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Keeping markets free
Peter Jungen explains how the European Enterprise Institute is winning the argument over open and free markets
 Peter Jungen |
The emergence of new regional economic power-houses such as India and China has put the economic leadership of the US and Europe under strain. What used to be the undisputed leaders in economic growth and wealth creation is today not a given fact. But what some people call globalisation is not a new phenomenon. History is full of shifting economic trade patterns and not so long ago it was the Asian tigers that caused concern; today, it is India and China. As an entrepreneur I do believe that that competition can only be of benefit to the people.
Unfortunately this opinion is shared by too few policymakers. The examples of economic protectionism are too many. In Europe, Spanish authorities tried to block the German power company EON from taking over the Spanish company Endesa on the mere grounds that EON is German. In France the government is openly engineering deals to block-out Italian companies, raising suspicion about future entries into the French market.
Last year, rumours of an American take-over of the French diary producer Danone, made some politicians to call for “nationalisation” of the dairy industry, bear the mark of ridicule. That the Indian company Mittal Steel should spark political uproar by daring to challenge the European company Arcelor is another example of this trend. That we in Europe actively support European companies, to establish themselves in countries such as India is suspiciously left-out in this debate. The renewed and dangerous push of protectionism in Europe on the economic front is labelled in the US as fighting terrorism or homeland security. So where does this current strand leave individual businessmen and investors? As an investor in several start-ups I have been an active part of the process which Schumpeter called “the process of creative destruction”.
I have during my business career, focused on re-shaping ideas and making sure that competitive ideas are put to the market. Sometimes this has meant new jobs, but occasionally it has implied that jobs are moved to other sectors or regions. Overall, though, I believe that the economy has benefited from my investment which has allowed companies to grow or new technology to establish itself. Creative destruction is inherently a process and can not be seen as a static snap-shot of history.
What was once the heart of the textile industry in a European country, is today a high-tech valley, and former Communist coal mines have been replaced by biotech. The process of innovation and transformation is ongoing and happens as we speak, but rarely is it noticed. I am not sure why this process never hits the headlines; whether it is the problem of a media too focused on reporting the bad news or if it is scare mongering amongst politicians wanting to score easy points.
I do know however, that in order for Europe and the US to succeed, we will need to embrace globalisation rather than oppose it. We will need to focus on our strengths rather than on our weakness. The EU has launched a process intended to make Europe the most competitive economy in the world, but besides rhetoric, little progress has been made. Sometimes in Europe we forget that at the end of the day it is the small steps that really matter. The Services Directive was such a step that would have opened up a big portion of the EU economies to competition and to further development.
This would have been an important step towards achieving the EU’s political goals but once again it was blocked by those who feared globalisation — and this time it was not India or China that they feared, but neighbours and partners in the EU. Why is it that as the whole world starts to open up, the EU starts to close its borders?
 The European flag, among others, fluttering in front of the European Parliament building in Brussels |
We now seem to have sort a of compromise, but one that is far from the initial proposal. Overcoming these tendencies is not something that can be done overnight. The process of changing a mind-set has to be approached with time and education. I have no doubt that what today seems far away, will tomorrow seem normal.
In 2003, a group of European entrepreneurs and politicians, came together to establish an organisation that could start a process to change this intellectual wall paper in Europe. It was our idea then, and it still is, that Europe needs a place where a frank and open dialogue can be held between the academic, business and political world. Although such an organisation might be new to Europe, its philosophy and inspiration came from the US. Since it was launched in 2004 the European Enterprise Institute has started to carve out its role in the Brussels policy-making circles. We have worked on a variety of issues, ranging from energy policy to entrepreneurship.
We have published articles and arranged events with distinguished authors such as Commission President José Manuel Barrosso and Ivan Miklos, Deputy Prime Minister of Slovakia, who have also joined our Advisory Council. In short, the EEI is seeking to be a place for an informed debate and discussion on what is important for European competitiveness. In this mission, merging the policy agendas of both sides of the Atlantic is a goal in itself.
The economic partnership between the US and Europe is the strongest and most important in the world. Our economic interdependence is enormous and any policymakers can witness this on its merits. Still, too little is being done at a policy level to bring these parties together. We need, therefore, a new economic partnership built on joint interest and the realisation of a transatlantic market. The European Enterprise Institute tries to answer this call by being a platform where ideas are being discussed and highlighted at a political level in Europe.
Protectionism and the fear of open markets will not be overcome overnight. I believe though that it is only by engaging in a debate and being frank about the challenges, as well as open about the benefits, that we who support open and liberal markets can finally win the argument. In this respect, any organisation or business working to increase the understanding of these issues, contributes to the most efficient long-term defence against anti-liberal rhetoric that is so detrimental to our common welfare.
Website: www.european-enterprise.org