On 15 May 1992, Margaret Thatcher gave a speech in the Hague on ‘Europe’s Political Architecture’, in which she talked about how the model of European government envisaged after World War Two was now out of date. An extract from the speech, which summarises its key argument, is reproduced below:
Mr Chairman, the thinking behind the Commission’s proposals is essentially the thinking of “yesterday’s tomorrow”.
It was how the best minds of Europe saw the future in the ruins after the Second World War.
But they made a central intellectual mistake.
They assumed that the model for future government was that of a centralised bureaucracy that would collect information upwards, make decisions at the top, and then issue orders downwards.
And what seemed the wisdom of the ages in 1945 was in fact a primitive fallacy.
Hierarchical bureaucracy may be a suitable method of organising a small business that is exposed to fierce external competition — but it is a recipe for stagnation and inefficiency in almost every other context.
It can collect and use only a fraction of the information that the market picks up, and acts upon minute by minute — and so it gets it wrong.
The top cannot be sure that its orders are carried out by the bottom.
And the organisation as a whole has no feedback that would indicate whether it is performing well or badly.
Such flaws might be of minor importance in a monastery where, after all, the wishes of the monks are not the criteria of success.
In a Government, however, they produce the economic chaos and alienation we saw under communism.
Yet it is precisely this model of remote, centralised, bureaucratic organisation that the European Commission and its federalist supporters seek to impose on a Community which they acknowledge may soon contain many more countries of widely differing levels of political and economic development, and speaking more than fifteen languages.
“C’est magnifique, mais ce n’est pas la politique.”
The larger Europe grows, the more diverse must be the forms of co-operation it requires. Instead of a centralised bureaucracy, the model should be a market — not only a market of individuals and companies, but also a market in which the players are governments.
Thus governments would compete with each other for foreign investments, top management and high earners through lower taxes and less regulation.
Such a market would impose a fiscal discipline on governments because they would not want to drive away expertise and business.
It would also help to establish which fiscal and regulatory policies produced the best overall economic results.
No wonder socialists don’t like it.
To make such a market work, of course, national governments must retain most of their existing powers in social and economic affairs.
Since these governments are closer and accountable to their voters — it is doubly desirable that we should keep power at the national level.