Misconceptions about Europe

Madsen has written a think piece listing seven common misconceptions about Europe that are certain to feature in the referendum debate.  They are:

  • The EU is “Europe”

  • If the UK leaves, it will, like Norway, have to follow rules it cannot help shape

  • That the UK has not lost sovereignty, only pooled it with other EU members

  • That the EU membership involves sacrificing some sovereignty in return for substantial economic growth

  • That huge numbers of UK jobs would disappear if the UK left the EU

  • That foreign investment into Britain would cease without EU membership

  • That special interests (such as universities and farmers) could not manage without the EU grants they receive

Madsen concludes:

It is quite possible that Mr Cameron will secure an advantageous deal from his EU colleagues that allows the UK to protect its sovereignty while enjoying a vigorous trading relationship with its partners.  If he does, the British people might well vote to accept that deal.  It will be better for the debate leading up to that vote, however, if the above misconceptions about the Europe and the EU are laid to rest.

You can read the full text of his piece here.

Is the single market possible in a 2-speed EU?

This week unites two crises: Greece and the UK’s proposals for EU treaty change.  The EU will get through both with a lot of fudging. Greece will stay in the Eurozone for now and Prime Minister Cameron will keep talking.

The former is eventually bound to lead to tougher rules for the Eurozone whether Greece remains in or leaves it.  That in turn will lead to stronger UK demands for non-Eurozone members to opt in or out, thus creating a 2-speed EU with progressive integration for the former and demands for the EU to be merely a single economic market by the latter.  The fact that the latter is also the overwhelming preference of EU voters carries little weight in Brussels or, indeed, in the other countries where Treaty changes require referenda.

The difficulty of isolating economic from social and political issues is where the EEC came in and why the continentals never envisaged a purely economic single market.  This issue was downplayed when the UK joined.

The UK’s position remains that social and political issues should be a matter for the British parliament. David Cameron would doubtless accept John Major’s Maastricht opt out if that were possible.  Indeed the UK should reverse all Tony Blair’s EU give-aways and be grateful to Gordon Brown for keeping us out of the Euro.

But all that is history and the question now is whether the single market we desire is at all possible with a 2-speed EU.  At the beginning of the year, FT columnist Janan Ganesh proposed that the UK be allowed a veto over proposed EU financial regulations it disliked in much the same way that France has a veto on changes to the Common Agricultural Policy. The argument would be that financial services are as crucial for the UK as agriculture is for France.  With the possibility of all the other 27 member states demanding vetoes for their chosen “crucial” areas, German support would be unlikely.

One way to sweeten the pill would be to renounce all UK regulations additional to the EU ones.  In combination they must annoy foreign financial companies operating in the City just as much as they aggravate British ones.  That would help establish the principle that we need clarity on “competences”, i.e. for each area the EU, or the member state, should legislate but not both.  Both doing so drags the whole EU down competitively.

But Eurozone integration threatens that.  Distinguishing competences between EU and member states is hard enough but a three way split between Eurozone, other EU and then member states may escape Brussels’ rather limited imagination.

Something important that Mr Cameron should understand

As Mr Cameron sets about negotiating a new European Union arrangement better suited to the UK’s needs and preferences, it is essential that he should understand something very important.  It is that the renegotiated terms are not about detail; they are about principle.

From the leaks and speculation surrounding Mr Cameron’s ongoing diplomacy the observer might think that they hinge on such questions as to whether immigrants should receive benefits, or whether the UK will be able to exercise some control over their numbers.  These are details, details on which the ASI has differed with some in his party.  We have taken the view that immigrants, especially skilled ones, should play an important part in the country’s future prosperity.

They are still details, however, and if all Mr Cameron returns with is a ragbag of assorted concessions here and there, he will have passed up an historic opportunity for Britain.  The principle at stake is sovereignty.  It is whether the British people through their elected representatives can make the laws that prevail in this country.

Yes, of course the UK should remain part of the single market, and yes of course the goods and services we export to fellow members of the EU must meet EU regulations and conform to EU standards.  The United States and China both meet those standards with goods they export there.  But what we do not want is a European Parliament that passes laws telling us how to feed our dogs.

Britain needs to distance itself from “ever closer union” if it is to protect the liberties that are part of its inheritance from Magna Carta onwards.  In most of the EU the laws tell people what they may do; in the UK the laws only tell us what they may not do.  Britons do not derive their freedoms from Parliament.  On the contrary, Parliament itself is a product of those freedoms.

Mt Cameron should remember that every concession on detail can be subsequently reversed.  John Major’s opt-out on the working hours directive was subsequently re-imposed upon us through EU health and safety provisions.  What he must seek instead is a deal that recognizes the principle that our Parliament is sovereign in this country.

The hope must be that Mr Cameron will be able to negotiate a deal that puts Britain on the outside track of the EU, willingly going along with the economic aspects of union, but with UK sovereignty protected from those who seek a Europe governed in detail by Europe-wide laws.

The immigrant’s pledge

I wonder if would-be immigrants to this country might find a readier acceptance if they were to undertake a voluntary pledge similar to this one.  I think most would readily do so.

“I am grateful that you have allowed me into your country to seek a better life.

I promise in return that I will respect your culture and your customs and I will learn your language.  I know that your ancestors fought for centuries to establish freedom of speech and I will support that freedom.  I promise that I will respect the right of others to seek to improve their lives, without regard to their sex or sexuality. 

I will do my utmost to be a good citizen.  I will do my best not to be a drain on your resources, but to make a positive contribution to your economy and to your essential public services through the work that I do and the taxes that I pay.

I will respect your laws and I will respect my fellow citizens and do what I can to prevent harm coming to anyone.

I will try to live my life in such a way that I will be a credit to my new country, so that those who allowed me to come here and contribute to its future will be glad that they did so.”

Geography and economic policy

The Economist has an interesting look at the problems of countries without a coastline. Given the greater expense this loads onto international trade this makes those countries poorer. From which we can derive two interesting points:

With a few exceptions the world’s 45 landlocked countries are poor. Of the 15 lowest-ranking countries in the Human Development Index, eight have no coastline. All of these are in Africa, which is a poor region. But even compared with similar sea-front countries those without coastlines have lagged behind. Their GDP per person is 40% lower than that of their maritime neighbours.

The first and most obvious of these being that this is proof that international trade enriches a place not, as the autarkists would have it, impoverishes. Pleases that find it more difficult to trade are poorer than thoise who find it easier: pretty good evidence that all that import substitution malarkey is indeed that, malarkey.

The second is a policy point. The total trade barrier in and out of any economy is not just the tariff barrier. Nor is it the regulatory plus the tariff one. It’s the costs of transport plus the tariff plus the regulatory. Thus, if you find yourself with high transport costs as a result of he above geography you should therefore be trying to be even more free trade in your regulatory and tariff attitudes. Because, as above, more trade makes you richer.

And interesting example of this is the US economy after the Civil War. Tariffs were raised considerably. This is often used as an example of a country developing successfully behind such trade barriers. But this coincided with the development of cheap ocean going steam ship transport. The total trade barriers into the American economy actually declined in this period. Late 19th century US development is an example of more trade leading to more development. We can check this too: trade did indeed rise considerably, despite those raised tariffs. And traded items converged in price across the Atlantic in this period: price convergence being a signal of freer trade.

The import substitution argument insists that some level of autarky makes places richer. The real world says that people with higher trade costs become poorer. We prefer to take our evidence from the real world, amazingly enough.