11

The EU has a long track record of pushing for more social cohesion and the debate on a new round of cohesion policies is ongoing. Hopefully it will result in a cohesive set of guidelines for the 2014 - 2020 period. I'm afraid the debate is too academic for me to follow, at least not all of it.

While poor social cohesion1 intuitively points to economic stagnation, I'm not sure if there's a strong correlation for the reverse. Europe is relatively free of obvious social conflicts, but at the same time its economic policies are currently under much scrutiny2.

As a first step, I'm trying to understand if the EU's past efforts towards more social cohesion have proven to be significant in terms of long term economic growth.

1 Severe conflicts between ethnic or religious groups, for example.
2 Just in case, the European sovereign-debt crisis is what I'm talking about there.

  • 1
    @DVK: Social cohersion means that the social differences in Europe (say between a slum in Romania and London City) shouldn't be too steep. – Martin Schröder Apr 11 '13 at 8:21
  • Here's a piece from a financial site that (indirectly) addresses the benefits of certain forms of social cohesion spending. seekingalpha.com/article/1494122-europe-s-lost-generation – Tom Au Jun 11 '13 at 15:35
3

Since "social cohesion" refers to minimized disparities in unspecified dimensions (See link provided in question), economics does provide some insight to the effects of social differences on economic well-being.

The two important insights come from Adam Smith himself, who studied this question indirectly in his book "An Inquiry Into the Nature and Causes of the Wealth of Nations". In this work, he points out how division of labor leads to economic gains, both domestically, and between nations of people who may have nothing in common, through the productivity gains from specialization.

Smith goes on to give us a second principle, called the "Law of Comparative Advantage", which makes the point even more succinctly. It states that even if one person or group is more productive at every possible task than another person or group, it is still economically advantageous for each to specialize in their comparative best tasks and then trade. Economist Paul Samuelson called this law an example of an economic principle that is "both universally true and not obvious". For this reason, further reading on the subject is recommended to convince you of its applicability.

The important thing to note from both ideas is that it is the Differences between people that make these social economic gains possible, not the similarities.

If you are looking to understand why the EU would pursue such policies despite 200 years of scientific reasoning telling them it's unnecessary, I would recommend yet another economic insight: the theory of Public Choice.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.