From decentralized democracy to centralized bureaucracy

Under the guise of Europe’s General Data Protection Regulation, EU governments collect and share citizens’ financial data in ways that violate democratic privacy rules. This overreach is part of a broader, alarming installation of centralism and bureaucratization in Europe.

A symbolic image of an eye peering through a bar code
The ever-growing volume of data extracted by governments from citizens and financial companies generates excessive costs and already goes far beyond what is truly needed to uphold the law. © dpa

A constitution, society’s most important contract, gives institutions the power to regulate the workings of the state and is the base of the rule of law. Its most important function, however, is protecting the rights and freedoms of citizens from encroachment by the state. The power of the state must be restrained.

Constitutions also protect minorities – not only those shielded under general anti-discrimination rules but also such groups as entrepreneurs, contrarians (freedom of speech), disabled or high-earning citizens.

Debasing democracy

As time goes by, Western societies’ constitutions, laws and regulations have begun to impose rules that limit freedom and now regularly dictate how the citizen – who is the sovereign – must subordinate his or her interest, not even to the requirements of the community, but most often to those of the bureaucracy. 

Essential principles of democracy, freedom and the rule of law are being undermined. An important precept of democracy says that the citizen is the sovereign and can decide on the form of governance that best suits the society, as long as the basic principles of freedom – especially freedom of choice – and unalienable rights, such as life, personal privacy and property, are safeguarded. 

Another critical principle is subsidiarity: the state should perform the tasks that only it can execute. An orderly hierarchy of functions requires that tasks which can be carried out by individuals and businesses are not assumed by public institutions. Further in the public area, national governments or supranational institutions should not assume the tasks which can be handled more effectively on the regional and local level. 

This transfer of information totally contradicts the data protection rule.

Regional competition is healthy, in contrast to standardization and harmonization imposed from above. The latter leads to policy solutions that are, in the best of cases, products of the lowest-common-denominator approach. At the same time, these policies tend to be overly complicated, burdening the society with a difficult-to-follow jungle of rules and requirements.

The flood of regulations that confronts us today in the Western world has awful consequences. Many such laws are unconstitutional, or in part contradictory. Respect for the rule of law evaporates as it becomes impossible to comply with all the provisions in the books. Also, the utility of many of these regulations is hard to comprehend; they appear to be the result of stubborn adherence to principles rather than reasonable need.

The worst consequence of this process is legal insecurity, which allows the authorities to render arbitrary decisions to the detriment of the citizen. There are scores of examples attesting to this in the realm of tax, labor, social security and property law. 

Protecting citizens’ rights from the depredation of the government and the state is a vital role of the parliament. However, the system of “professional” parliaments, in which deputies are fully employed and dependent on the function for their upkeep, ill serves the goal of defending citizens’ interests. We are in a vicious circle here, as it is argued that the sheer volume of laws being issued makes full-time parliamentarians necessary.

This Gordian knot can be cut with a sword – less centralization, more subsidiarity, more freedom and politicians who do not depend on the state to maintain their living standards.

Making a joke of privacy protection

Let us take a look at the European General Data Protection Regulation, or GDPR. Respect for privacy is of eminent importance in any free society and from that standpoint, such an attempt is laudable. However, the regulation makes a joke out of it. It is a bureaucratic monster, bound to be ineffective for two obvious reasons. Firstly, it does not limit the excessive collection of data by public authorities. Secondly, exceptions for government entities allow them to collect data in the absence of the interested parties’ consent and any proof of necessity. These exemptions are not reserved for extraordinary circumstances; they form part of the core of the regulation. 

Furthermore, this law represents a terrible and pointless burden on the private sector. It necessitates very costly electronic data processing applications and additional staff – all under the threat of excessively high fines. When I go to the dentist with a severe toothache, the first thing to do is to sign a data protection declaration, which nobody reads. The whole exercise is a costly joke: we just sign papers, or click a box on an internet site, neither bothering to read or understand the text, for the sake of filing. 

This regulation was approved in the European Parliament (a body of professional politicians) in 2016, to replace an older directive, apparently without anyone considering the consequences.  For example, medical, biological and pharmaceutical research is heavily affected by new restrictions, and there are in many instances no tangible benefits for the concerned individuals. More subtleties would have been needed in this area.

In today’s bureaucratic, highly complicated and often confusing environment, financial institutions (banks, insurance and asset management companies, boards of trustees, etc.) are obligated to provide the relevant tax authorities with detailed financial information on accounts and other assets every time a client deals with a foreign agent. This includes not only the owners and beneficiaries of the asset. Paradoxically, a foreign advisor or proxy will require such a report as well, even though he or she has no tax responsibility. 

Financial institutions must furnish this information electronically to national authorities, which then share it with relevant foreign tax authorities. This procedure represents a flagrant intrusion in personal privacy. Described as an exception, in truth this transfer of information totally contradicts the data protection rule.

It is also worth noting that this information network was immediately targeted by criminal elements, as happened within the Bulgarian tax system, where hackers gained access to the financial data of Bulgarian citizens and other nationals as well. This case is not likely to remain unique, as information is also shared with countries that rank highly on corruption and criminality lists. One may therefore claim that the directive puts European governments in a position of collusion with criminals worldwide, as the underworld has been provided with a formidable tool for plotting extortion, kidnapping or even murders. 

Moreover, such systems are somehow of little use for combatting money laundering (which goes hand in hand with terrorism), human and drug trafficking, and other crimes. The avalanche of data governments extract from citizens and the private sector goes far beyond what is needed to prevent tax evasion.

The Western world, which still pretends to be a stronghold of liberalism, has strayed very far from an effective, decentralized democracy, heading instead toward a lumbering bureaucracy.

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