EU and Unexpected Costs

by Tomas Forgac European Commission wants to tackle down on in-app […]

Image by © Dreamstime

Image by © Dreamstime

by Tomas Forgac

European Commission wants to tackle down on in-app purchases of add-ons for free tablet and mobile games. Commissioner Neven Mimica said, that “consumers, and in particular children, need better protection against unexpected costs”. He’s absolutely right.

At this point, some heartless libertarian anarchist could go ranting about infantilization effects of taking responsibility from individuals, moral hazard of compulsory outsourcing of due diligence or how goodwill of companies on free market is the best protection against misusing trust of their consumers. He could also insidiously show multiple examples of how both Apple and Google repeatedly reimbursed parents for the most expensive shopping sprees of their children.

But not us, we admire the junior commissioner’s endeavor to protect consumers from hidden costs and we would like to help him and his colleagues by offering a few other examples of unexpected costs they should look at.


Viviane Redding’s eternal crusade against roaming bears its fruits. Roaming is about to end across EU. Finally it will be cheaper for everyone to travel and post vignetted cappuccinos on Instagram. Well, for those who can afford to travel extensively anyway. What’s not imminently visible is what effect this will have on domestic plan prices for those who can’t. Roaming is one of those services which are typically higher margin and effectively subsidize domestic usage of mobile phones. When it’s gone, operators will not be able to lower domestic call and data prices or invest in increasing quality of their service as quickly as they could have otherwise and since they are all struck by the same regulation, there will be no competition forcing them to do so.

What would really help drive prices down is to scrap the whole nonsense licensing scheme which limits competition and protects existing players on the market.

Structural Funds and Cohesion Fund

Without these highly efficient fund schemes, we wouldn’t see such great achievements in equaling standard of living across continent as 65 thousand Euro high-end public toilet in a village of 1,250 people in Slovakia (which doesn’t work in winter because the village can’t afford heating). Yet even if proponents of these schemes would find an example or two where those brought something really useful, they fail to see how the funds corrupt political class willing to sell off sovereignty of their countries just to get their hands on those resources and how massively inefficient these schemes inherently have to be just because a bunch of bureaucrats decide on transfer of money between places thousands of kilometers apart having virtually no incentive to make that resources exchange viable for both parties. This is a stark contrast to an exchange on a free market which is always a win-win situation because both parties conduct it voluntarily after assessing they make monetary – or other – profit out of it.

These funds were designed to lower inequality between older (and wealthier) and newer (and poorer) regions. Why then Andalusia is not only still a region with highest unemployment in EU as it was when Span joined the union in ’86, but it’s unemployment rate is 5% higher than it was back then? Perhaps because they invested in what bureaucrats hundreds of kilometers away thought was best for them instead of what would really increase their productivity?

Agriculture subsidies

They make inefficient farmers’ life easier, that’s for sure. What they also make is food across the continent more expensive and African farmers less able to compete for share of wealthy market, which would make their life certainly much better than all the foreign help EU has sent there. Drop them. Now. All of them.


Their alleged positive effect on climate change has been rebuked so many times we will not bother repeating that. Their costs are visible to everyone who pays for the gas with honestly earned money and not by making loads of them by minding other people’s businesses. Their hidden costs are even worse because all around the world they take up land which could be used for food production or simply stay in its primary form and continue providing habitat for wild animals and consume greenhouse gases.

Energy and environment

Environmental policy favoring green energy has hidden costs in higher energy prices compared to the rest of the world, which makes businesses less competitive and goods and services for consumers more expensive. It has zero short- or long-term effect on climate change, yet it drives industries to shift their production overseas and increases unemployment. Lower profits or even new losses burn through the capital, which could be used for innovation bringing much larger effect on efficiency of machinery and would help the environment more in the long run.

Closed market

When new countries join EU – allegedly a free market zone – they have to implement new tariffs against their non-EU trading partners to meet newly inherited trade rules. This is very nice for protected businesses within EU, but it also protects consumers from cheaper prices for goods and services from outside. Unexpected costs, see Mr. Mimica?

Food serving regulations

Living in Singapore, one gets used to being able to have a delicious 3-Euro bowl of noodles on every other corner and wonders why there is nothing like that in Europe. Well, minimum wage (and lack thereof in Singapore) contributes to that for a starters, but that – at least for now – is not mandated by EU. But food serving regulations, which are supposed to protect consumers from what is known as the best business practice to acquire new customers – poisoning the existing ones – make it much more difficult and expensive to serve food to guests in restaurants or food stands. Vast majority of stalls in Singapore would have to be closed down according to EU regulations and yet those of us who have eaten in them for years haven’t experienced a single problem caused by their food.

EU commission, parliament, judiciary.

Their sky-high salaries, their good-bye presents in form of hundreds of millions of Euro in unfunded – and undeserved – promises after their retirement; their expensive perks, their carnival moving monthly back and forth between Brussels and Strasbourg costing 200 million of euros a year because a few nationalists couldn’t swallow their pride and decide where their omnipotences should sit for 300 Euro a day (on top of their salary of course), all of that is nothing compared to what their decisions and ideas cost EU citizens when they get implemented.

Their offices and positions are not necessary, everything good they have ever done could be achieved by one sentence signed by heads of all 27 member states of EU. That sentence could be: “People, goods and services are free to move across all member states with no other conditions.” Boom, billions and billions saved. No need to thank us for that advice.

Source: 4Liberty


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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