On ‘the Most Competitive and Dynamic Knowledge-Based Economy in the World’ and Other Issues

by Andrew Stuttaford

Let’s take a quick detour down memory lane, and go all the way back to Lisbon in 2000, a city that found itself hosting the collection of (insert insult of choice) then running the EU. You can find details of what was agreed in a document that is a depressing reminder that central planning did not die with the Soviet Union.

This was the goal that those leaders set for the EU in 2010:

“To become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion.”

Maybe it’s just me, but somehow I think that this collection of geniuses (the same bunch, more or less, that had just put the euro in place) fell a little short of their objectives.

I posted a little yesterday about the euro zone’s latest economic stumble. Writing for the Daily Telegraph on Thursday, Conservative MP Douglas Carswell added more:

Europe is failing badly. At a time when the rest of the world is growing, data out today shows France stagnating. Shockingly, Italy’s output is lower today than it was fourteen years ago. Even Germany is going into reverse.

Here’s where he’s putting much of the blame:

Economic Europe is paying the price of ever more political Europe. Introducing layer upon layer of rules, regulations and directive is starting to ossify. Europe’s economy has consistently performed worse than expected as a result of decades of dirigisme.

Here in Britain we have nothing to be complacent about. To be sure, cheap credit is stimulating output. Combined with welfare reforms, this is driving a spectacular jobs boom. But beware.

We might be outside the euro – and therefore free to engage in our own monetary stimulus. We are not outside the single market regulatory sclerosis. The deadweight of all those directives presses down on us every bit as much as on the Eurozone. Strip away the easy money stimulus, and we’re not that much better off.

For years, politicos have told us we need to be inside the European single market to prosper. So why is wealth now being created almost everywhere but inside the highly regulated single market? Those parts of the world that are flourishing somehow don’t seem to struggle to sell either inside or outside Europe.

It is not only European monetary union we ought to steer clear from.

Carswell is not wrong to suggest that the “single market,”& often trumpeted by chamber-of-commerce types as some sort of classically liberal free-trade zone is very far from being that, but the subtext of his argument — that the U.K.’s exit from the EU should also include a departure from the single market — is not so convincing.

Ideally, of course, Britain should leave the EU and slam the door behind it so fiercely that the whole edifice collapses. Europeans, including Britons, could then start again, rebuilding a far looser association that looked forward to the future rather than to a model shaped by the fears, prejudices and convictions of mid-20th-century Europe. Sadly, that’s not going to happen.

If Britain is to — as it must — leave the EU, euroskeptics will have to persuade their fellow citizens that this move will not represent a leap into the dark. Retaining access to the single market, probably with an arrangement akin to that currently enjoyed by Norway, would do a great deal to soothe those fears, and thus help pave the way to a vote in favor of “Brexit” as soon as it can possibly be arranged, a vote that even then will still be very difficult to win.

No, this is not ideal, but the economic and political realities are what they are. Getting out is what counts. If the divorce settlement with the EU involves a disengagement from Brussels that is less complete and more complicated than euroskeptics would like (over at EUReferendum Richard North has written plenty on this topic) then that will be a small price to pay.

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