Research On Secondary Principal-agent Of EU National Sovereignty

Supranational institutions are developing and play an important role to the worldpeace in globalization, which European Union (EU), as one of them, has effect on theEuropean economy in the deepest level of integration. The occurrence of the Europeansovereign debt crisis indicates imperfection of the EU system, and can helpunderstanding the evolution of supranational organizations and internal organizationalframework. Based on individual property rights, the paper shows two agencyrelationships of individuals, governments and supranational organizations, one is thatindividuals entrust non-private property rights to government management, the other isthat government entrusts a part of the power to supranational organizations bydiplomatic agreement. The government power is divided into public service power andforce power. The public service power includes the provision of government system andpublic goods, the force power includes justice and taxes, and both of them have to bematched each other. The government power has to meet two conditions: firstly,government system needs the force power to govern the country by limiting individualbehaviors; secondly, the revenues of force power are greater than or equal to the cost ofpublic service power in a certain period.The paper analyses the relationship between the EU political framework and theEuropean sovereign debt crisis. In secondary agency by agreement，EU membercountries entrust the rights in monetary field to EU management, and asked the forcepower of EU to meet the basic needs of public service power. Member governmentswithdraw the management in monetary and are limited to rights in related fields. Whenthe economy is stimulated, the EU member countries will be out of constraints of EUforce power, resulting in the imbalance of EU power. The institutional arrangements byEU are difficult to achieve, and the political structure of EU is in instability. Forexample, EU member countries failed to comply with the constrain that fiscal deficitcannot exceed3%of GDP in terms of Stability and Growth Pact, resulting in a largenumber of budget deficit. EU organizations cannot limit EU member countries by forcepower. At the same time, both of EU and member countries cannot finance capacity bycurrency in agency of monetary rights, which triggering government credit overdraftsand Greece’s sovereign debt crisis.According to research, it is central causes of the European sovereign debt crisisthat supranational organizations are lack of binding on member governments, instead of the contradiction between the unified monetary policy and the freedom fiscal policy.The weakening of EU force power in secondary principal-agent leads to the lack ofmanagement functions of member governments and EU, which affecting the stability ofEU system and triggering the European sovereign debt crisis.