Competition among Jurisdictions: The Idea of FOCJ

Abstract

The single European economic market has been a great success. The four freedoms relating to the movement of goods, services, labour and capital have without doubt significantly increased the welfare of the citizens within the European Union. With respect to politics, including economic policy, the picture is rather different. Essentially, one institution, the European Commission and its bureaucracy, has established itself as a monopoly government for European affairs, despite its so far limited powers. This paper argues that similar welfare improvements as in economic affairs could be reached in political affairs as well, provided the European Constitution allows for, and actively supports, competition between governments at all levels. The competition between already existing governments must be preserved but in addition a future European Constitution should foster the emergence of competitive new jurisdictions best serving individual preferences. These new governmental units are called FOCJ. The acronym relates to its four major characteristics:

• F = functional, i.e. the new political units extend over areas defined by the tasks to be fulfilled;

• O = overlapping, i.e. in line with the many different tasks (functions) there are many different governmental units extending over different geographical areas;

• C = competing, i.e. individuals and/or communes may chose to what governmental unit they want to belong, and they have political rights to express their preferences directly via initiative and referenda;

• J = jurisdictions, i.e. the units established are governmental, they have enforcement power and can, in particular, raise taxes.

We are grateful to Iris Bohnet, Isabelle Busenhart, Lüder Gerken, Felix Oberholzer, Dieter Schmidtchen, Jürg de Spindler and Christophe von Werdt for helpful remarks. Financial support by COST A7 is gratefully acknowledged.