Advocates of free markets harbor a well-justified distrust of the European Union (EU). I, for example, have spent a fair amount of time criticizingits populist overregulation,moral hazard,the damage created by the common European currency,EU structural fundsorCommon Agricultural Policy. Like many, I am convinced that the EU is a deeply flawed organization and that it mostly deserves much of the criticism that it receives from pro-market circles. At a more fundamental level, I also think that institutional competition and voting with ones feet is important, and see the thoughtless harmonization of legal and regulatory regimes across the continent as extremely damaging. <\/p>\n
However, I no longer think, as I once did, that the EU is the single biggest threat to freedom and prosperity in Europe. Neither do I believe that an exit from the EU either by the United Kingdom or some of the smaller central European states, such as my home country, Slovakia would make these countries, or the continent as a whole, more libertarian. If a break-up were to occur, it would likely push Europe towards nationalism and protectionism, and undo some of the real benefits of European integration. <\/p>\n
First, whatever one thinks of the EU, it has sometimes been a force for good. It would be foolish to take the free movement of goods, capital, people, and also to a more limited extent of services, for granted. Vicious protectionism, not free trade, has been the historical norm. The second half of the 19thcentury, is often cited as a counterexample, culminating in thefirst age of globalization. But one should not succumb to retrospective optimism due to measures suchGermanys iron and rye tariff of 1879andFrances Mline tariff of 1892,fin-de-sicleEurope was no free-trade zone. Or, for a different example, think of the transitional economies of Central and Eastern Europe. Whether one likes the EU or not, the prospect of membership was clearly one of the engines of economic and political reforms that would have been otherwise very difficult. <\/p>\n
EU break up would lead to more nationalism and protectionism. <\/p>\n
Second, it is helpful to keep a perspective on the magnitude of the problem. The EUs annual budget amounts toone percentof its GDP. Even the structural funds, which Irecently blamedfor the rise in corruption in some of the Central and Eastern European countries following their accession, are relatively modest, cumulatively accounting for some 4 percent of their GDP. <\/p>\n
What rightly bothers the critics of the EU is not the absolute size of the spending but rather its wasteful nature. Over the period of 2014-2020 the EU is planning to spend312 billionon agricultural subsidies. And the non-fiscal side of the EU, namely the unnecessary red tape and regulation it generates every year, is a much greater problem. This of course has to do with the lack of accountability of Brussels mandarins and with their belief that for every European problem there is a one-size-fits-all European solution. <\/p>\n
These are all valid criticisms. However, it seems odd to think that the EU is acting as an external, exogenous force, dumping bad legislation on unsuspecting member states. After all, theEuropean Council, composed of the representatives of national governments, is an integral part of the legislative process. In only a handful of areas, in which such powers have been explicitly delegated by the Council, can theEuropean Commission(that grey, anonymous, unaccountable bureaucratic body) act alone. <\/p>\n
Eurosceptic groups arecorrectto point out that much of the legislation adopted across EU countries originates in Brussels as does a dominant part of the regulatory burden facing European businesses. However, that is a reflection both of the institutional structures which make the adoption of bad, EU-wide legislation, more likely but also, quite independently, of an intellectual climate which sees all human problems as amenable to improvement by legislative action, without regard for costs and benefits. It seems plausible that bad European legislation is acting in part as a substitute for bad domestic legislation. That does not make it any better, of course, but it should shed some doubt on the notion that, if it werent for the EU, national policymakers would be adopting significantly better policies. <\/p>\n
The EU often acts in ways that are inimical to freedom and prosperity. But so do other political organizations, groups, and movements, and we need a sense of perspective to identify our key enemies. For one, I am much more afraid of the rise of Europesneo-reaction, of Vladimir Putins imperial ambitions in the EUs immediate neighborhood, of thetiesthat connect the regime in the Kremlin with the populist nationalists within the EU, and of the damage that these can generate when in power. These are not just abstract threats. In Hungary,Viktor Orban who wants tocreate a Hungarian alternative to liberal democracy, inspired by Russia and China already nationalizedthe pension system,populated the board of the central bank with his political cronies, and helped electa former skinheadas thedeputy speakerof the Hungarian Parliament. <\/p>\n
One may say that the choice between Orban or Putin on the one hand andJean-Claude Junckeron the other is a false one. Indeed, I havearguedthat the current anti-EU populism is largely a response to the heavy-handed policies and catastrophic response of European leaders to the financial crisis of 2008, which led to a six-year recession in Greece. The continent needs a compelling intellectual alternative to the way the EU is being currently run, taking into account the importance of institutional competition and trying to limit the arbitrary powers exercised by unelected bureaucrats (orsham parliamentary bodies). However, such an alternative is not going to come from Europes populist Right. In the meantime, taking the prevailing intellectual climate as a given, we may still face the unpleasant choice between virulent nationalism and a flawed EU. <\/p>\n
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The Libertarian Case for the European Union<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Advocates of free markets harbor a well-justified distrust of the European Union (EU). I, for example, have spent a fair amount of time criticizingits populist overregulation,moral hazard,the damage created by the common European currency,EU structural fundsorCommon Agricultural Policy. Like many, I am convinced that the EU is a deeply flawed organization and that it mostly deserves much of the criticism that it receives from pro-market circles Continue reading