Neverendum

(This was written four years ago)

David Cameron has recently announced his intention, if re-elected, to hold a referendum on UK membership of the European Union.  This post isn’t me selling a line one way or the other, but a way of clearing my own head that I hope others might find helpful.  I was tempted to start this post by saying “I would count myself a European, but …”, except that this sounds very much like “I’m no racist, but …”.   It’s a difficult topic.  Liz and I have a house in France, where we live for some of the year.  We enjoy Italy, Germany and Spain, have had a great time in Denmark, and are shortly off to visit friends who spend much of their year in Andalucía.  It would be easy to take an uncritically pro-EU line on the basis of the sad and unpleasant people who are lined up against continued membership, including the appalling UKIP.  But I’d like time and help to chew the whole thing over.

There are a number of issues that this proposal raises, most of which have been poorly covered in public discussion.  Some of the stuff is simply inaccurate – like a letter in the last Sunday Times ranting about the European Court of Human Rights, which is nothing to do with the EU.  What is our net budgetary contribution ?  What are the gains from trade ?  Where do these estimates of the vast cost of EU regulation come from, and how are they calculated ?  Which EU regulations would have to be replaced by national ones if we withdrew ?  Whilst there are some good resources – like the Financial Times – often the best you can hope for is summaries of what politicians are saying.  And what they say is a curious combination of vacuous and threatening.  Look at this article by Joschka Fischer, for example, and see if you’re any the wiser.  This may be because, as I said in an earlier blog, I think I am the only person in the country who does not want to extend Britain’s influence in the world. What does ‘punching above our weight’ mean, anyway ?  Asking people to do what we say even though we have a weak economy and undersized military ? Why would they do that ?

The first question is why we submit things to a referendum, rather than leaving it to elected representatives.  The answer that is usually given is that the British people must give consent to changes in our constitution, for it is from them that legitimacy flows.  This explains why we don’t have referenda on hanging or immigration or whatever else, but we do have them on regional government or voting systems.  Doesn’t explain why we had a referendum on police commissioners, but let that pass.   We have already had a referendum on EEC membership, in 1975, and the vote was two-thirds to stay in.  The reason given for another referendum on Europe is that things have changed, that what was sold as a trading bloc has become an ‘ever closer union’ covering a wide range of social and political issues.  Well, actually the phrase ‘ever closer union’ was in the Treaty of Rome in 1956.  There were proposals at the time for a unified currency – I remember writing an article pointing this out at the time, and attacking it.  I actually took part in the “No” campaign, writing articles in journals and sharing a stage as the warm-up act for Michael Meacher MP.  Curiously for the current viewer, the objection then was that the EEC was a capitalist club in which no respectable socialist could find a place.  Ho hum; times change, don’t they.

The second problem requires some thought about what is meant by a single market.  The government’s line is that we are happy to be part of a trading bloc with a single internal market, free of tariffs and quotas.  What we don’t want, we are told, is the raft of regulations and political initiatives that are now being forced on us.  This sounds awfully plausible, but it really isn’t.  Firstly, if you want to be part of a trading bloc, you have to agree a common basis of trade.  You cannot expect firms in France or Germany to be willing to open their markets to competitors with laxer health or personnel rules.  Common regulations actually help competition in an open market: you wouldn’t expect one butcher at Sheffield market to have different hygiene standards to another, would you ?  If we do not have (e.g.) common rules on electrical safety of household devices, we open up the opportunity for home nations to refuse to accept our exports on health and safety grounds.  Think how long it took for the French to accept British beef (on grounds of public safety, of course) after the mad cow disease outbreak.  I was talking to a chemical engineer recently who welcomed EU regulation of the Italian chemical industry, making them follow the same formulations and safety checks as the rest of Europe.

In passing, economic theory does indeed suggest that welfare would be improved by having free trade internationally. The basic theory goes back to David Ricardo in the 19th century, but is subject to a number of reservations. You could, in any case, argue that the EU does not help freer international trade because it interferes with trade with non-members, for example in agriculture. In any case, the actual size of the ‘gains from trade’ may not be enormous – for nerds, here’s a lecture by Paul Krugman to that effect.

A free market also involves free movement of labour.  It’s interesting that the lack of immigration control, which I guess are at the heart of much public objection to the current EU policies, is not part of the government’s ‘bottom lines’ for renegotiation.  When will this news be broken to Essex man ?

Tories say they like the idea of free markets, but two areas where free markets do not work are agriculture and fisheries.  European agricultural policy has involved consistent intervention in the market to assure the stability of farming communities, and as part of this there are extensive transfers of money from countries with small agricultural sectors to those that have larger ones (and from people who aren’t farmers to those that are).  A cynic could say that the EEC started as a deal where France gave Germany access to its industrial markets in exchange for support for French farmers.  Fisheries suffer from the ‘tragedy of the commons’ and it’s not really being fixed, mostly due to the fact that the fishing industry has more votes than herrings.  The economist in me says that a better definition of property rights – who owns this particular part of the Dogger Bank etc – would go a long way to solving this problem.  However, although considerable benefits could arise from reforming  both of these policy areas, the assumption that an independent UK policy will sort out the farming and fishing industry lobby is optimistic indeed.

So why are we here, apart from Mr Cameron’s desire to placate his anti-European wing and stop votes slipping away to UKIP ?  Well, there is a reasonable  argument that says that the euro currency bloc will, after all its travails, have to get closer in financial and budgetary matters, and that this creates a two-track Europe where relationships need to be clarified.  Not sure why this needs an in-out referendum, for it will be an exercise that involves other countries inn the outer ring, and that will be an enduring piece of work rather than a one-off task.

There is another major problem with an in-out referendum, which is this.  Taking any serious decision in life involves assessing the advantages and disadvantages of alternatives.  That’s how businesses work, and it is how families work: hell, it’s how Darwin decided whether or not to get married.  I can accept that it will be possible to lay out clearly the advantages and costs of staying a member of the EU, though I’d like a clearer accounting of the advantages of a single market rather than vacuous allegations or denials of how many jobs depend on it.  However, the costs and benefits of being out are altogether foggier.  If the electorate decides to vote “No”, there will then need to be a series of negotiations to see what the deal is when we withdraw.  We cannot know beforehand what this will lead to.  There is no reason why the French and Germans should broker a generous deal, is there – apart from the fact that the UK has a large negative trade balance with them ?  What, anyway, would a generous – or niggardly – deal look like ?   In other words, we are asked to choose between two alternatives without knowing the costs and benefits of one of them.

And finally – is it all just a matter of regulation and finance, or is the idea of a European Union more noble and broader than that.  Isn’t it a good idea that, in return for freer trade, richer countries contribute to bringing poorer ones up to speed with decent infrastructure ?  Isn’t in inevitable that looking after the environment means going beyond national boundaries ?  Don’t new countries benefit from a shared understanding of democracy and civil liberties ?  Don’t the EU institutions we never hear of, the ones that sponsor artistic and educational exchanges, contribute to a richer understanding ?  Shouldn’t we welcome the way that young people can travel abroad and try different jobs in different cultures without too much fuss ?  How much weight should we place on sixty years of European peace, and to what extent can we attribute it to European institutions (rather than NATO or sheer common sense) ?

There’s a very good introduction to this area of debate on Alistair Campbell’s blog site called, Monty Python style, “What Have the Romans Ever Done For Us ?” – but other contributions would be very welcome. Mind you, I guess one argument against the referendum is that a “Yes” vote will not placate the antis, who will push for another referendum in five or ten years, or whenever the next treaty comes up to be ratified. The Canadians, tired of Quebec’s endless debate about whether to be an independent Francophone country, have a word for this – Neverendum.