In a 2002 book called Why Britain Should Join the Euro, a team of experts including LSE economist Richard Layard, Federal Reserve Chairman Paul Volker, European Bank Chief Economist Willem Buiter, Chris Huhne, who sat on the European Parliament's Economic and Monetary Affairs Committee, and others set out the risks of not joining the euro. They warned that rejecting the euro would lead to lost trade, greater economic instability, higher exposure to economic shocks, 'danger that the City's predominance in wholesale financial services could be threatened', and a loss of 'economic and political influence'.
None of these came to pass.
At the time, those who rejected these shibboleths were regarded as small-minded nostalgics. As Larry Elliot wrote in his reflection on the UK's euro debate, 'to suggest that the euro would be supercharged monetarism, Thatcherism with knobs on, was deemed unseemly. People who liked the euro were civilised, supported the arts, went to Tuscany or the Dordogne for their holidays. People who didn't like the euro drove white vans decorated with the flag of St George.'
The campaign over Britain's membership of the EU has rehashed some of these old debates. In an excellent piece published this week, Professor Alan Johnson set out two fallacies of the Remain case: 'no EU, no prosperity' and 'no EU, no peace'. To the two fallacies, I would add two others: 'no EU, no social democracy' and 'no EU, no internationalism'.
Here, I would like to review these four shibboleths of Remain and identify why they are ultimately unconvincing. [fold]
No EU, no prosperity
The first claim is that leaving the EU would be a catastrophe for the British economy. This is premised, in large part, on the view that British trade is dependent on the EU. The same warnings made in the euro debate a decade ago have reappeared.
While it is true that the EU is the UK's biggest trading partner, the idea that that exit will entail the severe curtailing of trade with the EU is absurd. Official figures from the Office for National Statistics show that this year the UK's trade deficit with the EU hit a record high. The UK trade deficit with the EU is over £13 billion. It is inconceivable that the EU would walk away from this vital export market, which is the world's fifth largest economy. When the EU is in an economic shambles, it is in no position to cut off its nose (and ears, mouth and eyes) to spite its face.
Furthermore, the notion that prosperity is protected by the EU and impossible without it is a dark joke. The EU has relied on the free movement of people as an alternative to sound economic policies. Mass unemployment is rendered acceptable because, the argument goes, if you are a young person in Spain who can't find a job, you can simply move to Britain and get one there. If you are getting paid €2.50 per hour in Lithuania and want higher wages, move to France where the minimum wage is €9.67 per hour.
The Labour peer Maurice Glasman has described 'the lunacy of including countries with a level of wealth far below that of the founder members in an economic space predicated on the free movement of people'. For free market theorists, viewing Europe as a single undifferentiated economic space — oblivious to historical, linguistic, cultural and other differences — made a great deal of sense. But, as Glasman writes, it is 'a strange way of conceptualising European history'.
No EU, no peace
The EU has always had twin purposes, of course. One purpose has been to fulfil the economic self-interest of its members, even if that means impoverishing less developed economies in the process. The second is the loftier aspiration of achieving peace in a continent which for centuries was wracked by war.
This is the most compelling and emotive of the Remain shibboleths. Yet, is it correct? It is an empirical claim, with a counterfactual that is difficult to test. Was it the EU which prevented its members from going to war, or is there some other confounding reason (eg. wealth, democracy, region) which helps to explain peace in Europe?
It seems the 'no EU, no peace' shibboleth is a classic case of selection bias. No full democracy has gone to war with another democracy. To be specific, there have been no wars between countries which score eight or higher on the Polity IV scale, a standard ten-point scale used to measure democratic strength. Every EU country scores a nine or a ten on the Polity Score. Many non-EU states in Europe also perform well: Norway and Switzerland unsurprisingly are tens. Macedonia, Montenegro and Moldova are nines.
It could be argued that the EU creates incentives for states seeking accession to democratise. While this is a creditable claim, it overlooks the ways in which the EU has concurrently been working against the democratic will of its own members. European integration has devalued democracy, strengthened the power of capital and eluded accountability.
Most visibly, the EU has ignored the wishes of the Greek people after two general elections and a referendum. As trade unionist Fawzi Ibrahim has written, 'When a country is humiliated, its people impoverished and its public assets sold, would that be seen as an act of a friendly and decent institution or an act of war? For, while guns may not have been used, the outcome is the same.' Europe is facing serious internal crises, for which the EU has been a handmaiden.
No EU, no social democracy
The third shibboleth goes some way to explaining why the Labour Party has enthusiastically backed Remain. The idea is powerful on the British Left: to be a member of the EU 'protects' Britain from (its own elected) Conservative governments while guaranteeing social and labour rights which we could not secure for ourselves.
Yet, this is simply not accurate. There is no law from the EU for workers which we could not secure ourselves. In fact, as the Labour MP Gisela Stuart has pointed out, many of the rights for workers and women which are credited to our EU membership were actually initiatives of Labour governments. Many UK social rights preceded and even provide stronger protections than EU directives:
- Paid holiday leave: EU (4 weeks), UK (5.6 weeks).
- Maternity leave: EU (14 weeks), UK (52 weeks).
- Maternity pay: EU (no minimum pay), UK (90% for 6 weeks then £140 for 33 weeks).
- Equal pay: this was law in 1970 before the UK joined the Common Market. The minister who introduced the Equal Pay Act, Barbara Castle, enthusiastically campaigned for Brexit in 1975.
- Wages: the EU has no minimum wage, unlike the UK.
- Health and safety: this was law in 1974 and the minister who introduced the Health and Safety at Work Act, Michael Foot, was an ardent Eurosceptic.
No EU, no internationalism
In spite of pretences to the contrary, voting 'Remain' is itself an inward-looking approach. The EU is a protectionist club. The Remain position sides with Europe against the rest of the world, not with it. On the matter of immigration, to take one example, it is not 'internationalist' to prioritise (mainly white) Europeans at the expense of people around the world who have much stronger historic and cultural ties to Britain. Yet this is precisely what EU free movement rules entail.
By joining the EEC, Britain abandoned its partners in the much more diverse Commonwealth – hundreds of thousands of whose citizens of all faiths and races died fighting for Britain in recent wars. In a 1992 debate in the House of Representatives, Australia's Labor Prime Minister Paul Keating reminded his more pro-British political opponents that Britain 'walked out on you and joined the Common Market'.
The Remain side seems incapable of distinguishing between internationalism and globalisation. Yet we can surely be internationalist while not succumbing to unfettered globalisation. We can support national reciprocity and co-operation without ceding democratic institutions. We can support immigration without giving up our ability to regulate it.
It certainly would not be plausible to argue that the EU is incapable of doing good things for British workers, nor would it be reasonable to argue that the UK Government cannot work to harm them. The point is that Britain can work for prosperity, peace, social democracy and internationalism without the EU.
As the Labour MP Michael Foot said during the 1975 referendum, 'I say to our country — our great country — don't be afraid! Don't be afraid of those who tell us that we cannot run our affairs, that we have not the ingenuity to mobilise our resources and overcome our economic problems. Of course we have. We can do that and save the freedom of our country at the same time.'
Photo courtesy of Flickr user Peter Kurdulija.