The Case for the EU – The Right Engle

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eu, brexit, trade

France has a new president. In a runoff between a centrist (or center-left) pro-trade, pro-social freedom candidate and a far-right authoritarian nationalist, French voters opted for moderation. What’s surprising is that so many libertarians were disappointed with this result.

One would think that libertarians would hold their noses and support Emmanuel Macron; a centrist who at least values some economic freedoms and is an obvious defender of social liberties. Yet for many, the ultra-nationalist, protectionist Marine Le Pen was seen as the better option. What could make libertarians, arch-defenders of individual liberty, back a candidate who has spent decades skirting the edges of out-and-out fascism?

There is a simple answer to that vexing question: The European Union.

Macron is for it. Le Pen is against. That was enough for many libertarians to overlook Le Pen’s otherwise utterly un-libertarian platform.

But why do libertarians hate the EU?

The standard answer is that the EU steals sovereignty from the citizens of nation-states and gives power to unelected bureaucrats in Brussels. Follow-on arguments usually rest on descriptions of the byzantine regulatory frameworks the “Eurocrats” have foisted on the people of Europe.

Yet any serious scrutiny of this anti-EU argument will show that this line of argument is of little merit.

Where Powers Lies

It is crucially important to recognize that the power in the EU still rests with the national governments that make up the union. These governments are still sovereign and have the power to engage in their own foreign policies and economic agendas.

The EU’s supranational institutions are more geared toward harmonizing markets across the bloc.

Libertarians should see that as a good thing, because it allows businesses from across Europe to compete and trade with other members with onerous tariffs. It also removes many of the headaches that plague commerce between countries with very different regulatory regimes.

In general, the EU has done quite a good job of balancing national control of some regulatory issues while removing much of the friction of cross-border trade within the EU.

The EU common market is now actually more harmonized than Canada’s own internal cross-provincial market. That is a testament to the benefits of centralized inter-state commerce rules. Perhaps it should be no surprise then that the framers of the US Constitution were so in favor of such commerce rules, even when they were generally skeptical of central government.

Common Currency for a Common Market

There is a certain red herring in the euro, the shared currency of much of the EU. Whether the euro is a good economic idea or not has little impact on the value of the EU as an organization. The union could survive without the common currency, even now,  not all members have adopted it.

The UK, until last year’s vote for Brexit, was a central player in the EU even though it had retained the pound sterling. In the wake of the financial crisis and the continued financial challenges of some members like Greece, there might be a case for the euro being phased out.

Yet, despite all its faults, the euro has also benefited the members of the union. It has eliminated the problems of interest rate risk and government capture of central banks.

Surely libertarians who are so often skeptical of central banking can see the advantage of an institution like the ECB, which is both tightly controlled by a fixed mandate and subject to the consensus of the member states while staying independent of the venal aims of any one state.

International Institutions Do Not Mean Less Freedom

The major stumbling block for libertarians seems to be a psychological distrust of unelected agencies and supranational organizations of any kind. Yet, such organizations do not necessarily undermine liberty.

It is a mistake to equate liberty with national sovereignty. There are certainly benefits to having most of the functions of government localized, so that voters can control who makes the rules.

But there are also cases when a more local control can undermine the rights of individuals, or discriminate against certain classes of people.

Jim Crow laws is the US are a classic example of this. The black citizens who were being systematically undermined by state governments were not freer because the central government in Washington was taking a back seat.

Fundamentally, freedom is about individuals, not tribes of people.

National sovereignty is a powerful psychological anchor that carries many boons from the perspective of law and orderly government. Yet “fetishizing” it is a grave mistake that libertarians too often make.
If we genuinely believe in individual liberty, then we should embrace institutions that protect and expand those liberties.

Peace, Freedom, Democracy

For all its faults (and they are many) the EU is a force for good. It has helped secure democratic institutions across its member states and been a beacon of liberal democracy equal to the United States.

The peace the EU has secured on the continent should also be recognized.

Before the movement toward greater political union, Europe was in a state of nigh constant warfare. Political and economic integration have helped to banish the specter of war, and ensured that small countries are treated with the same respect as the mighty.

The EU has made trade between member states more open and the rule of law more firm. France has certainly been prodded by the EU to open its industries and enact labor reforms. Admittedly, those reforms have been punishingly slow and frequently grind to a complete halt. Yet, the alternative is no reform at all. That is the real alternative people like Marine Le Pen offer.

It is far better to take the slow prodding toward progress than to slip backward into a far worse past.

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John Engle

John Engle is a merchant banker and author living in the Chicago area. His company, Almington Capital, invests in both early-stage venture capital and in public equities. His writing has been featured in a number of academic journals, as well as the blogs of the Heartland Institute, Grassroot Institute, and Tenth Amendment Center. A graduate of Trinity College Dublin, Ireland and the University of Oxford, John’s first book, Trinity Student Pranks: A History of Mischief and Mayhem, was published in September 2013.