November 19, 2017

Devolution and concentration of power go hand in hand

By Barend ter Haar.

Power in Europe is moving in opposite directions. On the one hand the number of states has grown considerably. The German Democratic Republic disappeared, but more than twenty new states appeared, mostly as the result of the disintegration of the USSR and Yugoslavia. At the same time several countries have been devolving powers to their regions: in Belgium to Flanders and Wallonia; in Denmark to Greenland; in Great Britain to Scotland and in Spain to Catalonia, to mention only a few examples. Of course all these cases are different, but the general trend is clear: power is spreading from the old centers to regional centers and the number of European states is growing.

At the same time that political power is spreading, power is concentrating at a global level. This concentration of power is less conspicuous, because it is gradual and because it is not concentrated in one place, but in a varied collection of global institutions.

Some are governmental (such as the Intergovernmental Panel on Climate Change), some non-governmental (such as the International Organization for Standardization) and some are private (such as Microsoft), but their common characteristic is that they are setting global standards.

Although these institutions usually have no formal power to enforce their decisions, individual states and individual citizens have little choice but to respect them. To give just a few examples: without global standards and definitions international communication would come to a standstill and the fight against infectious diseases would be lost.

Private enterprises were quicker to realise the potential of working on a global scale than governments. As a result some of them have acquired enormous power. Take for example the growing influence on our thinking and behaviour of internet firms, such as Alphabet (Google) and Facebook. We are only starting to grasp the implications of this power.

Or take Apple, that by selling for more than $200 billion a year makes a profit of about $40 billion ($40.000 million) a year. As these profits are taxed at a substantial lower rate than the income of an average Dutchman (about 25% against 37%), Apple has a lot of “free power” in its hands.

More in general, the investment decisions of global private companies have large implications. Whether they invest in lucrative cosmetics and gas-guzzling SUVs rather than in pharmaceuticals and a circular economy has consequences for people all over the world. It is up to states to nudge them in a desirable direction by taxes, covenants, laws and other means. Unfortunately, multinational companies are global players, whereas governments often lack the expertise and the power to play in the same league.

What is the conclusion we should draw from this? Bringing power as close to citizens as possible is a laudable aim, but we should not pretend that global challenges can be solved by “taking back control” to the national or local level. To address these challenges, action at the national and local level has to be complemented by action at the global level and the best way to protect and promote European interests at the global level is by empowering the European Union to act as a global player.

 

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