Coordination costs and EU integration

There’s recently been controversy over the extent to which EU laws are written by lobbyists, and some enterprising souls have produced a web portal about it. The egregious Malcolm Harbour MEP shows up as one who takes quite a few amendments from the lobbyists; I still treasure a letter from him in which he forgot to fill in the losses due to IP infringment, which were stated to be “£_____ million per year”.

Worse than this fill-in-the-blanks politics on autopilot is the disparity European integration causes between the influence of interest groups. J H H Weiler makes the point that national legislatures are well integrated with civil society and business networks and the media, whereas the European institutions are much less so.

Consider the problem of concentrated benefits and diffuse costs, in rent-seeking.

The price of lobbying is partly a matter of transaction costs, that is, the cost of organising information. It is cheaper for a group of 10 people who all stand to lose £1000000 to coordinate their lobbying than a group of 1000000 people who stand to lose a £10 each, or, as Malcolm Harbour would put it, £__ each. The cost of coordination might be worse than linear, e.g., N.log(N) in the size of the group, or N.(N-1)/2 or something similarly hideous.

Thus the integration of multiple polities into a single polity can alter the relative costs of citizens’ representation. Twenty-seven groups of citizens lobbying against better concentrated interests is cheaper, relatively than one much larger group of citizens against a still small group of companies. It is no excuse to point out that both situations are costly to the citizens; what matters is that they differ in cost.

European integration on the current model exposes citizens needlessly to a relative diminution in the cost of their representation compared with more efficiently organised cross-border interests.

(See in particular the work of Benvenisti on Sharing Transboundary Resources)

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