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New Big-Government Schemes

There is nothing really new to the notion that European politicians are seduced by the ideas of state intervention and socialism, but it is interesting to note how good they are at coming up with new big-government schemes.

A few days ago, the European Union Commission presented the idea of a "globalization fund". The plan is to set aside 500 million Euros annually to "protect" companies, regions or industries that are threatened by new competition from countries such as China. Finally a plan to put a stop to whatever competition that has existed in Europe.

Disregarding the signs that ordinary Europeans citizens are skeptical to increasing the power of the European Union, the EU tax commissioner László Kovács recently said during an interview with Financial Times that he will come up with a proposal of introducing a European tax in 2009. Amongst others, he is quoted of saying:

"I know there are four or five countries that are resolutely against [a harmonised corporate tax base]. There is no practical reason for this, or at least I have never heard any concrete arguments for their opposition. With all my due respect to tax sovereignty, I believe that competitiveness is at least as important as tax sovereignty, if not more."

To be balanced, one has to admit that there has also been some good coming from the union during the past few years. For example, investments have been free to move across the borders and there has been a freedom for European companies to merge and acquire. Alas, French politicians seek to put a stop to the competitiveness of the European capital market. With the policies of "economic patriotism," French Prime Minister Dominique de Villepin has stopped foreign investments in French companies, adding to the countries massive protectionist politics.

A recent article in EUbusiness notes that countries such as France, Luxembourg, Poland and Spain are leading a trend to put up barriers to takeovers in the European Union, something that is described as a "return of state intervention reflex in Europe."

While the European Union is increasingly showing signs of big-government tendencies, individual European states are setting up regulations to hinder the competitive free market that the Union is supposed to create. At a time where European politicians should strive towards increased competition in a globalized world, they are finding comfort in the politics that have been the hallmark of stagnation and bureaucracy: high taxes, massive regulations and subsidies of failing sectors.

March 7, 2006