Economics & Finance
As the European Union struggles to contain its financial and economic problems, it is easy to forget the broader non-economic context to Europe’s troubles. Most discussion of Europe’s seemingly endless crisis is understandably focused upon the economic causes and effects of factors such as falling productivity, population stagnation and decline, excessive debt, sclerotic labor markets, and the ailing welfare states of many European nations.But while these elements contain their own specifically economic dynamic, they do not occur within a political, legal, or cultural vacuum. Widespread political and cultural expectations concerning the state’s role in realizing economic security, for example, contribute to profound resistance from many Europeans to any meaningful attempt to raise retirement ages or liberalize labor markets. Such expectations also help explain the relative weakness of entrepreneurial activity in many European nations compared to the higher appetite for risk that (still) characterizes America, but more particularly China.Among the many non-economic factors shaping Europe’s current crisis, there is one which, despite its seriousness, has not yet received extensive attention: an emerging rule of law problem throughout the EU.Many will be taken aback by this claim. Isn’t Europe the continent where the very idea of the rule of law was first developed in its most sophisticated form? And haven’t postwar European governments been so focused upon dispute resolution through shared legal protocols that they have been willing to dilute national sovereignty in order to enhance the authority of pan-European courts such as the European Court of Justice? Close attention, however, to particular decisions by European institutions and governments before and during the present economic crisis suggests that many have significantly infringed the rule of law.The meaning of the rule of law is by no means uncontroversial. Broadly speaking, it has been defined in “functional,” “thin,” and “thick” terms. “Functional” conceptions of the rule of law focus on the degree of “flexibility” enjoyed by public officials in deciding how to use state power: the greater the flexibility, the lesser the rule of law. “Thin” versions, by contrast, are less concerned with flexibility; instead they emphasize the procedural requirements that must be followed if the promulgation and application of a law is to be considered just. While “thick” conceptions of the rule of law embrace such concerns, they also insist that the rule of law necessarily involves protecting particular human rights, sometimes explicitly so.Central to all three versions, however, is a concern for restricting the ability of governments and public officials to act arbitrarily. The reasons are twofold. First, arbitrariness on the part of governments is, like any arbitrary choice, intrinsically unreasonable. After all, what plausible reason could be offered by anyone for choosing to act arbitrarily? Secondly, arbitrary public decision-making—be it by governments, legislatures, or judiciaries—destroys the certainty that those in positions of power will normally behave in particular ways.
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