Thus far I have purpose fully avoided engaging in this thread due to the disingenuous nature of the OP. I am glad to see that others, especially** Clairobscur** and UDS have made the effort to provide educational material. I’ll emphasize that the EU is in fact a result of all the strife that happyhethen thinks we are unable to overcome, and that like the Civil War in the America created a deep understanding of the need to coexist peacefully WWII did for the Europe. Anyone that thinks that the EU is failing and who wishes to educate themselves as to how wrong this is might want to peruse this thread:
Do the Europeans really want to be part of the EU?
In there you might also eradicate some misconceptions about the nature of our Union.
Well happyheathen. If you want an answer to that I think you had better tour the cities and counties of EU, ask the mayors, city council members, county trade development agencies, management funds, local entrepreneurial funds, county counselors and what-not what their specific region prefers to do in order to attract various businesses.
Obviously some of these counties, cities, towns and even states will have some weird preference for say ice cream manufacturers or the arms industry based on some conception that they can carve out a competitive edge in the regional strife to create wealth and employment opportunities.
But seriously… you are joking right? I mean, you do know that the EU is a free market economy? You do know how that works?
If not; the short answer is that there is no meddling by the federal state in what industry is to be allowed to prosper and there is no state planned production or enterprise.
The long answer is that every state or super-state structure including, but not only Delaware, the Punjab, Aquitaine, Japan, the EU, and the United States of America will have a certain interest in forwarding their strongest industries since it is their main source of income. The financial measures used to control these interests are usually tariffs on imports and tax subsidies on exports. These measures will be applied differently in different industries in all the nations that I know of at least.
The irony of your question is of course that the EU in its free trade union form serves to make sure that no one does that in Europe. Hence it would rather be correct to say that the EU is against favoring any industry. Now the world isn’t that simple and, for instance, we have pretty long and complex trade war between the EU and US that is going on as we type. In that trade war the two parties will favor their respective strongest industries and try to hit the opponent where it hurts the most financially and politically. Thus do we end up with for instance French cheese import tariffs by the US and orange import tariffs by the EU. French cheese irritated the French enough to force through lifting some painful trade sanctions the US wanted out. The orange tariff hurts Bush badly by targeting the economy in electorates he needs to be popular in, thus they twist the US administration’s arm to lift some of their tariffs that really hurt the EU.
Any state will also subsidize desirable but non-profitable industries such as the fine arts. The EU does quite a lot in this area compared to the US. This is partly due to slightly different view on how culture should be nurtured. While as the US tends towards sponsoring, the EU tends towards subsidies, both with the motivation that art should be free from influence. In this respect the US puts it trust to enterprise while the EU puts its trust to regional government, or the people if you like. It seems that the US system is more successful in creating a commercially viable arts and entertainment industry, while the EU is more successful in sustaining cultural tradition in the fine arts, especially seen from an educational perspective.
As regards the federal subsidy system in the EU; it is widely misunderstood. First of all it is a very limited amount of money that is redistributed to the regions. The reasons for the system are more than anything connected to monetary policy. With the lack of reinsurance system that a federal fiscal and tax union like the US provides the EU needs to create another way of handling asymmetric shock to the economy within the business cycle. It’s rather well and beyond this class and I shall only direct you here if you care to understand more. In that post you shall also find links to some scholarly work on the matter. The thread also answers pretty much any of the questions that the OP asks.
There is a controversial part to the subsidy system, which is the agricultural subsidy system. Due to the redistribution needs as described above a significant portion of the subsidies will go to agriculture. Even the US has limited form of this system, beyond the existing reinsurance mechanisms. The reason is that agriculture will be more sensitive than other industries to extra cyclic variations in profitability due to its nature of being nature, and the relatively low profitability parameters that we have an interest in maintaining in the industry that feeds us and hence remains a most essential part of survival. Even if the agricultural subsidy system is fairly small it is vital to the EU farmers, just like reinsurance through the state is for US farmers, which they see on their tax bill instead of in cash like the EU farmers see theirs. Both the US and EU have tried to use the various advantages of the two systems against each other. Both the EU and the US have protested that the other side is playing foul. Within the EU member states have been known to play dirty against their sister states in this area by attempting to skew subsidy rules and regulations to forward their regional interest and by exerting power through strikes and blockades in order to weed out more money from the federal government. The farmers of Spain and France are especially notorious in using such tactics.
Does that answer you question happyheathen?
Sparc