Aristotle, politics and Europe

For Aristotle the purpose of politics was to foster the achieving of the good life. He asserted that people who were the best at identifying the common good and should have the greatest share of political recognition and influence. Obviously, the meaning of the good life can be really questionable. But if we leave the meaning aside, we can learn something from of the Aristotle’s statement.

In democratic societies political leaders are elected through eventual elections where people show their preferences. So, the wish of the majority is often the result. But the policymakers who are elected are far away from being the best at identifying the common good insofar as their behavior is many times, if not always, motivated by winning the next elections not by doing the right things. Sure they can be the same thing, but it does not always happen. So, it is often better to be populist than realist. This is plausible because people do not usually like to stop ‘the party’. In this way, the Aristotle’s assertion about who should shape the political agenda could shed light to solving the bad behavior of policymakers. This would mean some people would have more power and influence than others.

Thus, this sentence ‘This would mean some people would have more power than others’ brings to my mind Europe, especially Eurozone. The reason seems to be clear: the bad behavior of southern countries leads to core countries trying to assume control to achieve the common good. Therefore, the purpose of politics as Aristotle asserted is fulfilled because untroubled countries should be the best at identifying the common good and therefore they should have the greatest share of political power. If we just see this side of the coin the current situation seems to be right to solve the problems. However, what does it happen if a share of the troubles of the southern countries is influenced by the reckless behavior of core countries? Is it correct that untroubled countries assume control?

There cannot be on single answer because it is not really clear who is guilty of the current situation in the Eurozone. But, there is something that we must take into account. Far beyond guilty or innocent, right or wrong, Europe is being leaded by political leaders who were not elected by European people as a whole and this must be our true concern by far because despite their deficiencies, democracies rely on the choice of their individuals not in the assumptions about their preferences.

So, the Eurozone needs to rethink its political system to achieve a way in which the current decisions to solve the problems depend on the desires of the people who are suffering those problems. So, can Europe learn something from this statement? Of course, it can.

Knowing what the common good is implies knowing which people who will be affected by it and what they want. And then, to be able to choose those ones who are better to meet the common goals.

The European Puzzle

The European Union, to be accurate the Euro Zone, keeps on next to the abyss. The straight meetings, the ECB’s measures and so on, have absolutely not finished solving the problems of which many lie in the design of monetary union. Despite lots of advice in the past, Europeans wanted to join faster than the magnitude of the project allowed.

The flaws in the design are closely linked with the Theory of the Fiscal Federalism. This theory tries to show what the optimal level of choice is inside a multi-government structure. The summarized conclusions are the following:

Resources assignments:  The theory asserts that the optimal level is decentralization.

The reason here is due to the fact that the efficiency of this sort of measures are linked with an assessment of the situation. Therefore, proximity is a key point.

Income distribution: The optimal level is centralization.

The main point is looking for convergence among places of the area through a tailored resource allocation.

Macroeconomic stability: The optimal level is centralization.

As well as the reasons of homogenizing both monetary and fiscal policies across countries, states or whatever, it is necessary that the decisions are adopted in the market size, i.e. European market.

From here, it seems easy to figure the flaws of the integration out. In the first years of the Euro, these flaws were overlooked because of the healthy global economy but at this time they are on the table. Thus, the Euro Zone as a whole and its state members have to make a choice. The options can readily be explained by “the trilemma of the global economy”.

Source: Rodrik

The economic theory asserts the integration as desirable because of efficiency:

• It allows taking advantage of the economies of scale due to the fact that the market size is bigger. This often translates to lower prices.
•  It allows widening of the kinds of products.
• It makes the market more competitive and it allows for better allocation of the resources.

The national sovereignty (the Nation-State) reflects the fact that the problems of the state must be solved by the state powers.

And in the third corner, the democratic politics are the political contracts between the policymakers and the society in terms of social protection and macroeconomic stability.

The picture and the explanation of the corners above show the options of the states members in the Euro Zone. With insight it can be seen that there is a trade-off between the alternatives. The states must choose two of the three, but they can never have the three fully. This is due to the fact that the asymmetry between the economic-financial sphere and socio-political decisions is increasing with integration.

So, what can we do?

In my own opinion, I consider that Europe should walk toward more integration if it wants to play a key role in the global economy. It should become a federal Europe handing over the national sovereignty to an upper level, the European level, in order to embrace the postulates of fiscal federalism theory.