germany, however, a thorough analysis was produced by the Federal Justice Ministry in answer to a parliamentary question. It concluded that an extraordinary 84 percent of all the laws in Germany were there to give effect to EU directives or regulations. Unless and until other governments supply their own figures, it seems not unreasonable to assume that that figure would not vary much around the EU. If that figure is even remotely accurate, a European superstate is already upon us.
Quite apart from the negative impact on democratic accountability, this centralization of power has deleterious consequences for economic prosperity. As the Nobel Laureate Gary Becker has written:
Competition among nations tends to produce a race to the top rather than to the bottom by limiting the ability of powerful and voracious groups and politicians in each nation to impose their will at the expense of the interests of the vast majority of their populations.
It’s a phenomenon that political scientists call “systems competition.” The United States is a fine example of its beneficial effects—although less and less so as the federal government expands. The EU is a depressing example of what the United States might turn into: a federation that is prepared to sacrifice prosperity for the sake of uniformity.
External competition is perhaps the major constraint upon a dirigiste government. A state can raise taxes only up to a certain point before capital begins to flow into overseas jurisdictions. It can offer its workers generous social entitlements only up to a certain point before entrepreneurs, firms, and eventually whole industries start to relocate to more attractive regimes.
As Milton Friedman put it:
Competition among national governments in the public services they provide and in the taxes they impose is every bit as productive as competition among individuals or enterprises in the goods and services they offer for sale and the prices at which they offer them.
Of course, many of the supporters of European integration have an ideological dislike of competition. There were few economic liberals among the EU’s early leaders. Some of the Euro-patriarchs were socialists. Most were Christian Democrats, heirs to the corporatist and centrist political tradition that had begun in the late nineteenth century as an attempt to lure Catholic working men away from Marxism. For many Euro-integrationists, much of the appeal of the project lies in the fact that it is an alternative to the “jungle capitalism” that supposedly defines the United States.
The first generation of Eurocrats believed that supra-nationalism would remove the competitive restraints on governments. Instead of the difficult political task of persuading their electorates to accept spending cuts or less generous entitlements, EU governments could simply export their costs to their neighbors. They believed, too, that big was beautiful: that the advantages of a large home market would outweigh the costs of reduced competition.
Setting aside the ideological objections to this vision, it has become technologically obsolescent. In the 1950s, regional blocs were a much more credible proposition than they are today, when the Internet has eliminated distance, and when capital can surge around the globe at the touch of a button. It is no longer possible to ignore competition from the other side of the world. Competition from China and India is every bit as real as competition from Slovakia or Greece.
We can see, moreover, that the size of an economy is no guarantor of its success. If big really was beautiful, China would be more prosperous than Hong Kong, Indonesia than Brunei, France than Monaco, the EU than Switzerland.
In fact, the reverse is true. There is an inverse correlation between size and prosperity. The wealthiest people in the world tend to live in very small states, as can be seen in this league table.
STATE INCOME PER CAPITA
(U.S. DOLLARS, 2008)
1. Liechtenstein 145,700
2. Qatar 124,000
3. Luxembourg 113,100
4. Norway 98,200
5. Ireland 65,800
6. Switzerland 65,000
7. Denmark 62,500
8. Kuwait 60,900
9. Iceland 57,700
10. United Arab Emirates 56,300
11. Jersey 56,200
12. Sweden 53,600
13. Finland 52,200
14. Netherlands 52,200
15. Austria 50,600
16. Belgium 48,700
17. Australia 48,100
18. United States 46,900
19. Canada 45,500
20. France 44,700
Source: CIA World Factbook
As you will see, the list is dominated by micro-states. The only country in the top ten with a population of more than six million in Switzerland: a highly diffuse confederation.
You might be tempted to dismiss some of these territories as tax havens, but this is to beg the question. They became tax havens in the first place by having low taxes. And why did they have low taxes? Because they were able to avoid the waste and excess that plague larger territories.
It is enormously significant that the first large state on the list should be the United States: the big exception, in both senses. The reason the United States has done better than other macro-states is that, until now, it has governed itself like a confederation of statelets, allowing substantial autonomy to its constituent parts, and thereby retaining the chief advantages of small statehood: efficiency, lack of duplication, proximity to the electorate, limited bureaucracy.
Euro-integrationists dimly grasp that the assumptions of the 1950s no longer pertain, and that the EU is threatened by competition from more efficient polities. But their response is not to free up their own markets. Rather, it is to seek to globalize their costs, to extend Europe’s socioeconomic model to other continents. The EU has poured resources into encouraging the development of regional blocs around the world: Mercosur, ASEAN, the Andean Community, the African, Caribbean, and Pacific Group of States. And it is investing its political capital in schemes designed to create a degree of global harmonization, such as the G20 and the Rio-Kyoto-Copenhagen process.
In November 2009, the EU appointed its first president: the former Belgian prime minister Herman Van Rompuy. At his very first press conference, Van Rompuy announced that he wanted the EU to return to “the economic and social agenda.” Referring to the G20 Conference, he hailed 2009 as “the first year of global governance,” and went on to describe the Copenhagen Climate Summit as “another step toward the global management of our planet.”
Until now, the main obstacle to such global governance has come from Washington. Leaders of the EU, true to their founders’ vision, have tended to favor supra-nationalism, believing that global technocracies are a surer form of government than vote-grabbing national politicians. Leaders of the United States, true likewise to their founders’ vision, have supported national sovereignty, democratic accountability, and the dispersal of power.
Recently, though, things have started to change. The United States has been readier to accept a measure of supra-nationalism, and Barack Obama has indicated a willingness to share sovereignty on issues ranging from climate change to collaboration with the International Criminal Court. This international change in outlook has accompanied a change in the domestic arrangements of the United States: a shift toward greater central control and higher federal spending. America, in short, is becoming more European.
4
THE RETREAT FROM FEDERALISM
The powers delegated by the proposed Constitution
to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.
—JAMES MADISON, 1787
The Founding Fathers were in no doubt about the merits of decentralization. The autonomy of the individual states was, for them, “an auxiliary precaution,” alongside representative democracy and the separation of powers, to prevent the growth of an overbearing government.
The dispersal of power has several other advantages, too. It stimulates competition and economic growth. It encourages experimentation and the spread of best practice. It brings government nearer to the people and, in doing so, makes it smaller and less wasteful. All these boons, however, are, so to speak, fringe benefits. U.S. federalism was chiefly designed to prevent the growth of a dictatorial central state.
As Thomas Jefferson put it in a private letter in 1812:
Our country is too large to have all its affairs directed by a single government. Public servants, at such a distance, and from under the eye of their constituents, must, from the circumstance of distance, be unable to administer and overlook all the details necessary for the good government of the citizens; and the same circumstance, by rendering detection impossible to their constituents, will invite the public agents to corruption, plunder, and waste.
Don’t make the mistake of thinking that these arguments belong in the pages of a history book. If anything, the framers were hundreds of years ahead of their time in anticipating modern public choice theory. They intuited something that political scientists were later able to study empirically. They understood that large administrations would become prey to vested interests, and that the law of dispersed costs and concentrated gains would make big government expensive, inefficient, and nepotistic. In the words of John McGinnis of Northwestern University Law School:
The New Road to Serfdom Page 5