Sunday 17 October 2010

We need an EU Attorney General and a EBI rather than the Europol

The title of this post is fairly self-explanatory. By "EBI" I mean a European Bureau of Investigation, à la FBI. The EBI should investigate and the EU Attorney should investigate. He should be appointed by the European Commission upon confirmation by the Council and the European Parliament. Why? Well there are a lot of arguments in terms of more efficient cross border policing, particularly relevant for the struggle against organised crime. However my concern is obviously closer to my comfort zone. This institution also makes sense from the point of view of a more coordinated fiscal policy. If the EBI could investigate fraud and claims that national government officials misled their euro-zone partners, this would obviously be a step further in ensuring compliance with euro-zone rules. If national officials know that misleading statements may cause them to end up in jail, then they'll at least think twice about messing with the figures. As we have it now, when your elected representatives screw up at their jobs, they get fired and you get fined! This is basically a system that provides for people to be taxed for voting with bounded rationality (we can't process all the information), with incomplete (we don't have all the information) and asymmetric information (interest groups and politicians know more than the median voter). That's just putting salt on the wound! This is the reason why I agree with the argument that fiscal coordination should operate through incentives rather than through a legalistic view defined by a rigid and arbitrary 3% target for deficits. My version of the EMU (see the end of this post), which is heavily based on that of others, would do that, with the only hurdle being the agreement of a formula to calculate the premia.

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