The question left before us: is a democratic deficit a deficiency? In answering this, I am drawn (against my will) to the comparison of two policies. In the EU corner, weighing 41.6 billion euro, the Mussels from Brussels, the Gourd from the Fjord, I give you…the Common Agricultural Policy!
For many years, the CAP was the most prominent facet of integration in Europe. Certainly, EU folk promoted it that way. It was the most direct contact that the average citizen of EU countries had with the supranational institutions their governments had created. The short course is a sadly familiar story: price floors stimulate overproduction.

The CAP began life as a French demand in exchange for the free market in goods and services. France (correctly) expected German industry to benefit more from the free market than their industries. Where France had an advantage among the original six (France, Germany, Italy, and the Benelux countries) was in agriculture. Of course, being France, they would never have gone for so sensible and Anglo-Saxon (both derogatory terms in France) an idea as a free market in agriculture. No, due to its special nature (only farmers experience uncertainty), agriculture required a dirigiste, statist response.
That response was to create a policy that transferred large amounts of money from consumers to producers through guaranteed minimum prices. Of course, most of those consumers were in Germany, and most of the producers in France. (You see, of course, the flaw in my argument: the thought that France produces something!) More than this, the CAP introduced tariffs at the border to make sure that produce from other countries could not undercut the prices the EU set. But here comes the irony: the EU dumped the massive surpluses it had to buy in developing countries, undercutting farmers in those countries.
Our challenger in this corner, wearing the pink Roosevelt shorts, the Ponzi from Poughkeepsie, the 550 billion dollar Boondoggle from Brooklyn, ladies and gentlemen, give it up for…Old Age and Survivors Disability Insurance! Those of you who read the deductions on your payroll advices know that I’m talking about Social Security. For those of you not familiar with Social Security—I envy you. More relevantly, OASDI transfers money from current workers to retired workers, though it works to create the illusion that current workers are instead contributing to an account from which their future benefits come. Interestingly, the government arrests private citizens who create these sorts of arrangements, but Congress evidently exempts itself from fraud laws as well as OASDI.
Worse, when the baby boom generation hit the workforce, the inflow of “contributions” far exceeded the obligations to contemporary retirees. Congress’ first response was to expand the scope of the program, to include disabilities and survivors of the deceased. This still left money, so Congress put the surplus in the safest place it could think of: Treasury bills. Naturally, T-bills are a very safe investment for the average investor. In this case, however, the government loaned itself the money (which explains the gales of laughter I experienced every time Al Gore said “lockbox”—what he wanted to lock up were the IOUs the government wrote to itself).
I do not mean to imply that there was a better place for the government to stash the surplus money. I tremble in fear at the thought of the influence Congress would have over the economy if it controlled the investment of that much money. Preventing that is the reason we insulate the Federal Reserve Board from the political branches. The reasonable inference is instead that it simply isn’t wise for government to have access to that kind of kibble.
Thus, between the expansion of the program and the approaching entry of the baby boom generation into retirement, the Social Security program has steadily become more expensive, and promises to really blossom in the next decades. Likewise, the CAP became steadily more expensive, dominating the EU budget. The entry of a country with a seriously productive agricultural sector, Poland, would have made the CAP crushingly expensive.
I feel like a heel for having brought you this far only to leave you without the punch line. Nevertheless, our resident blogspert (do I have the honor of minting that word?) might not forgive me for going even further beyond a sensible word limit. I can only offer the consolation that the preliminaries are through. Next week, we will see what these two policies have to say about the wisdom of democratic deficits. (I think I’ll coin a phrase and call it “rational elitism”—why it makes sense to be snobby. Now, if only I could make some coin…)