The value of the EU

In their responses to my essay, Douglas Carswell, Samuel Gregg, and Guillaume de Thieulloy raise many interesting points but also repeat several tropes that bear little relationship to European realities.

While their central claims are somewhat different, all three converge on their scepticism about Europe’s need for “pan-European systems of governance at all,” as Carswell put it. They also paint a picture of an ossified and dysfunctional attempt at such a system, which has faced constant rejections by European electorates “when allowed to vote on the issue,” and has benefitted only a narrow class of Brussels mandarins.

While my initial essay was critical of the approach to integration that long dominated the European debate, it does not take much to see that Carswell, Gregg, and de Thieulloy risk throwing the baby out with the bathwater. A view of the EU as a pure drag on Europe, economically, politically, and culturally, is untethered from facts. It also implies the possibility of an alternative in which the current 27 member states are not bound together by any common rules and do not share any common platform for joint decision making—supposedly at little or no cost. Such a counterfactual is a delusion.

It is “not as if European integration has been a success,“ Carswell quips. I beg to differ. Following the fall of communism, accession to the EU was essential for pro-market reforms in Central and Eastern Europe—not because of an explicit pressure from Brussels but because of a simultaneous economic opening-up of a dozen or so countries, which created a massive competitive pressure on fiscal and regulatory policy, with results that ought to be celebrated. Poland’s real incomes have tripled since the early 1990s. For the relevant counterfactuals, it is enough to look at the likes of Ukraine and Moldova. The EU’s single market and new tools of competition policy (both intellectual brainchildren of British Conservatives of the 1980s) led a substantial economic liberalization across Western European economies in the 1990s, dismantling national monopolies, privatizing state-owned enterprises, and eliminating heavy-handed industrial policy and cronyism. In fact, even in the UK’s case, the accession to the European Economic Community played an important role in kickstarting productivity growth following the disastrous experience of the post-war years and setting the stage for Margaret Thatcher’s economic reforms of the 1980s.

More broadly, those who want the EU gone have to grapple with the fact that the bloc does many useful things. The gains from having a single European market are large and well-documented. Because the single market means not just an absence of conventional forms of protectionism (such as tariffs and quotas) but seeks to dismantle non-tariff barriers, it necessitates the existence of a layer of common rules—at the very least to allow for mutual recognition. Carswell’s points about the EU’s falling share of global output and its absence of economic dynamism are well taken. The former, however, is primarily an artefact of rapid catch-up growth in previously underdeveloped parts of the world—something to be celebrated! The latter, meanwhile, is primarily a result of domestic, not EU-level policies—as the UK itself is learning in the post-Brexit era.

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