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Competition is a policy, not an objective

by Jerome a Paris Fri Jun 22nd, 2007 at 04:54:48 AM EST

Key clause dropped from draft EU treaty

The European Union’s 50-year-old commitment to “undistorted competition” has been scrapped from a list of the bloc’s objectives in a French coup that lawyers argue could undermine Brussels’ fight against protectionism and illegal state aid.

(...)

“A creative lawyer could point to the fact that competition was deleted from the constitution as a sign it has been downgraded,” said one aide. “They could also argue that competition is a policy but not an objective,” said one.

By contrast “full employment and social progress” will remain Union objectives, offering possible cover to a country wanting to prop up a failing company or engineer a merger of “national champions”.

And this is how it should be, when you think about it. But of course, the whole point of such articles is to prevent us from thinking about it, by making the opposite position appear obvious and inevitable, without ever arguing about it.

Competition is a policy, not an objective. Now that's a slogan we could use...


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Neither a value...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Fri Jun 22nd, 2007 at 06:00:58 AM EST
when will the FT sour on Sarkozy?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 22nd, 2007 at 06:27:33 AM EST
Me thinks this might be more meaningful of a phrase for economics geeks than the regular guy and gal on the street. But your heart is definitely in the right place!! (We will keep working on it...)

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Jun 22nd, 2007 at 06:38:58 AM EST
[ Parent ]
This is a very strange thing for a self-entitled Liberal to say, but welcome.

During the intense debate in these last days about the Treaty it is becoming more and more apparent to me that strong pro-Europe Liberals are ready to compromise their individual-centric sentiment for a real European Union.

I hope these pro-Europe feelings spread rapidly.


Vencit omnia veritas.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Fri Jun 22nd, 2007 at 06:39:15 AM EST
Compete on Quality, not just Price.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Fri Jun 22nd, 2007 at 06:55:28 AM EST
After reading all the articles in this mornings Salon about this EU gathering...what with Blair and the Polish president (who else am I leaving out?) and all their demands, I am amazed that anyone is agreeing on anything. But this is a start!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Jun 22nd, 2007 at 07:08:03 AM EST
The important notion that EU governments must treat EU companies fairly regardless of what member state they are from has been tossed down the toilet !   The important word here is undistorted and you're fixating on competition.  From here on, let the demagogues of all countries, starting with Sarkozy, cherry pick their favourites for protection and subsidies unhindered by any broad principals.

What's left "full employment and social progress" ?  Those are just words of no practical value.  How about "truth, justice and the American way" or "let's just all be friends" while we're at it.

I say scrap the EU if it's no longer committed to one of the most basic rules that governs a common market.

by Guillaume on Fri Jun 22nd, 2007 at 07:53:44 AM EST
that's "broad principles" of course...sorry
by Guillaume on Fri Jun 22nd, 2007 at 07:56:40 AM EST
[ Parent ]
You mean there are markets where competition is not free?


In the original constitution, one of the Union's main objectives was listed as "an internal market where competition is free and undistorted". France has now persuaded Berlin to put a full stop after the words "internal market" in the new treaty.

Last night Britain appeared unwilling to put up a fight on the issue and German officials downplayed the significance of the move, arguing that the concept appeared 13 times elsewhere in the Union's legal texts.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 22nd, 2007 at 08:50:31 AM EST
[ Parent ]
Not sure what you mean.  But if you're saying markets are rarely perfect that simply reinforces my point.

If the EU no longer makes a point (or even a pretense) of striving for undistorted competition then the internal market is useless sham for the benefit of "elite" insiders.

Like I said, scrap it altogether.

by Guillaume on Fri Jun 22nd, 2007 at 09:51:10 AM EST
[ Parent ]
I think what we need to scrap are the current politicians, not the EU.  WE are the EU! and politicians need to learn and memorize that fact.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Sat Jun 23rd, 2007 at 10:53:45 AM EST
[ Parent ]
... if it serves the objectives, it should be pursued, if it is not serving the objectives, it need not be.

All too often, the positive consequences of pursuing what is labelled as "competition" is taken as read, when an analysis of the real impacts would show that what has been labelled "competition" is partial, or competition among those without economic power to the benefit of those with economic power, rather than to the broader public benefit.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Jun 23rd, 2007 at 11:09:58 AM EST
[ Parent ]
I like the slogan, but I'm not sure I like the new policy. I would argue that in the areas that we do leave to the market, free and fair competition should be an important objective. In other words, either a sector should be fully competitive or fully public (note, however, that a sector can be both regulated and fully competitive - in fact, I would argue, and Adam Smith with me, that the natural state of an unregulated sector is the cartel, which is certainly not competitive).

It seems to me that doing deregulation by halves gives us the worst of both worlds: Profiteering by private companies, corruption, cronyism and abuse of position on part of the government officials running the system (which is seems to become exponentially easier when private companies are involved, since such companies can claim 'business secret' to avoid freedom of information requests) and any potential efficiency drawbacks of a single-supplier system.

Cases in point: The California energy market deregulation and the subcontracting of the European railroads.

The discussion should not be about how much we value competition - it should be about which sectors we leave to the market.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 22nd, 2007 at 05:49:26 PM EST
Profiteering by private companies, corruption, cronyism and abuse of position on part of the government officials running the system (which is seems to become exponentially easier when private companies are involved, since such companies can claim 'business secret' to avoid freedom of information requests) and any potential efficiency drawbacks of a single-supplier system.

If free competition is an objective in its own right, then anything that can be protrayed as "more competitive" ... such as a profiteering private duopoly replacing a public not-for-profit monopoly ... is a "step" toward the objective.

If free competition is a policy instrument, then just sticking the competition label on a policy is not enough to justify it.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Jun 23rd, 2007 at 11:12:46 AM EST
[ Parent ]
If free competition is an objective in its own right, then anything that can be protrayed as "more competitive" ... such as a profiteering private duopoly replacing a public not-for-profit monopoly ... is a "step" toward the objective.

No, that does not follow. It is entirely conceivable that a system with limited competition is worse off than a system with no competition, as long as the no-competition system is also non-profit (a point that seems to escape many fiscal liberals). But I think that without a doubt, a system with more competition is better off than a system with limited competition.

Besides, it does not address what I were saying... I were saying that if we make the political decision to leave a sector to the market, then competition becomes an objective. We can then have a political discussion about which sectors should be left to the market (rather fewer than presently are, if you ask me).

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jun 23rd, 2007 at 12:02:26 PM EST
[ Parent ]
I was not addressing what logically follows, but what follows politically.

I were saying that if we make the political decision to leave a sector to the market, then competition becomes an objective.

Part of the political process of "deciding" to leave a sector to the market is often the semantic game of labelling anything left to the market as more competitive than anything performed by the public sector. If competition stands as an objective in its own right, quite independent of whether it helps or harms the welfare of EU citizens, that provides more leverage to that semantic game.

As a development economist, I am quite sensitive to this particular game, since the IMF and World Bank are long time players.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Jun 23rd, 2007 at 02:56:06 PM EST
[ Parent ]
I was not addressing what logically follows, but what follows politically.

Oh. Ok. Then you're probably completely right.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jun 23rd, 2007 at 06:29:21 PM EST
[ Parent ]


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