Wednesday, September 05, 2012

Subsidiarity: Women Quotas

Now, I think we can all agree that having a quota for women on corporate boards is a monumentally bad idea. It is nobody's business but the shareholders' (and, in Germany, the workers') who sits on the board of a purely private company. Even if we were concerned about the glass ceiling, the kinds of women who sit on corporate boards are the last group to need the helping hand of the state. Quite the contrary. Introducing such a quota taints all female board members everywhere with the suspicion that they are not good enough, that they are only there to help the company meet its quota. It makes people wonder whether - to use an example from the European Commission - Commissioner Kroes has real skill, or whether she, like Commissioner Reading, is only there to hide the fact that the EU is still run by men. (I borrowed this picture of the 1991 Maastricht summit from Craig Willy. It goes to show that, to this day, the easiest way to make it to the top is to be born there. Too bad about the Queen's fashion sense.) 
Given how obvious this argument is, it is surprising that the UK seems to have based its opposition on the issue of subsidiarity instead. To be sure, this is not an implausible argument. It's just that, in Brussels, a subsidiarity argument generally only works in cases that are much more egregious still. I would have thought that it would have been much easier to win this argument on the merits. According to the Financial Times, my source for this story, the UK already has Sweden on its side. Bring in Ireland, and you're already half-way towards a blocking minority. The logical source for the rest of the votes is Eastern Europe, where they tend to be a touch more conservative and/or libertarian than in the West, which comes out in dossiers like this. Then again, you could also be cynical and combine the votes of the UK and Sweden with the votes of the six worst performers (i.e. everyone from Italy down in the graph on page 11 here, which surprisingly also includes Luxembourg). 
But since the British brought up subsidiarity, let's look at the draft proposal to see if that argument has merit. The Commission's discussion of subsidiarity covers more than an entire page, starting on page 8. It turns out that, while relatively long, this explanation fails spectacularly. 
Essentially, the Commission advances three arguments: 
1. Unless we do it at the European level, the Member States won't do enough.
That is fantastically dumb, quite possibly the dumbest explanation I have ever seen of why something satisfies the principle of subsidiarity. The fact that it is anticipated that the Member States will choose not to do as much as the Commission would like is in no way, shape or form an argument that suggests that action at the European level will work better. Giving the Member States the option of doing nothing is exactly the point of subsidiarity. In a perfect world, this would be an explanation of why this proposal would be shot down in the Council. As it is, it is a suggestion that the Members of the Council should use EU law to do a run-around their national legislatures and administrations. Neither of these points, however, is even remotely related to the question  of whether this law works better if it is enacted EU-wide. 
2. Level playing field, complications in business life and have a deterrent effect on companies' cross-border investments
These three all essentially come down to the same thing.  It's the standard go-to for the Commission in just about any dossier. The problem is that this is a company law rule, which means that every company only has to comply with whatever rule is in effect in their country of incorporation. There is no question here of one company being potentially subject to more than one rule. Nothing about this is particularly difficult to understand, companies deal with the fact that European company law is not harmonised every day. As for level playing field: Huh, weren't female board members supposed to help companies? More on that under argument 3. 
3. We need women on the boards of companies because this will promote economic growth that we badly need
This is wrong on two entirely different levels. First of all, I don't accept the premise. Assuming, for now, that companies are acting irrationally and promoting men to board-level positions instead of better qualified women, I refuse to believe that this effect is very significant, at a macro-economic level. No one person on the board of any company adds that much value. Not even big celebrity CEOs. (The more "celebrity" they are, the more they are subject to the rule of all autocrats: when they're good, they are very good, and when they're bad, they're very bad.) I don't see how all of this - by assumption - untapped potential can add more than a couple of basis points to economic growth. 
Apart from all of that, even if the economic growth at issue here were significant, it is still not enough to satisfy the principle of subsidiarity. It is not the task of the EU to promote economic growth by any means at its disposal. Instead, promoting economic growth is a task for the Member States, unless the EU can do a significantly better job of it. And, bearing in mind the previous points, why would the "growth spurt" created by Member State X introducing a women quota depend on whether Member State Y or Z also introduces such a quota?   

Taking all things together, I still don't think the UK chose wisely. In Brussels, a bit of hand-waiving along the lines of argument 2 usually gets you past subsidiarity, unless the Member States decide they don't want the proposal for other reasons. (Subsidiarity is a great argument to use if you want to get rid of a proposal for less politically correct reasons.) That doesn't change the fact, though, that the Commission did an appalling job here. Then again, maybe they did the best they could with what they were given. After all, I don't think I can think of any better reasons why this issue should be Europeanised.

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