The European Union: A Politically Incorrect View

Alberto Alesina, Roberto Perotti

NBER Working Paper No. 10342
Issued in March 2004
NBER Program(s):Economic Fluctuations and Growth, Monetary Economics, Public Economics

In this paper, we present our view of the recent evolution of European integration. We first briefly describe the main features of the institution and decision making process in the European Union, with particular attention to the debate between federalists and super nationalists. We then identify two key issues in the process of European integration: 1) an emphasis on institutional balance' based on a complex web of institutions with overlapping jurisdiction; 2) A conflict between a dirigiste versus a more laissez faire approach to government. We argue that the first problem leads to a lack of clarity in the allocation of powers between European institutions, confusion in the allocation of prerogatives between national governments and EU institutions, and lack of transparency and accountability. This dirigiste culture produces verbose rhetoric, which moves the European policy debate in the wrong direction. We then study how these problems play out in four important areas: employment policies, culture and scientific research, foreign and defense policies, and fiscal policy. Finally, we study the implications of the recently proposed European Constitution as a potential solution of these two problems.

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Document Object Identifier (DOI): 10.3386/w10342

Published: Alesina, Alberto and Roberto Perotti. "The European Union: A Politically Incorrect View," Journal of Economic Perspectives, 2004, v18(4,Fall), 27-48. citation courtesy of

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