This EU Won't Work

The ambitious goals stated by EU leaders are scarcely matched by the achievements.

Given the severe, concurrent crises in the Union at present there must be a strong chance that the EU will break apart or radically change in ways, and with consequences, we can’t predict. Why do supporters of the EU not factor this possibility into their economic arguments? They focus on a “Leap in the Dark” if Britain leaves, then assume bad outcomes and feed these into their models. Where is the full story?

The EU will change; the heads of its institutions have a plan, but is it one we should be part of? See Five Presidents Report. The quotes in A give a fair taste of their Plan; how does the plan compare with reality and the desires of EU citizens? See B for links to our posts that pick up this question.

Evidence for the structural weakness of the EU, which makes its future uncertain and continuing membership risky, can be gathered under two headings, which highlight the contradictions. Here is a summary:

A: Overweening ambition

• Four strands of ever-closer union (economic, financial, fiscal, political – “all euro area Member States must participate in all Unions.“)
• Unbelievable goals (“A complete EMU is … a means to create a better and fairer life for all citizens … and to enable each of its members to prosper.”)
• Unsubstantiated claims (“a deep and genuine EMU would provide a stable and prosperous place for all citizens of the EU Member States that share the single currency“.)
• Disdain for democracy (“intergovernmental solutions were chosen to speed up decisions and overcome opposition.”  “The President of the euro group, and he alone, should represent the euro zone.”)
• Distrust of divergence (“…  to address the still significant margin for discretion at national level.”  “Today’s divergence creates fragility for the whole Union. We must correct this divergence and embark on a new convergence process.“)
• Contradictions (“Our European Union is not in a good state.”  The EU “has achieved this by acting with one voice on the global stage.”  In the “international financial institutions, the EU and the euro area are still not represented as one.”)
• Lack of critical reflection (at least in their publications and speeches, “My first priority will be to put policies that create growth and jobs at the centre of the policy agenda of the next Commission.” from Jean-Claude Juncker, ‘My Priorities’, http://juncker.epp.eu/my-priorities)

B: Underwhelming achievement

• Absent is empirical evidence that a supra-national entity can manage national economies well (see Economics)
• Also missing is an agreed theoretical foundation for the economic claims (see Economic Forecasts are Wrong)
• EU peoples and businesses suffer from massive legislative and regulatory over-kill (see A playground for squabbles and cheating)
• The EU claims credit for achievements properly attributable to other organisations (see Europe versus EU)
• When things go wrong Eurocrats blame member states for insufficient dedication to ‘Union’ (see Still More Juncker)
• The EMU economy produces poor results (e.g. youth unemployment in Italy is at 40%) (see Good intentions and bad outcomes)
• There is declining popular support for the project (see Other European Views)
• Increasingly people declare discontent with the mismatch between ambition and achievement (see Other European Views)
• Britain is not committed to core features of the EU, including EMU (see The UK is different)
• Those countries which do not participate in EMU are resented by senior Eurocrats (see More Juncker)
• Southern, weaker economies are seeing a rise in left-wing populism (see Syriza, Podemos, 5-Star Movement and Left. Out! Right?)
• Northern, stronger economies are seeing a rise in right-wing populism (see EU in Crisis? and Resurgent Right)

A project such as the EU should be firmly underpinned by sound economic theory. It is not. There is no broad consensus in either economic or political theory, so there is no widely accepted foundation that could support the argument for economic and political union.

Because it is inconceivable that the EU/EMU as currently structured will be able to deliver jobs and growth, which are created at a sub-national level,  its failures are experienced by those who do not get jobs or see the benefits of growth, and they will continue to drift towards populist ‘solutions’ on the extremes of right and left.

The central problem is that the EU project, subservient as it is to EMU, is misdirected. It is about centralising power and as such it is doomed to fail, like all previous empires.

The case to remain is based on fear but the greatest fears should arise from the risks and uncertainties of remaining.