“The EU wants to make Europe into a social transfer union”


I’ve recently had the privilege of interviewing Prof. Dr. Erich Weede (Germany). Dr. Weede is a regular speaker at the Free Market Road Show. In 2015 he’s going to be joining us, at least, in Amsterdam, in Vienna, and in Munich as well across the Balkans.

Prof. Weede earned degrees in psychology and political sciences. He taught at Bonn University until 2004, when he retired. He’s written eleven books and more than two hundred articles. Among his writings, we can find The Balance of Power, Globalization, and the Capitalist Peace, Economic Freedom and Development: New Calculations and Interpretations, and Mensch und Gesellschaft -which my colleague Roland Fritz defines and “breathtaking”.

Needless to say, Erich Weede possess a keen intellect coupled with an encyclopedic knowledge. He’s a bright enlightened man who is more than worthy of our attention. We can undeniably learn a lot from him.

Below I’ve reproduced part I of the interview. It’s mostly on the current state of Europe. Part II, which will be published next week, has to do the Popper, Hayek, and the methodology of sciences.



Federico N. Fernández: During the 2014 Free Market Road Show you said that “the EU rewards bad governance”. Can you explain why?

Erich Weede: Within the Eurozone poorly governed and highly indebted countries like Greece are rewarded by being given the moral right to assistance from somewhat better governed countries, like Germany. Thereafter, it happens that Greece pays on average even less for its outstanding government debt than Germany does.

FF: What has made Europe stronger: union or disunion?

EW: Historically, European disunity has been the main reason why European princes had to concede safer property rights and more economic freedom to their subjects than the rulers of huge Asian empires. By ‘rescuing the Euro’ and avoiding government bankruptcies in Mediterranean Europe, the EU reduces economic freedom in assistance-providing as well as in assistance-receiving countries. Unfortunately, less economic freedom is not good for growth.

FF: What is to be expected if the “harmonization” trend continues on the European Union?

EW: In principle, harmonization could be good. In principle, harmonization might mean more economic freedom for everyone. One might abolish growth-retarding regulations or reduce government ownership. Unfortunately, the EU seems more interested in harmonization for harmonization’s sake and in expanding its regulations than in the promotion of economic freedom.

FF: The current European political scenario seems to present pro-EU mainstream parties vs right and left anti-system populists. Is there any hope for a rational and liberal message to be articulated and presented to the voters?

Nigel Farage, leader of UKIP. Photo Credit: Channel 4

EW: Some so-called populist parties advocate illiberal economic policies, like the Front National in France. UKIP in Britain is certainly more liberal than Labour in its economic policies. Whether UKIP will be as liberal as or more liberal in its economic policies than the Conservatives once it joins the government remains to be seen.

FF: Should the European Union be dismantled or reformed?

EW: The Euro is not viable without semi-permanent rescue operations. Currently, the EU builds a second tier of the transfer state. At the national level, the tax and transfer state has grown vigorously everywhere in Europe since the 1960s. For demographic reasons the sustainability of European welfare states is in doubt. Instead of doing the sensible thing, instead of trimming welfare states, the EU wants to make Europe into a social transfer union. This is not what a graying continent needs.

FF: War has re-entered the European frontiers in Ukraine. What can you tell us about this conflict?

EW: It is dubious whether NATO expansion was a good idea. Russian opposition to it was foreseeable. Discussing NATO membership for Ukraine without granting it generated the worst conceivable situation. Russia was not deterred. But it felt threatened by NATO expansion. Given the unwillingness of NATO to fight and its lack of preparedness for a fight, Russia felt free to violate international law and to annex the Crimea and to destabilize some parts of Eastern Ukraine.



FF: The recent terrorist attacks in Paris have ignited, once again, debates over massive immigration and the relationship between European countries and their Muslim minorities. What is your view on this issue?

EW: First, mass migration from poor Muslim and African countries into Europe is likely to remain a fiscal burden for the taxpayers. The improvement in living standards for poor and desperate migrants is paid for by more confiscation of earned incomes from Europeans. Second, mass immigration generates cultural (religious as well as ethnic) heterogeneity in European countries. By and large, culturally heterogeneous countries are politically less stable than homogenous countries. They are more likely to suffer from civil war. Think of Sri Lanka (Singhalese and Tamils), Iraq (Sunnis and Shiites), Turkey (Turks and Kurds), Lebanon (Christians, Shiites, Sunnis), Syria (Alawites and Sunnis), former Yugoslavia (Catholic Croats, Orthodox Serbs, Muslim Bosnians or Kosovo Albanians), even Northern Ireland (Catholics and Protestants). Cultural heterogeneity undermines the legitimacy of the legal order. Obviously, a legal order works best, if most people want to obey the law most of the time. Third, because of the challenges of cultural heterogeneity, government in heterogeneous societies is likely to expand. European anti-discrimination laws are an example for this heterogeneity-induced expansion of government. In effect, these laws reduce the freedom of contract.

Click here to read the second part.

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