TCS Daily

I ? EU

By Fredrik Segerfeldt - August 16, 2004 12:00 AM

Coming from a country where it is usually considered left to be against and right to be for the European Union, it is often perplexing to follow the debate on the EU in free-market fora such as TechCentralStation. Libertarians in the US and Central Europe seem to have mainly negative things to say about the Union. Often one gets the impression that, to them, the very idea of European political integration is something bad. I would like to suggest that they are wrong. It is possible to be in favor of both free markets and the European Union.

True, a libertarian is by instinct skeptical towards government. Therefore, the creation of yet another level of government, above the national one, is by definition wrong. And of course, there are numerous features in the EU that deserve criticism from a free-market perspective. I could even agree with the statement that most parts of the EU are going in the wrong direction. Trade policy, the creation of "social Europe", subsidies, and tax harmonization are the first policies that come to mind as being destructive. But we must not confound institutions with the leaders presently in charge of those institutions, or with the policies pursued by these leaders. The EU is not to blame for the failures of continental Europe in creating jobs and prosperity. The European Commission must not be allowed to be a scapegoat for the ineptitude of Gerhard Schröder and Jacques Chirac. The EU is not merely a mirror of its present leadership, but a way of uniting a divided continent and of creating better opportunities for economic growth and prosperity. If socialists are destroying Europe, it is socialists we need to defeat -- not Europe.

To me, the fact that Germany has not been at war for almost 60 years is an accomplishment of proportions we cannot overstate. Yes, one could argue that the US military presence, the pacification following World War II and the Wirtschaftswunder all have had a role to play in the peaceful development of Germany and of the postwar stability of Western Europe. It is of course also obvious that democracy has played its role. But the EU also contributed a great deal to the democratization of Spain, Portugal and Greece. In short, it is hard to argue that European integration has not been a stabilization factor for our continent. By the same token, it is difficult to ignore the role of EU accession in facilitating difficult structural changes in the new member states. Would the electorates have accepted deregulation and privatization had the governments not been able to say that they are a requirement for EU membership? Would the Slovaks really have rejected Vladimir Meciar without the realization that electing him would have had devastating consequences for Slovakia's international aspirations? But perhaps most importantly, could we have accomplished the level of free movement of goods, services, capital and people, accompanied by internal market and competition policies to spur growth and job creation in Europe without the EU?

The usual answer from libertarians to these questions is yes. Institutional competition would eventually have led to better policies, they argue. This is naive. Who actually believes that political leaders in 25 countries in Europe would all have come to the conclusion that complete free trade in the Union is necessary, desirable, and acceptable? I do not. Politicians mostly find it very difficult to withstand vested interests and public opinion on issues of international trade, competition, restructuring etc. Losing a vote in the Council of Ministers, however, happens all the time.

The issue at stake is really whether it is acceptable to use political tools to tear down barriers between countries. From a completely dogmatic perspective, the answer is no. But are dogmas the only things that count? Cannot good results be given some credit? Furthermore, what political power has built -- nation states -- must be torn down by political power -- now at European level. We should remind ourselves from time to time that the European Commission often is accused of being a "neo-liberal" institution, how outrageous this may sound. The point is that European integration is not a bad thing per se. It is what this integration is used for and the political direction that project has taken that is the problem. A libertarian can -- and should -- be in favor of the existence of a European Union.


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