Democrats in the US have been calling President Obama’s recourse to Executive Orders for pushing a key social policy change (minimum wage rise) a case of “leading by example”. It so happens that across the Atlantic, leading by example comes packaged as a well-worn policy tool rather specialized for a fiddly problem in a very different policy area, namely the environment.
European governments would like businesses to be more environmentally responsible, some being of course more enthusiastic than others. The industries at the receiving end, however, are equally reluctant everywhere. Faced with their citing of legitimate economic and technological constraints to meeting the high aspirational environmental standards, the EU decided a while ago that it was best to lead by example. “Charity begins at home” might be another maxim to characterize the principle. And in Europe, it is a large home. Public procurement is a sizable chunk of the market across Europe – about 16 per cent of the GDP for the Union; higher in some countries.
There are obvious legal hurdles to individual governments being seen as playing favourites towards what they deem are more environmentally conscious firms. It is easier for distant Brussels to set European standards for public procurement as guidance for all members. Quality standards are the norm for public tenders. Adding on environmental criteria makes for “Green Public Procurement”. The Union can thus champion pioneers of environmentally superior technology and the firms like it because they are rewarded for their efforts with substantially-sized orders. That also effectively covers the risk for them to dip toes and assess the wider market.
President Obama’s State of the Union strategy amounts to public procurement of better Social Policy. He hopes the Executive Order will provide the initial spark that will ripple across to the wider market as employers note the effects. While in Sweden the government uses pre-commercial technology procurement to push the envelope on environmental technology farther than is feasible under the current product market conditions, in the US the Executive Order will be used to shore up a minimum wage at a level that might not be considered otherwise, to foster a gradual shift in the labour market.
But what a contrast across the two sides of the Atlantic!
On one side, the government’s share of the market pie is leveraged to bring businesses to the table. It is the carrot. Not quite the same as the last resort to thwart an intransigent antagonist as West of the ocean. Even less similar, the “other” in the US is within the government. Lastly, in Europe, the tool is used to court the other party to negotiate a more permanent deal. In the US, the tool is whipped out after all the regular deal-making has amounted to nothing or when existing deals have fallen through.
The contrasting use of a very similar stratagem makes an illuminating point about governance. A polarized two-party system begins to resemble games that governments in other systems play with non-government players. In the non-US forms of democracy, governments distinguish between insiders and outsiders. Might the US executive and the legislature learn more ideas by observing other governments’ dealings with regulated non-state parties? And conversely, might European governments pay more attention to American antics to garner pearls of stratagems to sell regulation?
Getty / K. Van Weel
Council of the European Union