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Thinking about Europe.

Thinking about Europe.

Summary

The Europe Union is a huge achievement, bringing peace and free movement to a continent historically as much fought over as any in history. However, the EU made a transition from being a backdrop technocracy to become a political structure, not merely visible but placed stage centre. This has brought difficulties. The Euro and the 2007 crisis have had enormous impacts on some countries in the years immediately after this occurred, adding to popular concern. The legitimacy of the EU institutions is under challenge.

It is not possible to represent over five hundred million people without there being a clear, unifying social narrative – "this is who we are and how we act." Without this, representative institutions will feel cold and remote, and be seen to act contrary to local interests in the pursuit of the goals of an elite. We have questioned whether such a social narrative exists within Europe. We conclude that it does, but only for one economically-capable section of society. It is altogether absent amongst a large and less successful group.

Low skill people have anyway had a bad time in the past few decades, but notably so since 2007. The EU - also Germany - bear the odium for much of this, quite unfairly. The issues of the next twenty years – detailed as bullet points, but a major restructuring of political and economic power around the world, terrifying technological advances – will impact this group still further. They will, quite naturally, tend to blame the conspicuous political powers for this, amongst them the European Union.

It follows that a Europe which is based on the social narrative of the affluent will not serve. A generic, abstract-noun based mission statement will not substitute for a gut sense of the Union as being something to which everybody belongs, from which all win by membership. The US, in general, does have such a narrative. Failing to acquire something similar will leave a large section of society alienated and will open European states to a particularly deadly strain of populism.

It is not clear where such a narrative could come from. However, could the democratic deficit be managed through regionalisation and subsidiarity? In theory it could. However, in practice, it would be very hard to bring about quickly. It would be hard for nation states to swallow, given their refusal of much less demanding steps, such as economic harmonisation under the Euro. Third, enhanced regionalisation carries the potential to further worsen social polarisation. Subsidiary regions require wholly new institutions at every level. For all these reasons, it is not going to happen quickly or easily. It follows that the EU will not be the focus for a unifying social narrative – as in "I vow to thee my country" – but neither will it be able to retreat once again into being an invisible technocracy.

The EU is, then, a loose affiliation of nations and it will stay that way. The consequent managerial style has to be experimental, loose, provisional. Nations will probably come to choose less from a buffet than a set of fixed menus. Its creative classes will merge and seek out centres of excellence, and their values will continue to diverge from those of the low skill majority. Europe is remarkably diverse, by history and by inclination, and at least a part of its society is well-suited for a future that demands innovation and agility.

How fit is Europe for the challenges ahead? Internally, its demographics are both dire and, in many states, largely unfunded. Welfare for other uses will have to decrease. That will further increases tension between the affluent, capable class and those being left behind. The external challenges are even more extreme, as noted in the list of bullet points in the third section. The impact of these will yet further worsen the position of the less able. What they do for the capable depends, of course, on local political outcomes. In nations that accept the challenge, the outcome will be probably serve them well. Populist attempts to block change - closing down trade and borders, blocking technologies, soaking the rich, expelling migrants, running up international debt – provide perfect poison pill for any nation in the likely world conditions of the 2020-2040 period.

It follows that recognising and taking steps to meet these challenges has to be a core priority. The European Union has a consequent set of goals set for it that have nothing to do with political integration. It should focus on three things:

This paper is divided into three sections. The first focuses on the cultural origins of Europe. The second section deals with the implications and utility of extreme subsidiarity. The third section is concerned with fitness for purpose, and the challenges ahead.

Twin and not-so-parallel tracks: the evolving ‘social’ Europe and the developing EU

Something changed in 1945. Perhaps it was that ideological confrontation and the threat of annihilation finally overwhelmed nationalism as an organising principle for the European continent. Perhaps the ghastliness of two Great Wars called for a way of thinking that transcended petty rivalry and narrow jealousy. A contributory factor was the emergence of intellectuals in positions of power. Figures such as Keynes, Monnet, Schuman and a host of scientific and technical advisors brought concerns to policy that dealt with systems rather than boundaries on maps. But most certainly something changed.

This text draws a distinction between Europe the continent - the society, the ethos, the shared history - and Europe as an emerging block of formal institutions. What might be called social Europe set off on one track after WWII. Formal, institutional Europe followed another. The victorious powers linked up across the Atlantic to oppose the USSR in a military pact. Specifically European, civil agreements began with one key intention: Never again. Germany’s heavy industry had been dismantled and the coal and iron producing regions lay under international control. As a result, Europe’s coal and steel were to be brought under joint management. Agriculture followed. Euratom would attempt a unified approach to nuclear power.

None of that touched individual lives very much. As an agreement between sovereign states, the union was a highly formal, constrained set of institutions that were managed through elite agreement and by fiat. The structure grew over time – EFTA, then the EEC created a customs union. Further embellishments followed.

Notions of a more open form to European level governance emerged only with the accession of Britain, Denmark and Ireland in 1973. The first public elections to a European parliament followed in 1979. These elections were hardly designed with democratic legitimacy in mind, despite being described as introducing a "social dimension" into the workings of the Commission. The public elected members of a list chosen by national political parties to constituencies with which they might have no connection whatsoever. The constituencies were generally larger than the population of modest-sized member states. Few could name their MEP, but so long as the issues were technical and far from peoples’ lives this did not much concern them. However, that complacency was to change.

In 1993, the Maastricht Treaty brought the formal European Union into existence. The former free trade area was absorbed into the EU framework, exchange controls were abolished and the right to settle or work anywhere across Europe was fully accepted by most member states. As a major element of this, the notion of a common currency had been flickering in the background since the 1960s. The Maastricht treaty gave it formal impetus, with agreement to a three stage process that would lead to the abolition of many national currencies. In 2002, following significant enlargement of the EU - and with many of its member nations wholly ill-prepared to take such a step, the Euro was launched.

The Maastricht treaty unleashed its explosion of change and suddenly, each nation had to fit a new and immediate reality into its world view. For the first time, therefore, the results of formal European institutions began to impinged on individual lives. Immigration into the richer countries from the poorer was one such issue. In some countries, the Euro demanded major sacrifices in order to achieve convergence. In Spain, for example, unemployment hit 25% during the ERM period. Later, with membership of the Euro achieved, its supposed mutual dependence underwrote a spate of international borrowing. That in turn led to prodigal state spending, housing bubbles, exuberant bank lending and many other symptoms of overheating. All of that had to stop after 2007, leaving an aftermath of stringency and low-to-no income growth. However, that did not stop the continued flow of immigrants, generally competing for low wage jobs in the richer countries, generally perceived as "stealing" those jobs and generally diluting community cohesion.

Prior to Maastricht, a few extreme figures had seen the EU not as a helpful structure but as an foreign bureaucracy that was set upon crushing sovereignty so as to build an alien United States of Europe. Now, notably amongst the less capable and often older elements in many countries, this view began to expand. Almost all political conflict continued to remain within countries, rather than between them, but this was a new thread that has continued to grow.

Meanwhile, however, the younger generation was simply getting on with being European. Free movement, the absence of war and general prosperity led to quite astonishing changes, most notably amongst the better educated, wealthier groups. Multilingualism, marriages across nationalities, careers that hopped from this centre to another became a commonplace. This was particularly a metropolitan phenomenon. Only around a half of those living in central London are now British-born, and between two and three hundred thousand French citizens live in London at any one time. Cosmopolitan centres and elite groups are casually European, therefore, whilst the countryside and the less able and the elderly tend to feel themselves a part of a nation under siege.

Arguably, the great virtue and potential future strength of Europe lies in its sheer diversity, which stems in good measure from the physical geography of Europe and the practical difficulties of unifying it. So, even as late as the latter half of the 19th Century, modern-day Italy and Germany comprised a great diversity of small polities, many with distinctive approaches to governance, culture and language. Diversity and freedom to experiment drives innovation, and this no doubt drove the rapid emergence of capitalism, the industrial revolution and banking, all centred on Europe.

They are, therefore, new social tracks that Europe is following; but they are decidedly tracks in the plural. Since the late 1960s, every industrial country has undergone a common phenomenon, that of static or falling real wages amongst their lowest skilled individuals. This is a complex subject that goes well beyond this note, but a key conclusion from its analysis is that this was the result of redistribution of wages, not their reduction as a proportion of GNP.

As economies have become complex, so they serve as extensive toolkits in which the capable can generate large amounts of value. However, the same processes that made them modular, efficient and reliable also squeezed out the low skilled from participation in the mainstream economy. The sectors that made up the national product have changed sharply since World War II, often towards a lesser role for manufacturing and biased towards high-end services. Where mass employment still remains, its industries are subject to intense automation and the sweeping, IT-augmented redesign of business processes. This is an entirely automatic outcome of international and national competition, of advancing technology and similar forces. To have acted against this would have sunk the relevant economy . To acceded, however, was to marginalise the low skilled.

This trend has both intensified and moved up the income scale. Middle income families have seen no real improvements in living standards for a decade, and would not have seen improvements from the early Nineties if borrowing against housing assets had not been so easy. This trend holds true in virtually every country that was only mildly effected by the 2007 crisis, and has gone further in those countries that were most effected by it. There, middle incomes have fallen, in some cases fallen very sharply. The dynamic of this is not going to stop, and it is nearly-certainly that it will become more intense. The final section explores the reasons for this, and its likely consequences.

Here, then, is the current situation. The competent and the capable have been quietly constructing a functional, attractive "social" Europe, one that works well with the new institutions and, it has to be said, for them. Meanwhile, within the very same countries, a large mass of people feel their lives are getting worse, and they look around for people and institutions to blame. Polled disaffection with current political institutions has never been so high in the modern period.

In parallel to this, the abstract structures of the EU have been expanding and complicating themselves. A recent study by the Swedish Parliament's in-house magazine reviewed 1,300 legislative proposals. It found that 43% these originated from the EU in 2012, up for 28% in 2010 and from virtually nil in the early 1990s Another study from Sweden found that about a half of the business of district councils was subject to European regulatory requirements. These requirements can be extremely complex and onerous. Regulation which is aimed at the banking industry will amount to more than 30,000 pages, far more than any human can ever fully understand. Quite falsely, this structure tends to present itself as - and is certainly seen as – a super-government, somehow "in charge" of member nations. Of course that is not the case, as the EU is an agreement amongst sovereign states, not a federation. However, that is not how the "antis" see it. If your world has got worse, they say, if unwanted foreigners have suddenly changed the nature of your community, then someone or something must be to blame for this. And there, alien and threatening, is the EU… Tosh, but beguiling tosh.

Europe still has the largest economy of any trading block. Unfortunately, due to the lack of economic realism during the rush to set up the Euro, and due to the improvidence by some countries on joining it, many of its economies are set somewhere between slump and depression. Its banks are still unstable, chiefly due to sovereign loans that they advanced within the Eurozone during the bubble that led up to 2007. Some countries also suffered from unregulated housing booms. Southern Europe and Germany have dire demographics which, in the South, are underpinned by even more dire long term finances. Its states have committed themselves to social expenditure – pensions, healthcare - which, even under historical rates of growth, their projected tax revenues are not able to support. Public debt has risen to dangerous levels in many countries.

As an example, Italian public debt has reached 135% of GDP. This is because, despite the crisis, efforts at restructuring state finances have failed and Italy has to borrow continually. Many state jobs are paid on the basis of a sixteen month working year. State employees may be contracted to a 28 hour week, and they can expect to retire on pensions which match their final salary. Job ‘creation’ leads to remarkable misallocation of resource. Naples alone has twenty thousand forestry police for its scant forests, which is more than the number deployed in the whole of Canada. In the private sector, the world’s highest high corporation taxes are supplemented by near-ridiculous labour laws. It is extremely difficult to fire anyone from an enterprise of more than fifteen people, and indeed companies are subsidised by the state to provide posts from which no work is expected. Youth unemployment, perhaps as a consequence, stands at 43%.

The central banking system of the Eurozone is unable to do much about any of this, as it has no powers to compel members to take appropriate actions, directly or through the EU commission. It has discussed buying sovereign debt from beleaguered European banks, but who is to carry this liability if those debtors default is a nettle that none of the wealthy, stable countries care to grasp. As a result, Europe is cited by almost all studies on international investment decisions as the key short-run uncertainty that is inhibiting investment. Companies are sitting on record reserves, waiting for the situation to normalise itself.

National action has been taken to rebalance this situation, often at the bidding of creditor nations, such as Germany. This is seen as "austerity" – and in some cases in fact is austere – and all such restructuring programs have impacted the low skill, high unemployment, elderly groups the most. Individual governments may find it convenient to blame the EU – or Germany - for actions that they themselves cannot avoid taking. As a further result, therefore, European nations are experiencing a run of idiosyncratic politics – rejecting the political class and its works, finding enemies to blame for its sorrows, indulging in separatist movements and in general writhing like a worm on a hook, trying to evade the source of its pain. And the EU is very much seen as that hook: alien, abstract, ‘lording it over us’, mediating things that the group loath. Such notions now find their way into the serious press:

I mean abuses of the rights of humans whose children have been mown down by foreign drivers with no licence, humans whose husbands have been stabbed to death. Humans still astounded by grief who have to attend a British court and hear a judge tell them that the conscienceless wretch who extinguished their happiness cannot be deported post haste or hurled, preferably, over the white cliffs of Dover. No, the wretch must be allowed to remain in our country because they have the right to "a family life".

[…] Why are we powerless to send these frightening, violent individuals back to where they came from? Because, according to the European Court, it’s too frightening and violent. Anything I’m missing here, chaps? Are our learned friends in Strasbourg ’avin a laugh?

The Telegraph 15 October 2014

And that is just the start of the European problematique.

European values and the development of institutions that command affection

We have seen that from a state of near invisibility, the European Union has divided its populations into those who rather take its huge successes entirely for granted, and those who regard European institutions as the root of all their ills. Opinion polls show extremely low levels of trust in both national and European institutions as compared to historical levels. We have already explored why this should be the case. Recognising this, EU officials talk about a "democratic deficit", curing which should cure all the criticism of the Union. At issue, though, is what this might mean in practice.

It is probably impossible to run a truly representative democracy when the individual representative has to handle more than 50-75,000 citizens. Even then, experienced representatives surround themselves with staff, and they learn ways to filter true opinions from the loud voices of lobbies and cranks. The current 27 countries in the EU have between them well over 500 million citizens, implying that this would need 6,700-10,000 representatives to plug any such deficit by direct representation. That is an impossible number from which try to extract government and consensus. Naïve solutions will not work.

How, then, do large democracies manage to operate? Chiefly through a combination of national ethos and the party system. The national ethos – sometimes called the national, narrative – is a set of assumptions and values that constrain and define national identity. This models the sort of person that a citizen is supposed to be, and sets out general prescriptions of how they are supposed to behave in this or that situation, of how they can win approval and disapproval. These poorly articulated norms govern much of our lives. Not only do they shut down a vast range of options as being incompatible with "who we are", it confers a sort of common sense on the whole process of government: ‘people like us just don’t do things like that’.

This sense of destiny and self-limitation can be seen at work in the USA, where the US model is, by implication, the ultimate destiny of the world’s populations, and where that model proscribes a wide range of behaviour and prescribes rather specific policy goals. However, a Salafi jihadi would see a separate, coherent set of values and prescriptions that led to a similar conclusion, the in case a global caliphate. A strong model is neither right nor wrong, merely useful as a coordinating force. It is cluster of values, myths and simplified history which sets the agenda within which political actors, such as parties, have to operate. At least until recently, the two US parties were both very similar in what they proposed and very constrained in how far they could reasonably move from the national consensus. People talked about Purple America, the Democrat blue everywhere mixed in with the Republican red.

This remained true until, on the Right, social and economic change started to move too fast for many Republicans, spawning the Tea Party. Similarly, on the Left, the relatively cosy social consensus was punctured by events after 2007. We have already discussed the declining real income of low skilled people and the increasingly static incomes of the lower middle classes. Democrats find this hard to reconcile with both their party’s tradition of whole-nation governance and with the practical options that a healthy economy permits. Notions such as punitive taxation of the wealthy, a universal basic income and the like are not going to get Democrats elected in "purple" America. But neither will raging amongst the Tea Party and endless internal battles amongst the Republicans. There is no agreed model for what the future should look like, or what values define the US community. Trust in US politics has fallen in direct parallel with this process.

Looking to other successful examples of large democracies that we can see beyond Europe – Japan, India – we always find this same strong, broadly universal national ethos. Government is there to serve within this overarching sense of the community. Less successful democracies – South America, for example – do not seem to have this collective ethos, or have more than one narrative running at the same time, often class based, each interpretation in open conflict with the other. The immediate danger of a twin-ethos Europe is closer than we may realise.

Europe should have a common social narrative if its institutions are to attract universal support. Europe can, of course, be considered as a continent or as a set of institutions, and it is worth asking whether Europe in either of these guises has the required values and synchronising assumptions.

It is self evident that the formal institutions of the EU do not have this quality. They were never developed to be the focus for popular reverence. The issues that they debated in the early years were generally tangential to most peoples’ lives. It is, however, precisely the absence of such a narrative which has made them seem soulless and uncaring since the 2007 crisis, has made them seem to be the tools of the elite, to be oppressive to the extent that serious commentators have described them as Germany’s way of winning World War III. A host of similar poisonous notions fill Europe’s social media.

It is, however, easy to see why the absence of a clear social narrative makes an alarming event seem particularly threatening. Imagine a comfortable household is suddenly sick of an alien, foreign disease – perhaps of Ebola. Cold machinery begins to turn, with goals that are not so much concerned with saving the household as preventing a broader contagion. Trucks with flashing lights line up outside the house and the front door is forced. Plastic suited figures flood in.

Compare this to a visit from the family doctor, attending an equally deadly but familiar disease. This is carried out on terms that everyone understands, an intimate and familiar matter that is managed within a social narrative that defines the doctor’s motives and sets the limits to her actions.

Enough of these strained analogies. Democratic deficits go away when people feel that the government is acting in harmony with their long-standing social narrative. They may disagree with what is being done, but they understand it, and understand the limits that exist on those who are in charge.

Europe institutions developed very slowly until the early 1980s. As we have noted, they had little impact on most people’s lives. For whatever reasons – tracking the fall of the Soviet Union as a threat, responding to the growth of globalisation, changing Franco-German relationships, individual personalities – the pace suddenly picked up. In some cases, the haste with which integration was advanced brushed aside the need for most basic managerial machinery, for caution, for due process and for timeliness. The Euro, for example, was started without a vestige of the machinery that would be needed to manage it, and indeed it still lacks most of this. There was no discussion of the necessity to cede considerable, core national political authority to any such machinery - monetary policy, fiscal balances, labour policy and the like. Such discussion would have delayed or even blocked the project. Perhaps based on hope that it could all be fixed later on, this and other major programs were driven through, often with the barest of public consultation, as a government-to-government matter. The EU had acquired a social narrative that was shared by almost nobody outside of its inner circles.

Worse than mere hastiness, however, was the absence of a public ethos to limit and task what the union was about. The thirty one chapters of the EU aquis have not grown up organically. They are often arcane abstract forms of words – worthy forms, no doubt, statements of principle, to be sure, but without resonance for most people.

It is not that people disagree with the aspirations that these values express, or that they do not understand what they might mean when put into practice by reasonable people. Rather, it is the fear of writing a blank cheque to distant intellectuals, granting them unlimited freedom to do with as they please. It has something in common with calling in the Ebola team rather than the family doctor.

Bland generalities:

This is taken from the European Union’s official brief history of the European enterprise:

2010 – today: A decade of opportunities and challenges

The new decade started with a severe economic crisis, but also with the hope that investments in new green and climate-friendly technologies and closer European cooperation will bring lasting growth and welfare.

In much the same way, handing environmental or human rights interests an open-ended commitment is something which most electorates find very alarming. What lies behind the words? What "common sense", what self-limitation prevails amongst the people who will frame and execute policy? National anti-terror legislation carries with it similar concerns. Abstract nouns – liberty, equality, fraternity - come shorn of limits. There is never enough liberty, and anything that opposes liberty is generally speaking bad. Unless, of course, it is another abstract, such as a war on terror, drugs or other axiomatically bad things.

Perhaps, though, European countries are similar enough for these constraining values, this common sense limitation on power, to be embedded and latent within them? It is, therefore, worth looking to see whether Europe, considered as geography, has indeed developed a distinctive narrative. Is there a distinctively "European" civilisation?

As seen from the outside, that is certainly the case. An Indian or an African would be likely to say that Europe stands for something that is distinct from their own cultures and different from other industrial nations. Canada, New Zealand and Australia are generally seen as being a part of this conceptual Europe, but the US, Japan, Korea are not.

We need to be clear on what we are discussing when we talk about a social narrative. The concept does not suggest that the psychology of individual people is in some way different between European nations. Indeed, when this is measures, the difference within nations is far greater than the mean differences between them. What varies is how people collectively explain themselves, the learned pattern of attitude and values that are expected in public debate. America’s "sink or swim" view of individual lives is very different from the much more collective sentiment that is expected in European debate.

National ethos is, as de la Rochefoucauld suggested four centuries ago, as "indefinable as an odour, but as unmistakable. Indeed, in the Netherlands, Argentine-born Queen Máxima drew massive criticism when she said that "the" Dutch person does not exist. People were sure that such a centre of weight did exist. Outsiders are very clear that there is a Dutch persona, a very specific set of values. Yet is you examine the population of Holland, you find the same dispersal of personalities and values as you find elsewhere, with the spread within the country far greater than the differences between the average and mean of other European countries. Narratives do not always map onto geography, as with Southern and Northern Italy, or the commonality of values that seem to run through the ports and surrounding territory of the former Hanse league.

Social narratives can be constructed, as any theocracy or dictatorship demonstrates. Dissenting values are crushed, become unmentionable. This can be done with a light touch, however, creating a popular centre of weight. Bavaria has a distinctive narrative which was actively created by the dominant Christian Social Union party during the 1950s and early 1960s. The CSU constructed the gesamtbayerisch by articulating a common Bavarian heritage, through schools, historical re-enactments and commemorative speeches. Officials, such as police chiefs, wrote articles for the newspapers setting out a Bavarian morality; and so forth.

There have been many attempts to measure social narratives, both in terms of the narrative itself and the outcomes that emerge from policy. Some scholars claim to detect contemporary outcomes from cultural influences that existed a hundred or more years earlier. Robert Putnam was able to find strong relations between the contemporary regions of Italy and what was happening in the individual city states a hundred years earlier. Nevertheless, it is less contentious to compare what policies different societies have in fact put in place, and then to look for family resemblances. When this is done, clear structural relationships emerge that allow nations to be classified for their closeness, much as one might sort daffodils from oak trees.

When this is done, it turns out that nations do indeed cluster into families. When the entire world is considered, the developed economies occupy a distinct branch that has two clusters on it. Catholic-Mediterranean Europe (and Japan) find themselves on one of these and the English speaking world – that is, including the US, Australia and so on - cluster with another group. This second group also includes Scandinavia, Germany and the Netherlands. In purely policy terms, the US is more like some parts of Europe than those countries are like their Mediterranean peers.

It follows that there is not a specifically "European" socio-political dispensation. Developed world policy choices have tended to split down the Rhine, not across the Atlantic. Socially, however, do people in Europe have distinctive attitudes? The answer is that it depends who you measure. Younger people, and people with good jobs and higher qualifications do show a distinctively European way of thinking and acting that is not closely shared across the Atlantic by their peers. It is not, however, a universal as it is heavily class-based. Further, the working classes vary considerably in response by region, religion and age.

Let us suppose that the European Union broadened its communications to emphasise this narrative of the young and the able. Those people would certainly feel comfortable about what it is proposing. However, that might well seem like a visit from the Ebola team to working class Europeans.

It follows that one or the other of these groups will need either to change its views or be absorbed into the narrative of the other if the EU is ever to acquire an organic, universal quality. That will take time, or a crisis that obliterates all other choices. It may never happen at all. European cooperation may have to make do with written agreements around high-sounding aspirations and simply accept the democratic deficit.

There is, however, an avenue that could make that sound overly fatalistic. In the order of thirty regions in Europe have secessionist ambitions. Wikipedia has a map of these, which is eye opening.

At the very heart of Europe, Belgium consists of three communities which do not like each other and may choose to separate. Even the Faroe Islands want to leave Denmark.

Motives for doing this are, of course, mixed. In some cases, ethnic friction impels change, in others it is the desire of a rich region to remove the claims on it by poorer regions. In general, though, there is a strong populist element to this. People – often the least thoughtful in the region - are circling the waggons around the territory that feels familiar and cosy to them, hoping to shut out change. This was very evident in the recent Scotland referendum, where the issues were almost entirely about identity, a distinct set of values, a different emotional style in politics rather than any economic or pragmatic rationale.

Not all attempts to bring power to smaller aggregates need be secessionist, however, or negative about the future. National influence and confidence now has much more to do with clarity, agility and wealth than it does with sheer scale. In the long run, it may be better to be Singapore than Russia, and certainly better is Singapore is assured that a larger aggregate is looking after those things that need skill and collaboration amongst its regional peers. Those elements of international affairs that do benefit from national scale – such as defence, trade, big systems-directed regulation and collective macroeconomic management – are increasingly addressed at a supranational level. Europe has, of course, been engaged in joint activity for a long time, and it has more recently expanded in a large number of new areas in which the benefits of scale are said to exist.

Taking this to its extreme, small regions could live in this broader pond, doing so with less universal reference to the nation from which they sprang. Taken at a more immediately practical level, it is not hard to envisage a goal for Europe that consists of powerful, self-determining regions, held within nations which have correspondingly less control. The regions follow their own local logic, and the nation – and so on upward - focusing on necessary harmonisation and integration. The nation would be responsible for the regulation of their charges, ensuring that they remained within common-sense bounds.

This concept is called ‘subsidiarity’, and those who favour it argue that it could give birth to an alliance of a myriad of regions, each agile and clear about its identity, each answerable to its population and their social narrative, each also answerable upward, to nation and Union.

It can be argued that the smaller nations of Europe are very close to the status of such regions. Netherlands or Denmark are clear about their social identity, and each small enough for its government to be truly representative. Smaller nations or regions have fewer variables to deal with – one or two major industries to regulate, for example – and they are often more socially homogeneous than are larger nations. As a result, each is likely to be better able understand its situation and respond to it, from industrial policy to the supply of appropriately trained people, civil security or transport. In addition, each can specialise on what it does best – offshore engineering, looking after old people, trading in financial instruments. Attractive on the face of it, however, specialisation is the probable downfall of subsidiarity. We will come back to this point.

The European Committee of the Regions has 353 member regions, some municipal authorities, some rather arbitrary chunks of rural landscape. France is pruning its Euro-regions from 22 to 14, with an aim to give each a representative voice at the European level. Britain has embarked on an uncertain process to devolve even more power to members of the Union such as Scotland, and to do the same, perhaps as separate regions, within its major population block, England. Belgium has completed a process that decentralises much of government to its regions and Germany has, historically, been a Federation of Länder since the end of WWII. The Spanish government has opposed separatism, and may well find that further devolution the price it has to pay to keep the Basques or Catalunya as a part of its nation.

There is, of course, a range of costs to implementing subsidiarity. It is necessary to define the span of competence of each layer and to set criteria as to what should be addressed at which level. There has to be machinery for dispute resolution and for the imposition of standards.

In this, subsidiarity has much in common with the national regulation of commerce. Like competing firms within an industry, each region will quickly discover its own best interests. These may be social – wanting to live on its own terms, for example - but most of them will be economic. The rationale that informs policy in London or Paris is not the same as applies to a rural part of Spain or Italy. Each region will become increasingly and consciously different from the whole. That will be their democratic choice, reflecting the will of the majority who live within them. They will continue to buy into the essential macro-systems that allow them to continue in operation – a stable banking system, for example – but they will be less inclined to join initiatives that impinge on their identity. The result could be a multi-speed, loose network of affiliations and membership of assorted initiatives, with a firm but limited transnational system of cooperation. How much the rich regions are to subsidise the poor – as London underwrites England’s largely deindustrialised North-Eastern region – is, perhaps, a national; or a Union-wide issue.

Further, though, in today’s world, the geography of nation states is supplemented by the geography of industries. A layer of organisation spans the chemicals industries of Switzerland, Germany and the Netherlands that answers more to an international logical than it does to those specific nations, let alone a European aquis. Germany’s car makers coordinate a web of parts and supplies across Europe. They have some European competitors, but what defines their world occurs in China, Korea, Japan and the US. Each specialised region will be required by basic economics to answer to these intangible patterns of influence as much or more than to a European partnership. Indeed, national governments now find that ‘there is no alternative’ when considering their important industries in the global context.

Naturally, the economies of some regions will continue to do better than others. The wealthy regions will continue to become too expensive for low skill people, and as a result of this existing trend, it is not inconceivable that "sink" regions will develop. Indeed, the rich regions will continue to pay these to manage their low skilled, but on a more formal basis. The seeds of this exists at present, but semi-autonomous regions are likely to amplify existing differences.

Quite where nations states sit in all of this is not clear: perhaps, ultimately, nowhere that is not symbolic, or as their regions representative at the European level and responsible for managing cohesion amongst their regions. However, it is important to remember that European nations are not at all states within a union, in the sense that the US or Australia would understand the term. Or, indeed, Germany. The Union is a set of provisional choices choice made by sovereign entities. As a result of this, the Union style will always be tentative, experimental. plural. Some nations will go along with one idea, others come together to pursue another. Indeed, a model of a "buffet" Europe, in which individual states or regions can select what they want seems an unavoidable part of a functional future. If its complexity can be managed appropriately, then this outcome would seem a positive response to a many-layer, fast moving world. However, it is incompatible with a fully subsidiary Europe-of-the-regions. Indeed, a pure "buffet" model would lead to endless complications and diplomatic fudges. Rather, perhaps, there should be two or more "styles of Europe" – full economic integration around a centrally-managed currency, a ‘social’ Europe of mobility and common social standards, a customs union – and nations should sign up for one of these fully and then abide by its rules.

As a consequence of almost any development in this direction, Europe’s monolith nation states may be expected gently to dissolve in the solvent that is subsidiarity, and to some extent fall into "right sized" decision-taking units. Each of these will try to follow its self-interest, and this will need to be restrained and subject to mandatory harmonisation if harsh conditions are not to arise in the economically weakest regions. This requires a multi-decadal program, based on sound thought and deep consultation. The mistakes of the Euro must not be repeated at the regional level. Nevertheless, it is hard to imagine an alternative that is not the marriage of convenience amongst nations which have no intention of merging their sovereignty.

Fitness for purpose, the challenge in prospect

The world is poised on the brink of a quite extraordinary discontinuities. This section reviews some of the more relevant of these, and in order to avoid excessive length, this has been done in bullet form.

That is, perhaps, enough bullets: the likely world of the 2030s is already increasingly visible. Add rising commodity prices and increasing environmental restrictions and most nations will find themselves in a technocratic straightjacket. They will also find themselves ever-more economically dependent on a small creative class. That is a class that can be cajoled but not ordered, and which is highly mobile in response to the weakest of signals. A nation’s most prized possessions will be its innovative milieux, of which Silicon Valley and Hollywood are the canonical examples. It is not so much that these or their staff leave if over-taxed – although they will – but that the new milieux will simply form elsewhere.

European diversity is likely to generate these milieux with particular strength. Britain is currently the centre of a ferment of innovation and its finance, likened by many in the industry to the West coast of the US. Where these settle comes down to the attractiveness of the environment, the density of relevant talent and the absence of negative features. France, currently maligned as a hide-bound bureaucracy, in which even the current incoming Prime Minister rails against "totems of the past", nevertheless used to be a centre of ferment. The Paris of the fin de siècle set the agenda for the art of the next century, supported an innovative industry that grew from a ferment of science – Pasteur, Curie and many others. Plainly, Europe needs a commercial and social environment more like France in the late Nineteenth century than in the late Twentieth.

What is it that stands in the way of this? The dynamics of change – both external to Europe but intrinsic in the responses that its firms make to changing conditions – are unlikely to be kind to the lowest skilled. Whatever happens to the capable, a growing number of middle class people – and a considerable majority of working class households – will find themselves ever-further removed from the core economy. They take poor quality jobs, work as artisans or find jobs giving in care to the elderly, in domestic service or in formless contract work. Some do make-work jobs that are created by the state.

Such people are likely agree on a social narrative that reflects a world that seems to them to be actively oppressive. In it, the wealthy are predatory and they are the prey. There are conspiracies against the ordinary person. Political movements will continue to form that are aimed to oppose this, indeed to return to how things used to be, to the time when everyone had a job, when a private house for their family was within reach, when everyone could enjoy the dignity of self-sufficiency. That is understandable, predictable and to anyone who spends a few hours on social media on-line, already in train.

This is, then, a social dynamic diametrically opposed to what is needed to adapt to the long list of bullet points that we have already see. Blocking adaptation may seem to mitigate social pain, and a thousand populists will call for it. A popular line that is developing is the desirability of autarchy – of following "our" social policy to protect "our" people and their jobs. It was a loud component of the secessionist movement in Scotland. It also tends to express a general xenophobia, a call to remove foreign influences, "immigrants" and the like. It could mean blocking technologies - notably those apparently eating middle class jobs – and halting industrial procedures, such as automation.

Populist movements are not concerned with systems but with symptoms. In advocating any such measures, any affected region will chase off its creative class and deter the formation of the necessary milieux. (Germany lost its lead in the pharmaceuticals industry when assorted activists blocks experiments into biotechnology, for example.) Such a region will quickly need to borrow to pay the bills that have been run up by its ambitions. Unlike a state, it cannot print its own money, and it will quickly be held to account. It is possible to envisage a transition from moderate success to a carbon copy of Greece occurring over a span of five years. International forces will be swift, implacable, irresistible.

The European Union has to live with all of these forces. It has, however, two very distinct populations. One enjoys internationalism, sees itself a "European" and cosmopolitan, is doing well from the new economy and is happy for the project to succeed. The other is battered, alienated, once hopeful but now angry at it knows not what, but yearning for a time ‘when it all made sense’. Naturally, this is a continuum, with the middle walking a tightrope between conceding that market forces matter but opposing their total domination, a "flat world" globalization. Many who who themselves are not under threat but have deeply-felt objections to a "free for all" that in practice means benefiting those already accumulating more and more power. This is a battle of ethos as much as it is an old fashioned left and right battleground. It is, perhaps, the early stage of the development of a new narrative that is not preoccupied with grand aggregates, institutions and sovereignty but with people’s lives, their principles and aspirations. And a narrative that breaks down the false dichotomy between economic and social values, between global forces and local adaptation, seeking to put an "and" in place of the implicit "or" – internationalism and local distinctiveness, excellent economic performance and social values.

Further, the Union is not soon – or ever – going to come to a core consensus. For all of the reasons already touched upon in this section, this is not a time to wait for consensus to emerge, for all the pennies to drop and all the politicians to fall into line. In fact, this will never happen in this diverse and restless continent, and certainly not with its current brand of democracy. Europe is a work in progress that needs to celebrate its diversity, and not in any way to seek out a monolith of unachievable concord. It needs to find ways that somehow harmonize that diversity, reduce the likely friction between increasingly diverse elements and in all ways enable locally-adaptive change. This has much to do with subsidiarity and regionalization; but also in respect of a multi-track Europe, in which individual member states need to decide which kind of Europe they will join.

This, then, is the raw material from which to build the future of Europe. European unity has been an astonishing success in so many ways. Conflict in Europe is now unthinkable. Free movement across borders is almost a reflex, where once it was an arduous adventure. Even the food of Europe has undergone fusion and evolution. It is a civilising influence on the world that is less immediate, less absolutist than can be US foreign policy. Europe is a Good Thing; but to survive its ‘ultras’ and its ‘antis’, it needs to rethink how it is to cope with the decades ahead.

The key for the European enterprise is, therefore, to think how this disorderly, awkward group of sovereign states - and how the divergent interests and narratives of its social groups - can address and surmount the challenges ahead. That is not for the European Union to bring about so much as for it to orchestrate. It has, for example, taken a strongly active role in promoting change in respect of environmental issues. Many would argue that this could have been done better if it had engaged with the major actors, rather than discussing matters almost entirely amongst governments and with pressure groups. Systematic change has, nonetheless, been set in train.

Similar initiatives are required to get nation states aware of the huge issues that lie ahead. Many presentations of the ideas that were listed at the head of this section to senior policy makers have, invariably, generated both surprise and concern. The audience were not aware of the issues, or certainly not aware of them in an interlinked and systemic manner. They are, however, more than adequately informed of the concerns of special interests.

It may be helpful to suggest a process by which such debate can be triggered. It is extremely important that such a process takes its source material from practitioners and not from lobbies and special interest groups. The process should start by engaging with what has been called the "performing core". That is the huge population of practitioners, people actually performing senior tasks in industry, health provision, agriculture, law, education. The performing core have primary opinions, not those derived from secondary sources, their experience is enormous and their orientation entirely practical. They have much experience in filtering noise from the many special interest claques and reaching for the heart of an issue.

It is from this source that the major structural issues should be surfaced. This approach will be criticised as "elitist", now an odd term of abuse. What is being suggested is a process, however, and the next step is to probe the impact of these issues on the population at large, or on those who have special interests to promote. Their critique – on issues of gender, race, sustainability, disability, exclusion and so on – will serve to round the issues and bring them into a nascent European narrative. A further step consolidates all of this into scenarios, different ways the system could evolve. Such scenarios, based on the input of thousands of experts, will be a powerful structure against which national debate can measure itself. A request to individual governments to say how, in specific terms, they are going to respond to the challenge would be helpful in rounding off the process. Naturally, as events moved on, a new cycle would be required, following similar procedures.

One central issue which will dominate political affairs whatever the scenario is, however, what Europe is to do with its less able people. This is no longer a matter of ‘left versus right’ but a set of technical problems to be solved. We must accept that there is a social transition to be managed, one that cannot be avoided and which cannot be solved or dodged with the techniques of the past. The European continent needs to upgrade its human resource, focusing on the least able and lifting them up into a transformed condition where they are once again able to make their own way. Education, for example, once designed as a "cannon" that fired an individual off on a life trajectory needs to become a "rocket", providing continuous thrust, steering itself to meet changed conditions.

If the Union fails to solve this issue, then at best it will be a ship carrying a below-decks cargo of potential mutineers. If a wave of populism blows it off course, then the future will not be kind to it. To us. To all of us.

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Links to Interactive Trek Guides sites for Peru and Nepal.

The trek Peru web site. The trek Nepal web site.