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The existing structural funds fund infrastructure. This is for industry.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 03:43:46 PM EST
[ Parent ]
In which case the need to support industrial activity in a trade deficit region should decline as it achieves a trade balance and thus, rightly, the supports should decline.

For the EU to develop susch a policy, three heresies have to be embraced:

  1. All trade imbalances within the Eurozone are a bad thing and should be discouraged by differential taxation and reduced through differentiation expenditure.

  2. The EU should actively promote economic equality in all regions within the Eurozone

  3. Optimised capacity utilisation = full employment should be a primary goal of economic policy and not some kind of residual remainder effect or collateral damage of "correct policies".


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 2nd, 2011 at 03:53:12 PM EST
[ Parent ]
In which case the need to support industrial activity in a trade deficit region should decline as it achieves a trade balance and thus, rightly, the supports should decline.

Indeed.

But that is only one role of a traditional federal administration.

The federal European level may wish to also have a policy on health care, income equality, homelessness, transportation, armaments, pensions and so on and so forth. Such policies cannot be sustainably funded out of cross-subsidies. So if you make "[t]he EU budget should be funded [exclusively] from trade imbalances," then you are implying certain things about the scope and nature of the European federal bureaucracy.

I'll reserve judgement on whether these implications are good or bad, but they are there and should be kept in mind.

All trade imbalances within the Eurozone are a bad thing and should be discouraged by differential taxation and reduced through differentiation expenditure.

Well, technically speaking it's only trade imbalances in excess of sustainable growth in the actual ability of a country to honour hard-currency obligations that's unsustainable. The system is not so fragile that it will blow up unless you go all the way to zero.

The EU should actively promote economic equality in all regions within the Eurozone

At a countries level, at least. As noted above, while a policy like this promotes intra-country income equality, it is not by itself sufficient to achieve it (nor is it the point of the policy).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 2nd, 2011 at 04:16:02 PM EST
[ Parent ]
What we're discussion here is specifically and only how an EU finance Ministry should be funded if it is to be effective in ameliorating structural imbalances within the Union at a trade level.

However if you concede the principle that all EU regions should harmonise/converge to some form of equality, that brings all sorts of other policy and service areas into play.  

We are so far off even trying to achieve equality at any level, I would settle for an EU Finance Ministry funded by a tax on trade imbalances and promoting greater economic equality at a macro level as a first step.

A Common EU public health service?  Yes, we can dream.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 2nd, 2011 at 04:35:44 PM EST
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