Resolved: Flanders and Wallonia as E.U. States

On August 22, 2024, Bart De Wever of the New Flemish Alliance group in Belgium resigned as his efforts to form a government had stalled. His group had won the most votes in the E.U. state’s most recent election back in June, at which time King Philippe appointed De Wever to find consensus among five groups on policies such as taxation on capital gains. Belgium’s longest period without an elected government is an incredible 592 days, which was set after the previous record of 541 days that had been set after the 2010 elections.[1] With two culturally-different regions, Belgium has been difficult to govern. Being a state in a union could conceivably help Belgium in this regard.

A day after De Wever resigned, a media report insisted that “Belgium must form a government to file a federal budget to the European Commission by September 20, 2024.”[2] Yet it seems easy enough to miss such a deadline. Rather than look for administrative means by which being in the Union could pressure the state to get its act together on governing, the possible impact may be more basic. Put another way, thinking bureaucratically is not sufficiently “outside of the box.”

Theoretically, there being some governmental sovereignty at the federal (i.e., E.U.) level takes the pressure off a state to form a government because not all governmental responsibilities are handled any longer at the state level. In other words, there is less riding on which groups govern the member state. But the amount of sovereignty that had been delegated by the states to the Union by 2024 was not sufficient to relieve enough pressure, given that the 592 and 541 days had occurred when Belgium was in the European Union. Furthermore, the heady game of politics can make virtually anything seem important to political antagonists, even if major decisions of public policy are taken elsewhere.

So, like the efficacy of any administrative means by which the E.U. might attempt to chide a stalled state into forming a government, taking the heat off is also unlikely to succeed. Being in a union presents Belgium instead with the non-ideological alternative of splitting into two E.U. states without them being foreign. In other words, being in a political union effectively relativizes the fallout from splitting up because both Flanders and Wallonia would still be in the Union; neither, after all, would be the smallest state in the Union. The intractability in governing should be a wake-up call, or indication, that maybe the two regions would be better off as separate states; governing together just hasn’t worked out very well.

Of course, opposing such a change, which seems drastic, is the ideology of nationalism and the related difficulty, especially in Europe, of letting go of some history. The same ideology has manifested in the E.U.’s Euroskeptic parties in the European Parliament to the potential detriment of the Union itself. Even conflating the union with a “bloc” is harmful in that Belgians would not realize the extent to which Flanders and Wallonia would still together by virtue of being states in the same union, which is substantially different than a trading bloc or military alliance. Citizens of Flanders and Wallonia would all be E.U. citizens, for example. They could live and work in the other state, and they wouldn’t have to go through customs in traveling back to visit old friends. Additionally, the currency wouldn’t change. They would all still be represented in the European Parliament.

Ironically, Belgians might even have a greater Flemish and Walloon cultural identity due to greater cohesion at the state level. Identifying more at the federal level—leveraging this—could thus make enhanced regional identity stronger rather than weaker. Il faut séparer être ensemble. It is a pity that thinking outside the box is perceived generally as radical, and thus as easily dismissable, and that making substantial rather than merely incremental change is often an up-hill battle, given the intractability of political will and the related momentum of stasis in the status quo, whether it is working or not.

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1. Angela Skujins, “Belgian Government Talks at a Standstill after Resignation of Key Negotiator,” Euronews, August 23, 2024.
2. Ibid.

Public Policy on Housing in the E.U.: On the Impact on Federalism

With rents and the price of houses being historically high in 2024 in the E.U., it is no surprise that housing was a salient issue in the E.U. election campaigns that summer. Legislative action on the state level had been insufficient. Hence, President von der Leyen told the parliament, “I want this Commission to support people where it matters most, and if it matters to Europeans, it matters to Europe.”[1] The Union complementing legislative action by state governments on such an important issue is admittedly a step in the direction of solving an urgent problem, but the impact on the federal system in the future should not be ignored. As important as a pressing issue of the day is, someone should be keeping an eye on the shop itself. The gradual political consolidation of the U.S. federal system over more than two centuries at the expense of federalism is an example of what can happen when policy-makers are too oriented in putting out policy “brush fires” without bothering to ask how the federal system itself could be impacted.

To be sure, homelessness and high house prices and rents had become big problems by 2024. In 2023, an estimated 890,000 people were homeless in the E.U., while over 650,000 people were homeless in the U.S., out of total populations of almost 447 million and 336 million, respectively. Even though less than 1 million out of hundreds of millions looks minor, the trauma of being without a stable shelter, as well as the fear of losing one’s shelter due to a dire change in economic condition, argues in favor of housing being recognized as a human right that governments are obliged to supply where reliance on a market and personal income falls short. Put another way, the sort of existential angst that is triggered by homelessness and, to a much lesser though significant (yet subtle) degree, losing a job (or even knowing that it is possible) belongs in the state of nature rather than in civil society. Where the supply of available units of affordable (i.e., low-income, and no-income) housing is less than the number of homeless in a given geographical area, this argument suggests that government should see to it that the gap is filled. This is, of course, a normative argument, one that has been much more prevalient in the E.U. than in the U.S.

Generally speaking, government targets for new units tend to fall short of those that would be necessary to expunge actualized existential angst. In the E.U. state of Ireland, a local-government official bragged to a journalist in 2024 that the city government would reach its target, and the journalist pointed out that it is insufficient to eliminate homelessness in the city. Both in terms of being shy in having more affordable-housing units built and in standing up to hedge funds that are driving up house prices by buying up some as investment (and even by keeping some units vacant to increase the shortage), local governments have fallen short.

Besides spending money on the construction of new units, government can restrict the use of residential real estate for investment and even as small hotels (e.g. Airbnb). At least as long as homelessness exists, so this argument goes, shelter’s use for speculation is inconsistent with housing as a human right. To be sure, the moneyed interests in a society can be hard for democratically-elected representatives to resist even when a significant number of people are paralyzed by existential angst.  

Not going nearly so far but signaling a shift in societal and governmental priorities, President von der Leyen of the European Commission set up her second portfolio, or term of office, in the summer of 2024 by stressing “the urgency of tackling the housing crisis, proposing the first-ever European affordable housing plan and a commissioner responsible for the policy area, as the Socialists had demanded as a condition for backing her second term.”[2] At the time, “a significant investment gap in social and affordable housing” existed in the Union.[3] In addition to there being the homeless, people were “struggling to find affordable homes,” von der Leyen said at the mid-July plenary in Strasbourg.[4] “Between 2010 and the end of 2023, average rents in the E.U. increased by almost 23% and house prices by nearly 48%, leading to protests in cities.”[5] The general economic interest was being negatively impaired by the housing- (and food-) led cost of living increases.

The E.U. being a federal system of dual sovereignty, like the U.S., von der Leyen had to contend with the “limited competency” of the E.U. in housing; by this I do not mean incompetence. Rather, the federal and state levels could both legislate in housing. Because the states could “only use public funds to target the most vulnerable groups,” space was open for the federal government to legislate to bring the cost of housing down. In other words, the states were oriented to the homeless problem, which arguably represents a greater, or more severe harm in society, so the Union’s activity on the wider problem of high rental and house markets would not usurp the residual sovereignty of the state governments.

This is not to trivialize the problem of high housing markets, whether in California or Ireland. “In terms of state aid [at the federal level], we would like to see the recognition of social and affordable housing for all—beyond disadvantaged groups or social groups with fewer opportunities—as a service of general economic interest,” said Christophe Rouillon, president of the PES group in the European Committee of the Regions (CoR).[6] The scope not only of the problem, but also of the legislative means, or power, is such that this “limited competency” of the Union could have a significant impact on shifting more power from the states to the Union. “The E.U. can influence housing through financial regulation, competition law, energy efficiency, regulatory and planning standards, cohesion policy, climate action, urban/rural and social policies,” Rouillon stated.

The impact of federalism should not be lost on policy makers both at the federal and state level even though the primary focus is on the policy issues (i.e., homelessness and high real estate markets). In reaching a fever pitch of societal displeasure, these issues may give us a glimpse into how modern federal systems, which are characterized by split (or dual) governmental sovereignty, tend to consolidate power at the federal level at the expense of the state governments over time. Europeans would be wise to think about whether the E.U., just over 30 years old in 2024, would be as consolidated at the U.S. in 2024 after more than two-hundred more years. Both unions being of vast territorial expanse in 2024, such that states in each union can differ from one another in the same union so much that “one size does not fit all” in public policies, political consolidation comes with significant drawbacks. Additionally, the “check and balance” feature of federalism is rendered inoperative when a federal government has so much power that the state governments cannot counter-balance it. The question of whether the E.U. might end up as consolidated politically as the U.S. is thus not at all trivial.

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1. Paula Soler, “Von der Leyen Promised an EU Commissioner to Tackle the Housing Crisis,” Euronews, August 13, 2024.
2. Ibid.
3. Ibid. For those readers who feel the need to substitute “bloc” for “Union,” there is help.
4. Ibid.
5. Ibid.
6. Ibid.

The European Union Is Not a Trading Bloc

The European Union can be distinguished fundamentally from the previous European Economic Community in several ways, just as the Articles of Confederation can be distinguished on a fundamental level politically from the U.S. Constitution. Both Europe and America have made a qualitative jump, rather than merely as a matter of degree or further extent. In both cases, politically speaking, governmental sovereignty has been split between a union and state governments. Furthermore, in both cases, the domains of power being handled at the federal level have increased. In the case of the U.S., the coverage has expanded beyond Washington’s Continental Army. In the case of the E.U. even by 2024, the union’s coverage had come to extend well beyond a common market and trade policy to include non-economic domains of power, or competencies, too. In this regard, the E.U.'s federal level resembles a government.

After her reelection as President of the European Commission, the E.U.’s executive branch, in 2024, Ursula von der Leyen had some jobs to fill. Among them, each state was to designate one person to be a commissioner. It was up to the president to assign each person to an area, or domain, of power, which were hardly all economic in nature.

Among the dream jobs, besides Competition and Economic & Financial Affairs is Foreign and Security Policy, which is a traditional domain of a government. To be sure, the Competition Commissioner has considerable power “to block mergers, fine big companies, and ban state subsidies that distort markets—and, unlike most other E.U. commissioners, [the Competition Commissioner] doesn’t need to sign off decisions with governments or [the European Parliament].”[1] This represents a transfer of governmental sovereignty has taken effect from the state governments to that of the European Union (which also means that the E.U. had indeed a government of its own distinct from those of the states). Even though I suspect this is most true for economic portfolios, because a majority of E.U. competencies are subject to qualified majority voting instead of the principle of unanimity, the E.U.’s governmental sovereignty extends beyond the economic domain.

Among the rising stars of portfolios are two: Defense and Enlargement, rather than only Industry and Digital. That defense in particular was projected to be enhanced in Von der Leyen’s second administration supports the point that the E.U. was indeed thought of as a government, even if behind a veil of Euroskeptic (i.e., states’ rights) denial.

Among the golden oldie portfolios are climate, migration and justice, rather than just energy and trade. To be sure, on immigration there was still “a lack of real E.U. power.”[2] But “with concerns about media freedom and judicial independence” on the state level “on the rise,” the justice portfolio could “set a bold new direction in protecting the rule of law” within the union—power that can hardly be reduced to economics. Indeed, in enforcing justice within states rather than only at the federal level, the Justice Commissioner’s position itself supports the point that governmental sovereignty was in fact dual in the E.U. even in 2024.

That there were Commissioners of Agriculture and Budget also points to the E.U. being a government, as governments typically have their own budgets and have agriculture policies. Indeed, having territory, which the E.U. does indeed have, is a hallmark of being a government. The portfolios of Cohesion, Neighborhood, Home Affairs, Environment, Health, and Social Rights all contradict the supposition that the E.U. was economic in nature even as late as 2024. Social rights especially do not reduce to economics, but, rather, are fundamentally political in nature. Whether or not natural rights exist as John Locke argued, governments can institute and protect (as well as take away) social rights. The additional portfolios of Demography, Foresight, the Mediterranean, and “the E.U. way of life” all also go beyond the economic domain. So many portfolios at a high level in the Commission are not expressly or even mostly economic that it cannot be said that the E.U. was an economic organization at least by 2024 when Von der Leyen’s second term began with an emphasis on defense at the federal level, given Russia’s invasion of Ukraine.

Among the plethora of implications, the European Union cannot be characterized like the EEC was, as a single-issue organization; rather, in part because the federal competencies had grown broadly by 2024, we can speak of there being a federal government. There are of course other reasons why this is so in contradistinction to both the EEC and the American Articles of Confederation, both of which were solely international rather than a blend of national and international as evinced by the E.U. and U.S. Whereas in the U.S., that the U.S. Senate is founded on international principles has been commonly forgotten, most Europeans conveniently look over the fact that the European Parliament is founded on national rather than international principles.

Ideology is a great distorter, especially in politics and religion. To refer to the E.U. as an economic bloc is the epitome of intransigence in the face of political reality. That such a psychosis has been perpetuated by journalists in the service of ideologues, giving the brain sickness (recall Nietzsche’s use of the expression!) a patina of official legitimacy, is truly astonishing given the breadth of portfolios in the Commission alone.

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1. Gerardo Fortuna and Jack Schickler, “Demogra-what? A Definitive Guide to European Commission Portfolios,” Euronews, August 8, 2024.
2. Ibid.

Adding Anti-Trust to Monetary Policy: The Case of Groceries

Monetary inflation is a complex phenomenon. Not only can its causes be several; it can make it more difficult to distinguish immediate and medium-term economic conditions from more long term, or structural changes impacting our species economically.  Of the former, the relationship between inflation and whether the markets are competitive or oligarchic (or even monopolies) can be better understood, and this in term can put us in a better position to assess the impact of longer-term changes, such as those stemming from the huge increase in the population of human beings since before the industrial age. The price of food (i.e., groceries) is a case in point. Specifically, the impact from presumably temporary shocks during the Covid pandemic should be distinguished from the impact of oligopolistic markets in keeping prices high, and of the increase in human mouths more generally (and longer term) representing increased demand for foodstuff in on a relatively fixed planet.

In addition to a spike in the prices of raw materials, or, moreover, factors of production, and a growth in the money supply above the growth in GNP, the gradual consolidation of an industry from market competition to oligopoly and even a monopoly can increase inflation. The consolidation of the U.S. meat-producer market, for example, could be expected to result in higher meat prices at grocery stores. Similarly, barriers to entry facing discount grocery stores could result in food prices staying high even after a temporary increase in factor costs. In short, government action to keep markets competitive or return them to the discipline of competition should go side by side with monetary policy, lest it be assumed that inflation is primarily a result of the growth in the monetary supply. Otherwise, keeping interest rates higher than would otherwise be the case could unnecessarily put a damper on job growth.

In June, 2024, the U.S. official unemployment rate increased to 4.1 percent; the next month, that figure was even high, standing at 4.3 percent. This triggered the “Sahm rule,” according to which “a recession is imminent or underway if the three-month moving average of the unemployment rate rises by 0.5 percentage points or more relative to its prior 12 month low.”[1] The U.S. economy added 114,000, rather than the expected 175,000 jobs in July, and some people were nervous that a recession might be on the way.[2]

Accordingly, U.S. Sen. Elizabeth Warren wrote, “Fed Chair Powell made a serious mistake not cutting interest rates. . . . He’s been warned over and over again that waiting too long risks driving the economy into a ditch. The jobs data is flashing red.”[3] The Fed kept the interest rate in place in order to fight inflation even though 4.3 percent is above the acceptable range for unemployment according to the Fed. In fact, Austan Goolsbee, President of the Chicago Federal Reserve, said at the time that 4.3 percent was something the Fed “has to respond to” by cutting interest rates.[4] Besides, he added, the “trends show inflation coming down across the board, multiple months in a row” as the labor market was cooling.[5]

Anyone shopping in a grocery store, however, would beg to differ, however, as the rise in food prices during the Coronavirus pandemic had not come down after the shocks, which included shipping as well as hoarding, had ended following the pandemic. Meat prices in particular had stayed very high even though such levels would be expected to attract new suppliers (or more supply) in a competitive market. But the meat-producer industry had been consolidating so a few large companies could essentially dictate prices to grocery stores, a related industry that had itself become oligopolistic. That the discount chain, Aldi, was not in the San Francisco region of California, for example, even in 2024 while Safeway and Whole Foods kept prices high suggests that the competitive mechanism, which protects consumers from the excessive greed of producers unrestrained by market discipline, was not working, for the basic logic of market competition holds that higher prices (and profits) attracts new producers such that supply increases and prices fall rather than stay high unless the cost of a factor of production has increased and stayed high.

To be sure, limits to the supply of food (and the cost of fuel for shipping) could be expected to become more salient as the human population level continues to increase dramatically. Whereas the 20^th century had begun with about 2 billion human beings on the planet, the 21^st century mark stood at 6 billion; by just 2023, that number had increased to 8 billion. At some point, the Earth’s agricultural potential being relatively fixed, could be expected to run up against increased demand for food. The common experience of having to pay more for groceries during and even after the pandemic due to temporary shocks and the lack of competition that would otherwise increase supply and thus reduce prices could be just a taste of what humans could expect in the 22^nd century.

That a species’ population can increase beyond its ability to feed itself was posited by Thomas Malthus (1766-1834) in An Essay on the Principle of Population, published in 1798. The theological significance alone was startling, as the possibility threw off the notion that God had designed Creation and so the existence of God could be inferred from the excellence of the design found in nature itself. Malthus also claimed that famine, war, or disease is nature’s means of naturally correcting a schizogenic (i.e., maximizing) population, and subjecting the creatures who are in God’s image to such hardship hardly seems like part of the design of an omnibenevolent deity.

Therefore, the mechanism of a competitive market assumes not only lower barriers to entry, but also the capacity for increased supply when prices are relatively high, and this second assumption may be increasingly untenable as our species continues to grow while the natural resources of Earth remain relatively fixed, allowing of course for efficiency gains from technological advances. At the very least, from this macro perspective, governments should not shy away from enacting and enforcing anti-trust mechanisms so prices reflect not only demand, but also whatever supply is possible, given the Earth’s natural resources, especially in terms of energy and food (and also housing). Moreover, concurrent and sustained increases in several industries oriented to human sustenance ought to be especially concerning regarding toll from both uncompetitive markets and our species’ growth.

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1. Alicia Wallace et al, “Markets End the Day Sharply Lower . . . “ CNN.com, August 2, 2024.
2. David Goldman, “Elizabeth Warren: The Fed Made ‘a Serious Mistake,” CNN.com, August 2, 2024.
3. Ibid.
4. Ibid.
5. Ibid.