On March 24, 2010, what all observers of European affairs have long known will be written in stone: the EU failed to attain the targets for economic growth, efficiency, and modernization set ten years ago in Lisbon. Rather than becoming “the most dynamic economy in the world,” the EU is losing ground.
MILAN
– “Never confess a failure. Whenever you are about to miss a target, just move the deadline. Sooner or later, you will make it.” This simple rule, largely followed in Eastern Europe in the socialist days, is also popular among European Union bureaucrats in Brussels today.
On March 24, 2010, what all observers of European affairs have long known will be written in stone: the EU failed to attain the targets for economic growth, efficiency, and modernization set ten years ago in Lisbon. Rather than becoming “the most dynamic economy in the world,” the EU is losing ground.
The gap in per-capita income of the EU15 (the membership prior to the accession of mainly post-communist states in 2004) relative to the United States – taken as a reference in many targets – is unchanged at 30-40%, depending on the adjustment to purchasing power parity. The EU as a whole has attained none of the 17 quantitative targets set in the Lisbon Strategy. And all the qualitative targets, added later in the process, have been used mainly to feed national bureaucracies preparing plans within the so-called “open coordination method.”
Rather than digging into the reasons for this general failure, the EU is now issuing a document that calls for new ambitious targets for 2020. For another ten years, it seems, we can talk big and dream.
What failed in the Lisbon Strategy? Basically, everything – and the method, above all. Rules without any monitoring and enforcement mechanism are merely empty rhetoric. The “peer pressure” that should have been exerted in the open coordination method has been a powerful tool to exert “peer protection” in justifying delays in attaining the targets.
Second, the targets themselves were wrong, and there were far too many. Those who bravely tried to list them came out with three-digit totals. The only justification for such a long list is that every government could claim to have attained at least one target – a trophy to exhibit at home.
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Moreover, the targets mostly involved policies that do not require any supra-national coordination, such as labor policies, childcare, and pensions. Hence, the soft method, and the absence of sanctions for countries delaying the process. In addition, the targets were generally set in terms of outcomes rather than policy instruments. The government of a country hit by a positive shock could attain a target even without having done anything to achieve it.
For all of these reasons, postponing Lisbon to 2020 is a no-brainer. Rather than wasting time and public money to set up or maintain the Lisbon bureaucracy, the EU should closely monitor the attainment of those national and EU-wide targets that involve significant spillovers across jurisdictions. A clear case is environmental protection. The 2012 Kyoto targets are attainable. Any delay by one country in moving in that direction would jeopardize efforts made in other countries.
Another example is energy distribution. The EU is still very far from having a single energy market, which makes it more costly for business and households and reduces efficiency. Here, there is a strong case for having EU-wide targets rather than simply national objectives and sanctions for countries that do not liberalize their markets.
Other targets could instead be set at the EU level, rewarding those countries that contribute the most to attaining them. One such target is skilled migration. Europe is losing out in the worldwide race for talent, and the global recession is providing an opportunity to redesign the geography of human capital endowments.
Selective migration policies and talent-friendly environments supported at the European level could significantly improve the net skill migration balance, which is currently negative or zero in all EU countries. There is a pool of about 300 million graduates to build on, and, according to solid evidence, they react to changes in economic incentives with respect to their location choices.
In this context, there are clear spillovers across jurisdictions, not least because talents go where there is a critical mass of job opportunities for them. People often move as “power couples” looking for good jobs for both adult members of the household. With popular destinations like the United States and Canada cutting back on research and public education and facing the need to raise top tax rates, Europe has a unique opportunity to attract skilled migrants and reduce the exodus of European researchers.
The so-called “blue-card” process has so far been largely unsuccessful, because there was no incentive for individual states to coordinate their policies. How about conditioning EU support to national researchers on the adoption of selective migration policies? That would be the first serious step towards creating a single market for labor in Europe.
If Europe were to take such steps, it would look not only like the land of redistribution, but also like a place where the environment is taken care of, energy distribution is efficient, and talent is highly rewarded.
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The escalating war in the Middle East must be understood in a broader context. The fact that the Iranian regime felt emboldened to risk a direct strike on Israel attests to a changing world order in which Western power is increasingly open to challenge.
considers the implications of Iran’s unprecedented decision to launch a direct strike on Israeli territory.
MILAN – “Never confess a failure. Whenever you are about to miss a target, just move the deadline. Sooner or later, you will make it.” This simple rule, largely followed in Eastern Europe in the socialist days, is also popular among European Union bureaucrats in Brussels today.
On March 24, 2010, what all observers of European affairs have long known will be written in stone: the EU failed to attain the targets for economic growth, efficiency, and modernization set ten years ago in Lisbon. Rather than becoming “the most dynamic economy in the world,” the EU is losing ground.
The gap in per-capita income of the EU15 (the membership prior to the accession of mainly post-communist states in 2004) relative to the United States – taken as a reference in many targets – is unchanged at 30-40%, depending on the adjustment to purchasing power parity. The EU as a whole has attained none of the 17 quantitative targets set in the Lisbon Strategy. And all the qualitative targets, added later in the process, have been used mainly to feed national bureaucracies preparing plans within the so-called “open coordination method.”
Rather than digging into the reasons for this general failure, the EU is now issuing a document that calls for new ambitious targets for 2020. For another ten years, it seems, we can talk big and dream.
What failed in the Lisbon Strategy? Basically, everything – and the method, above all. Rules without any monitoring and enforcement mechanism are merely empty rhetoric. The “peer pressure” that should have been exerted in the open coordination method has been a powerful tool to exert “peer protection” in justifying delays in attaining the targets.
Second, the targets themselves were wrong, and there were far too many. Those who bravely tried to list them came out with three-digit totals. The only justification for such a long list is that every government could claim to have attained at least one target – a trophy to exhibit at home.
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Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
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Moreover, the targets mostly involved policies that do not require any supra-national coordination, such as labor policies, childcare, and pensions. Hence, the soft method, and the absence of sanctions for countries delaying the process. In addition, the targets were generally set in terms of outcomes rather than policy instruments. The government of a country hit by a positive shock could attain a target even without having done anything to achieve it.
For all of these reasons, postponing Lisbon to 2020 is a no-brainer. Rather than wasting time and public money to set up or maintain the Lisbon bureaucracy, the EU should closely monitor the attainment of those national and EU-wide targets that involve significant spillovers across jurisdictions. A clear case is environmental protection. The 2012 Kyoto targets are attainable. Any delay by one country in moving in that direction would jeopardize efforts made in other countries.
Another example is energy distribution. The EU is still very far from having a single energy market, which makes it more costly for business and households and reduces efficiency. Here, there is a strong case for having EU-wide targets rather than simply national objectives and sanctions for countries that do not liberalize their markets.
Other targets could instead be set at the EU level, rewarding those countries that contribute the most to attaining them. One such target is skilled migration. Europe is losing out in the worldwide race for talent, and the global recession is providing an opportunity to redesign the geography of human capital endowments.
Selective migration policies and talent-friendly environments supported at the European level could significantly improve the net skill migration balance, which is currently negative or zero in all EU countries. There is a pool of about 300 million graduates to build on, and, according to solid evidence, they react to changes in economic incentives with respect to their location choices.
In this context, there are clear spillovers across jurisdictions, not least because talents go where there is a critical mass of job opportunities for them. People often move as “power couples” looking for good jobs for both adult members of the household. With popular destinations like the United States and Canada cutting back on research and public education and facing the need to raise top tax rates, Europe has a unique opportunity to attract skilled migrants and reduce the exodus of European researchers.
The so-called “blue-card” process has so far been largely unsuccessful, because there was no incentive for individual states to coordinate their policies. How about conditioning EU support to national researchers on the adoption of selective migration policies? That would be the first serious step towards creating a single market for labor in Europe.
If Europe were to take such steps, it would look not only like the land of redistribution, but also like a place where the environment is taken care of, energy distribution is efficient, and talent is highly rewarded.