Assignment 3: React on an article

Opinion of Jochem Verheijen on the article of ‘The Sun’ on the ratification of the Lisbon treaty by the British government.

Article: "Britain betrayed as hated EU Treaty becomes law", published in The Sun on 04 November 2009.

As the title suggests, the article gives a view on the new EU treaty, and the British government that signed it. I will try to give comments on the article itself and on its content. I would like to start by saying I believe newspapers should not convey political opinions of their own. I believe newspapers should solely fulfil a reporting function. This means that, if they intend to give their opinion, they should sufficiently show and refute the alternative opinions. I believe The Sun has failed to do so in this article. For those who did not notice, the term “Euro-sceptic” certainly applies to The Sun. Even though, in my opinion, a sceptic should be a person inclined to question or doubt all accepted opinions, where The Sun solely seems to accept their own, and refrains from questioning the others. This lack of reasoning can also be found in hate, I find the term “Euro-haters” therefore more appropriate.

Obviously, the Sun must have its reasons for disliking the Lisbon treaty. A quote in the article calls the day the document was signed, “a bad day for democracy”. In my opinion, the Lisbon treaty gives an increase in democracy within the EU, especially when you compare it to its older brother. This is the result of, one of the biggest Lisbon changes, the increase in power of the directly elected European parliament. Of course, not hosting a referendum seems undemocratic. However, how can it be a bad day for democracy if the ratification will lead to an increase in democracy, even if it has not been democratically decided on? Furthermore, the decision to sign the treaty has been made by a government that has been elected. Because Britain only has two parties, the government always represents the say of the majority of the population.

Something that seems to concern the writers is the loss of vetoes on some subjects. I think a drop in vetoes will only make decision-making easier and less lengthy. It is obvious that no decision will ever have negative affects on any member state. All that vetoes add is the possibility for a member state to postpone a decision they are not really fond of. The subjects that will no longer be voted on unanimously will now be voted on using the treaty’s qualified majority voting system. Since this system is more democratic than most national systems, the drop in vetoes will not have negative affects for democracy within the EU.

I understand the ever so proud English are afraid of losing sovereignty. On the other hand, I believe the UK benefits from having a stronger Europe, and that this treaty will help creating that. And Britain: Don’t be tricked into thinking this treaty will make the UK “just a province of Europe”.

Assignment 4: The Credit Crunch

State aid, fuel for inefficiency

If we understand correctly, banks in America have been lending money to people who could not afford a loan. To be able to give all this money away, the banks leant money from other banks, which on their turn did the same. If bankers were trying to show their children how to blow bubbles, they have certainly succeeded. The other thing they did was cause a crisis.

One and a half years later, the lack of financial backing and drop in spendable income is having a severe impact on a lot of companies. Governments are expected to come to the rescue. However, the main characteristic of a crisis is that it does not have an apparent solution. In this case, speaking of one solution is as understatedly optimistic as it is unrealistic. I believe that a crisis is ideal for a market to get rid of underperforming companies and regain healthy internal competition. This theory does suggest the market is able to solve the crisis by itself. This would make state aid, and intervention, redundant. The contrary solution to the crisis involves providing financial backing for companies that face bankruptcy, just to get them through the crisis.

I believe that the solution does not lie completely in either one of these extremes of the spectrum, and that it is up to the governments to find a consensus. To determine which companies deserve state aid, a clear distinction should be made between companies that go bankrupt during the crisis and companies that go bankrupt because of the crisis. Companies that are solely inflicted by the poor economical environment, in theory, have the right to be helped through the crisis. Because governments can than safely assume that, when the crisis is over, the company will healthily resume service, and be able to contribute to the domestic market once more. In this scenario, State aid can be seen as an investment. However, by financing unhealthy companies, you allow companies to remain unhealthy. While a crisis should form a very strong incentive for underperforming companies to increase efficiency. The increase in efficiency will provide the company with a stronger competitive position, which will have a positive affect on the market and it’s economy.

To conclude, I believe state aid is a measure governments should be able to take. However, companies should be thoroughly assessed on past performance, and cause of underperformance, before the states aid.