Latest posts by Richard Ebeling (see all)
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The political and financial establishments of Europe and the United States were taken by almost total surprise and sent into apparent shock when 52 percent of the voters in the United Kingdom chose for their country to leave the European Union (EU). But it is not the end of the world as we know it, and can be a positive sign and example of opposition to unrepresentative and centralized bureaucratic control over people’s lives.
As the June 23, 2016 vote neared on the referendum as to whether or not the United Kingdom would retain its membership in the 28-nation European Union, public opinion polls suggested that the voting result would be very close but with an edge toward remaining within the EU. The financial and foreign exchange markets all were positive, and the political elites in both London and Brussels, the European Union headquarters, appeared to be taking a sigh of relief that the existing order of things would not be threatened by a major participating nation opting out.
Hysteria and bedlam are the only words to describe the initial reaction when the votes were being counted, with the clear outcome that a majority of the voters had, in fact, said, “No,” to staying under the rule of the Brussels bureaucracies.
What is the European Union, and how and why has it brought about such a reaction from not only the people of the British Isles, but sizeable numbers of people in other member countries from one end of the European continent to the other?
The EU: from Free Trade to Political Plunder
The EU grew out of attempts that began in the 1950s to establish a free-trade zone among a number of Western European countries, both to improve their mutual prosperity and to reduce the potential for conflict after the experiences of the two world wars of the twentieth century.
It formally became the European Economic Community (EEC) with the Treaty of Rome in 1957. But soon the free-trade idea was superseded by various interventionist programs for intergovernmental planning of agriculture and industry, and for a welfare-state social safety net. The EEC was transformed into the European Union in 1992, with additional plans for a single currency, which finally came to fruition with the establishment of the Euro as a circulating currency in 2002, and which is now used in nineteen of the EU member countries.
In 2000 a conference was held in Nice, France, to plan the expansion of the EU to incorporate many new member states in Central and Eastern Europe in the wake of the fall of the Iron Curtain and the demise of the Soviet Union in the early 1990s.
Then in October 2004, at a conference in Rome, the EU member governments agreed to a draft constitution that was meant to lead to a more integrated political regime and eventually to a United States of Europe under which, many critics feared, the individual nations of Europe would be reduced to subservient provinces of a centralized political authority directing and controlling the fates of all the member citizens. But when referenda were taken in May 2005 in France and in June 2005 in Holland nearly 70 percent of the voters in France and over 60 percent of the voters in Holland rejected the threatened loss of national sovereignty.
Recent EU Crises: Greek Debt and Mass Migration
The most recent disturbances and internal conflicts affecting the EU have been, first, the Greek financial crisis, and, second, the massive influx of Middle Eastern and North African refugees in the face of the wars in Iraq, Syria, and Libya.
The Greek government, having lived far beyond it financial means for decades to feed a bloated bureaucracy, an unsustainable welfare state, and a corrupt crony capitalist economy was faced with fiscal bankruptcy and default on a national debt it could not sustain. The financially more stable EU members were expected to cough up the money to cover the Greek government’s budget needs and revalue downwards the Greek bonds held by creditors. Fiscal band-aids and smoke and mirror Greek government budgetary reforms have taken Greece’s continuing financial difficulties off the front page.
Last year’s migration of more than one million refugees into the EU, under the initial openness of the German government, has brought about the most recent crisis among the member countries. Many of these nations have resisted acceptance of many, or any, of this multitude attempting to escape from war and find a better life for their families. The recent terrorist attacks, especially in France and Belgium, have made many among the EU countries fearful and paranoid of the arrival of a vast influx of Muslims within their midst.
Some Valuable EU Pluses, But Far More Negatives
In assessing the European Union, it is certainly true that the EU has brought some desirable changes. Investments may be made relatively freely among the member nations, and this has made a more rational and efficient allocation of profitable use of capital within the member countries. And without a doubt, the establishment of virtual freedom of movement for member citizens within the administrative boundary of the European Union has been a great liberation. Though, of course, the latter liberty has been reduced due to the reestablishment of internal border restrictions in the face of the migration inflow in 2015.
But these advantages must be weighed against the fact that with EU membership comes a vast spider’s web of Brussels-imposed rules and regulations over practically every aspect and facet of manufacturing and market retail life, including labor markets and work conditions. Social regulations and rules impose increasingly one notion of “political correctness” and “social justice,” which member nations and their citizens have limited liberty to resist.
Furthermore, the European Union bureaucracy collects hundreds of billions of dollars worth of tax revenues through EU-wide import duties on goods entering any of the member nations from other parts of the world, and receives a portion of the value-added tax (VAT) collected by member nations within their respective national boundaries, as well as tax revenues representing a percentage of the each member nation’s gross national income.
The largest special interest benefactor from European Union spending of these tax revenues is the farming community. In 2014, about 40 percent of all EU expenditures were on the Common Agricultural Policy (CAP). Inefficient, high-cost and wasteful farmers from one end of Europe to the other receive vast sums of money at the expense of non-farm business and manufacturing, as well as the EU consumers who pay for this financial transfer through their taxes and end up paying far higher prices for food than would be the case if there was a free market in farming.
The next largest spending category is called “regional support,” and comes to over 35 percent of the EU budgetary outlays. This is a catchall of infrastructure and crony capitalist spending to favored parts of the European Union defined as less developed or economically poorer, but ends up lining the pockets of huge networks of special interest groups working hand-in-hand with the EU bureaucracies.
A good part of the rest of the EU budget goes for the funding of the fads and fashions of political correctness in the arts and sciences, or wasteful and misdirected subsidized work and training programs for young people in the form of imaginary jobs to nowhere.
The European Union, in other words, is a huge and intrusive system of interventionist, redistributive, and corrupt bureaus, agencies and departments run by over 40,000 staff members and regulators. They impose regulations and controls over the social, economic, cultural, and political affairs of over 500 million people who reside within the European Union. And they are, seemingly, answerable to almost no one, and certainly not to the citizens and voters of the countries over which they impose their centralized authority of social engineering and economic planning and political correctness.
British Voters Wanted Democratic Self-Determination
At the heart of most of the arguments for the United Kingdom’s exit from the European Union has been the desire to return self-determination to the people of Great Britain and out of the unrepresentative hands of the EU commissions and bureaucracies in Brussels. The people of Great Britain should hold their political, economic and cultural destiny in their own hands, it was declared.
This is why the supporters of Britain’s departure from the EU have been called it a triumph of “democracy.” Firstly, in the sense that the holding of the referendum meant that the people being ruled by a political authority should have the freedom to decide whether it wished to remain under the control of that authority. And, secondly, now that the vote has been taken, that the people, especially in England within the United Kingdom, have stated that they want that political decision-making returned fully to the government within the boundaries of their nation island.
The advocates of the UK remaining within the European Union are playing Chicken Little, warning that the United Kingdom, the European Union and maybe the rest of the world might be facing an economic sky falling in the form of banking and market collapses.
There is no basis in fact for such dire predictions. First of all, there are potentially up to two years of negotiations about the UK’s withdrawal and the political and economic ties and relationship that will replace the existing ones between Great Britain and the European Union. And, secondly, there is no reason why the new relationship cannot be similar with the ones that the EU has with a number of non-member countries now, which allow for a wide arena of relatively free trade and movement of capital and people between these partners.
This will be a matter of the ideological dogma and political spite that enter into the negotiations, especially on the part of the EU power structure in Brussels, wanting to set an “example” for any other nations that attempt to withdraw from their tentacles of suffocating control.
The UK’s Future: Free Markets or Homegrown Control?
Will the United Kingdom come out of this departure, in the long run, politically and economically stronger or weaker? That depends upon what the citizens of the United Kingdom do with their reestablished democratic self-determination.
We need to remember that “democracy” is a political means and not an end. It is a way of removing those who hold political office and power without resort to revolutionary violence or destructive civil war. It is a way of changing those in government with the use of the peaceful ballot box rather than through applying the force of bullets.
But what democracy does not do, in and of itself, is determine what it is that those in high elected political office are expected to do, as a reflection of the “will” of the voters. That depends upon the general political and economic philosophy, and attitudes and ideas that govern and guide the thinking of a majority of the voting citizenry.
The real choice facing the people of the United Kingdom, once those tentacles of political, economic and cultural control emanating from Brussels are fully removed, is to decide what they want their own government to do. Will it be an underlying and implicit conception of human freedom, which sees government as the protector of citizens’ rights to life, liberty, and honestly acquired property, with human relationships based on freedom of association and voluntary exchange?
Or will it be a view of government as bestower of favors, privileges, subsidies, and anti-competitive protections from domestic and foreign market rivals, and which is also expected to redistribute wealth and establish societal constraints in the form of homegrown political correctness? In other words, will the UK’s democratically elected political leaders and domestic bureaucrats be expected to merely continue with most of the same type of policies that the political elite and bureaucrats in Brussels currently impose through the European Union structures of control and regulation, and which their own Labor and Conservative Party governments have been doing all along since the end of the Second World War, anyway?
There are friends of liberty in Great Britain who have participated in and even led the movement to leave the European Union. They want to return control of these political, economic and culture matters to direct British jurisdiction because they hope that will result in a more open and freer market society than the one currently lived under through the EU. If they are able to influence British politics in a more classical liberal, free market direction, with less regulation, lower taxes and reduced monetary and fiscal manipulation, the future can offer greater liberty and more prosperity for the British people.
But the fact is that the collectivist and interventionist mindset that dominates the European Union elites and power structures in Brussels have their long-established counterparts in the United Kingdom. The UK has plenty of its own domestic social engineers, crony capitalist special interest groups, and ideologically driven collectivists.
Which of these two intellectual and institutional alternatives – a more competitive capitalist system or more interventionist control and command – will determine the future of the British people. Exiting the European Union, therefore, is the beginning, and not the end.
If they chose the road leading to greater personal freedom, more free market competition, and less intrusive and taxing government, the British people will not only have redeemed themselves, but set an example for the rest of Europe and the world. History waits to see what happens.