Could you please explain what European public goods (EPGs) are and how they have an impact on the lives of Europeans?
At the heart of the notion of European public goods is the question of economic efficiency. European public goods refer to policies that will bring greater value to European citizens if carried out at the European level rather than at the domestic level. Given the current context, just think of defence: a lot of money could be saved – so-called ‘economies of scale’ – by avoiding the duplication of efforts at national level, for those states than can afford it, and do more at the European level. European public goods have an impact on the lives of Europeans in that they contribute to improve the delivery and the economic efficiency of a range of policies.
European public goods are associated to European funding policies in pivotal domains such as agriculture, cohesion, or social fields. Why were these areas deemed necessary to receive large investment at the European level?
Taking a step back, the reason why European policymakers decided to develop European funding in these areas - the Common Agricultural Policy (CAP), Cohesion, Social Policy - had often little to do with the notion of ‘economic efficiency’ that is at the heart of the idea of European public goods. Don’t get me wrong, economic reasonings were not unrelated to the final decision. The making of the single market, the desire to help less developed regions and support workers or the prospect of Economic and Monetary Union were central to the development of these policies. But ‘economic efficiency’ as such was not quite on the radar of EU member states. Political bargains and trade-offs were front and centre in the development of the CAP in the 1960s and that of regional policy (the ancestor to Cohesion policies) in the 1970s, for example.
In your paper, ‘An uphill struggle: a long-term perspective on the European public goods debate’, you explain that historical advancements in European public spending happened in very specific circumstances and were not solely motivated and justified by economic efficiency. What role did political bargaining play in agreeing on common European public expenditure?
Let’s look at one (in)famous case, the common agricultural policy. Some of its aspects could qualify today as EPGs, such as for instance food security and sustainable farming. But when the CAP was created in the early 1960s, the considerations of its supporters were very different. To simplify, the Dutch government wanted to secure its exports, the French government to protect French farmers, and the Commission to finally develop one large common policy. ‘Economic efficiency’ was quite far off among such considerations, including later in the designing of the details of the CAP.
Another timely example is the question of setting up a European budget for defence. It was proposed in the past, even if it did not materialise in the end. The European Defence Community (EDC), which was eventually abandoned in the mid-1950s, did include a common European defence budget. Was economic efficiency at the heart of the desire of France, Germany, Italy and the Benelux countries that wanted to set it up? No, it was rather that the French government feared a German rearmament. The French government preferred agreeing on defence becoming supranational, and hence out of German hands. Again, a rational decision based on ‘economic efficiency’ had little to do with that – just as the eventual rejection of the EDC Treaty.
As mentioned in Bruegel’s ‘The Sound of Economics’ podcast, the current geopolitical scenario has sparked debates on whether the European Union should increase its expenditures in common defence. Given the sensitivity of the matter, and the different approaches amongst member states, what could we expect in the coming months regarding the question of European public goods?
What we can certainly expect is a lot of debate, which is important, because the issue is central to the future of Europe. Our Economic and Monetary Union Laboratory (EMU Lab) at the EUI is making an important contribution to this – you can read the papers that Marco Buti, Part-time Professor at the Robert Schuman Centre, and colleagues have published on the design of European public goods.
Whether this debate will lead to concrete decisions is another matter. I think the future will depend on how we can commonly argue for spending at the EU level rather than the national one. And when I say ‘we’ I don’t just mean academics, pundits, and think tankers. Reasonings in terms of economic efficiency are important, but I think unlikely to win, alone, popular support. We need to move the debate at a broader level, and we probably need to think about the core question: What do we Europeans want to do in common, and why? The economics of the answer to that question will then follow.
Emmanuel Mourlon-Druol is Professor of History of European Cooperation and Integration, 20th century to the present, at the EUI Department of History. His research focuses on 20th century international and transnational history, with a particular focus on European cooperation and integration, business and financial history, the Cold War, and the use of digital methods in historical research. He is also a non-resident fellow at Bruegel.