Policies without Politics

The European Commission has set its sights on education. Given Europe's PISA scores have declined steeply throughout the 2010s and 2020s this is a good thing. By 2022 roughly one third of 15-year-olds lacked ‘minimum proficiency in mathematics’, and a quarter struggled with reading.

The Commission has identified that poor schooling can become a major obstacle to economic performance. Or, in Commission-speak, ‘skills shortages and gaps, insufficient transformation speed, and fragmented and inefficient governance are hampering the EU's competitiveness.’

The result of this focus is the ‘Union of Skills’ plan released last week. Here is one representative paragraph:

Strengthen and streamline the Pact for Skills to, support strategic sectors in their up and reskilling, including through the Large-Scale Partnerships in line with the Competitiveness Compass, Clean Industrial Deal and future Preparedness Union Strategy. Reinforcing the Large-Scale Partnerships will support the development of sector-specific solutions. The reinforced Pact will tackle the fragmentation of initiatives and improve linkages between them, such as the EU Skills Academies, European Alliance for Apprenticeships, the Centres of Vocational Excellence and European Universities alliances. Improvements will be made to cross-sectoral synergies among Pact members, knowledge and resource sharing along the value chain (e.g. skills intelligence, occupational profiles, curricula, training modules). Pact members have pledged to upskill 25 million workers by 2030. The Commission is calling on Pact members to at least double their commitments.

There are certainly reasons to take issue with the ideas in the plan. One can complain about the emphasis on skills over knowledge, the buzzwords over precision, and the fact that the EU has few educational competencies.

But a lack of proposals is not why education is falling behind. The relevant input for education — as in many other sectors in Europe — is not ideas but how one tackles the interest groups who block attempts to improve outcomes. For this, the Commission can offer no solution.

This is not an indictment of this particular push. It reflects the basic reality of how the EU makes policy. The Commission is the result of a technocratic coalition of all acceptable forces (from the moderate left to the moderate right). It necessarily makes rules in ways that assume there are no losers. Powerful interest groups, from pensioners to farmers, are never to be antagonized.

As Schmidt (2006) observed, ‘the EU is policies without politics’ and ‘the capitals are politics without policies’ Brussels makes policies without political debate, while national capitals have political debates with increasingly little power to shape policies. The Skills Union is just one more elaborate plan written under the conceit that reforms can be implemented without creating losers.

We’ve written a few times on this blog about why — unless under strict criteria such as national security —we should steer away from industrial policy: it creates groups that, with their acquired power, will reduce freedom of action and efficiency in the future. For any group — from cars to pensioners — the faction granted greater rents and power will use that leverage to extract still more rents in the future. Europe is experiencing the consequences of previous generosity. When rapid change is finally needed — as it is now — it is impossible to do so without any group using their existing leverage to block it.

Indeed, there have been lots of previous efforts to reform education in Europe. In Spain, the Popular Party pursued the LOMCE reforms in 2013 after Spain's poor PISA performance. The government tried to introduce external exams, streamlining the curriculum, and opening more vocational tracks. Teachers and regional governments mounted ‘green tide’ protests and when the government changed hands the reforms were rolled back with a new law.

In Italy, Matteo Renzi’s 2015 ‘La Buona Scuola’ reform attempted to tackle teacher employment, introduce merit pay, and give principals more autonomy. The response was large protests from unions against ‘creeping privatization.’ Key elements, such as merit-based evaluations, were subsequently watered down or reversed. In France, the story over the past decade is similar, with good proposals repeatedly struggling after sustained opposition. Just last month, Elisabeth Borne (now a minister) backtracked on some of the most recent changes proposed by Gabriel Attal (then a minister) last year.

Every time, it is the interest groups, not the ideas, that determine success. Even when the interest groups are initially defeated, success is unlikely to endures if the interest group has not lost its leverage.

Take the example of England. The Conservative Party does not deserve credit for much, but on education, they did surprisingly well.

They entered power in the early 2010s with a concrete plan to improve schools. They would radically expand Tony Blair's system of academies, which allowed schools to set their standards, curricula, and pay. They overhauled the curriculum, moving it away from learning general ‘skills’ towards learning facts and putting emphasis on basic reading, writing, and mathematics. For reading, they chose to embrace phonics, a style of teaching whereby students are taught to focus on sounds rather than concepts.

Michael Gove, the architect of reform, then fought a lengthy battle with teachers’ unions and other interest organizations. It was only due to the reality that teachers did not form a core part of their base that the reform actually happened.

The results of this perseverance are clear:

England now ranks fourth out of 43 countries for reading proficiency for 9- and 10-year-olds . . . The OECD’s Programme for International Student Assessment of math, reading, and science ability found that England’s 15-year-olds outperformed those in Scotland and Wales, where other parties are in charge of education policy. England now ranks 11th internationally for math, up from 27th in 2009; and in reading and science, it placed 13th for both, compared to 25th and 16th respectively in 2009. (Bloomberg)

But even these changes probably won’t stick. One of the first actions of the new Labour government has been to propose a bill that will roll back major elements of the Conservative school reform, despite its seemingly clear-cut success on international rankings. The same groups that initially resisted its implementation — primarily teaching organizations — have now organized a seemingly successful push for its (partial) repeal.

This is why the Commission’s plan is probably hopeless. Not because the ideas are uninspiring (although they are), but because the obstacles to reform are the interest groups that Brussels has no ability (or incentive) to tackle.

The way interest groups affect policy is not novel. Olson's 1965 book explains why concentrated interests defeat diffuse ones in political contests: small groups with high stakes mobilize because each member's potential gain justifies the costs of participation. Larger groups with weaker individual interests struggle to organize because the benefits for each member are too small to overcome the benefit of free-riding.

What is different in Europe is the degree to which policy must avoid, by design, antagonizing any interest group. That worked when Europe had the luxury of the US taking care of its defense and Russia subsidizing its energy. In this new era it is increasingly costly.

Amidst all the great policy pushes taking place in Europe right now, it is this dynamic that must be the core of the analysis. There is a lot of excitement for Europe’s drive towards greater funding for defense. But the greens in Germany are already holding it hostage for green investment, and the left in France to prevent cuts to welfare spending. (The Dutch parliament just voted down the EU rearmament plan out of fear that it would lead to more pork in less frugal countries).

When hearing the pronouncements made by Ursula von der Leyen, remember that the single greatest expenditure from the Commission every year is not innovation, defense, or competitiveness but the EU’s farm subsidies. The European Commission's plan to ‘lead the global AI race’ means investing €4 billion by 2027. The EU spends €55 billion every year on mostly rich farmers.

Will the push for more defense spending lead to a shift in priorities towards defense and away from social spending – more guns and fewer pensions? Or will it lead to more guns and more pensions? The political economy makes two option likely: no cuts will accompany the investments now needed.

In the current environment, a successful and decisive Europe is necessary. But this means creating conditions where some interests can be hurt to achieve others. An entity, in other words, that is able to act politically. It may be that each group is too entrenched for the equilibrium to be escaped; in that case, the problems will continue to grow. The consensus model that helped Europe in good times — ensuring no one lost — now holds it back. In the world of trade-offs, someone initially needs to lose. Until policymakers indicate they will fight those battles, even the best-written plans will keep failing.