## Archive for June, 2016

### Reflections on ∈

June 5, 2016

The following was prompted by Tim Gowers’ thought-provoking blog post, “$\in$“, on the EU referendum. While I think Gowers makes some very nice theoretical points, there are several important issues that undermine the conclusion, in my opinion. (I speak as a former advocate of Remain who has somewhat reluctantly changed his mind.)

I think the biggest problems with the EU are democratic / consitutional ones, and depending on how much weight one places on issues of democracy versus other issues (e.g. economic ones), it is perfectly possible for a thoroughgoing utilitarian to favour Brexit, as Gowers’ last paragraph tacitly acknowledges.

1. The democratic problems

A major problem with the EU is its so-called ‘democratic deficit’. This has two sources: firstly, the EU Commission, which functions as the EU’s executive and proposes legislation on which the European Parliament votes, is unelected. (Instead, Commissioners are nominated by the governments of member states.) By contrast, in the UK, the legislation on which Parliament votes is proposed by the government, which is made up of elected MPs. For many years there has been widespread concern throughout the EU (not just in the UK) that the EU Commission is insufficiently accountable to the EU’s citizens; yet this state of affairs has continued ever since the EU Commission’s creation in the 1950s. How likely is it to be reformed any time soon?

The second problem is with the European Parliament: though it is elected, voters throughout the EU are very much disengaged with the process. In 2014, voter turnout for the European Parliament elections was only 43% across the whole of the EU, and only 36% in the UK, compared with 66% in the UK’s 2015 general election. A related problem is the lack of scrutiny of and engagement with the activities of the European Parliament: in a recent survey, only 11% of UK citizens were confident of being able to name at least one of their MEPs, compared to the 52% who could name their Westminster MP. Partly because of this lack of scrutiny and engagement, national governments are sometimes able to use the EU Parliament to bypass national democracy and push through unpopular, illiberal measures at the European level, as was revealed recently in the Independent:

While I agree with Gowers that it would be disastrous if Boris Johnson were granted unfettered power, Westminster politicians are (with all their faults) subject to a high degree of public and media scrutiny, and must win general elections, which typically have a rather high voter turnout. The same cannot be said for Jean Claude Juncker or even for many MEPs. (I would point to Michael Gove as a more principled Leave campaigner, one who moreover genuinely believes in the cause; Boris Johnson on the other hand was rumoured to have written two speeches, one in favour of ‘Remain’.)

But perhaps the most serious constitutional problem with the EU is the ‘tyranny of the majority’, and this would remain a problem even if the ‘democratic deficit’ problem was solved.

The general problem of the ‘tyranny of the majority’ is ancient and well-known: it is possible even in a smoothly-functioning democracy, for a majority to consistently oppress a minority. This is a particular risk when there is a lack of empathy and shared identity between voters in the same polity, and this is unfortunately the case in the EU, and is likely to remain so for the foreseeable future.

A particularly egregious example of ‘tyranny of the majority’ within the EU is the incredibly harsh austerity package imposed last year on Greece (in defiance of the result of the June 2015 referendum there, of course). According to many (perhaps most) academic economists, this degree of austerity is likely to cripple Greece’s economic recovery in the long-term. Paul Krugman even speculated that the deal imposed on the Greek government by the Troika (the IMF, the EU Commission and the European Central Bank) was designed to topple the Syriza government – see e.g.

http://www.huffingtonpost.com/2015/07/02/greece-austerity-economists_n_7714148.html

Austerity was imposed on Greece largely at the behest of the German government, in an effort to recoup as much of their taxpayers’ money as possible, in the short term. (Though it remains to be seen whether they will actually be able to recoup less in the long term as a result of the austerity!) The imposition of austerity was strongly supported by German voters. And bear in mind Germany has hitherto been one of the more altruistic EU member states.

How is the UK at risk from the ‘tyranny of the majority’ within the EU? Well, since the Treaty of Lisbon, decisions in the EU in over 30 important policy areas are now taken by QMV (qualified majority voting) within the European Council, and this allows groups of nations in a minority to be consistently outvoted. This is a particular problem for the UK in the long run, because the UK (a majority of both its voters and its politicians) has a fundamentally different vision for the future of the EU, than many mainland Europeans, who want a much greater degree of political integration. Some even envisage (eventually) a federation of states along the lines of the US. This raises the possibility that the UK government will be gradually pressured (by a majority of other member states) to accept more and more political integration, against the wishes of a majority of its citizens. And many UK citizens are wary of this, not just paranoid UKIP types, but e.g. Cambridge-educated lawyers of my acquaintance! If it seems implausible, bear in mind that the Treaty of Lisbon was drawn up partly in order to adopt measures in the proposed European Constitution, which had been rejected by referenda in France and Holland. (The French and Dutch constitutions did not mandate referenda on treaties, only on a constitution!) See for example

To give an example of one prominent ‘federalist’, Matteo Renzi, who is regarded as a pretty mainstream politician in Italy, repeated in 2014 the call for a ‘United States of Europe’ –

I cannot imagine many UK citizens being supportive of such a vision. Some of my German and Italian colleagues declare themselves quite willing to see the end of the nation-state in Europe. This ‘hard-core federalist’ agenda may or may not have noble motivations, but there is an undeniable danger in going too far with it: a world with many nation-states may well be safer on average (averaging over both time and ‘space’, i.e. people) than a world with very few. If a government ‘goes wrong’ in one county, one can move to another; this is less easy if there are too few independent nation-states.

I admit that the creation of a federal European state along the lines of the US is very unlikely to happen in the short-term or the medium-term, if only because of the current impasse between Germany and France on how to achieve further fiscal and political integration (with Germany demanding joint fiscal rules to guarantee restraint before the issuing of joint Eurozone debt, and France demanding the latter before the former, in the name of ‘solidarity’). But further political integration in the short term is very much on the agenda, as illustrated by the following quotes from leading EU politicians:

Jean Claude Juncker (President of the EU Commission): ‘The Five Presidents’ Report includes a full agenda of work for the years to come, and I want us to move swiftly on all fronts – economic, financial, fiscal and political Union.’ (September 2015)

Jose Manuel Barroso (President of the EU Commission, 2004-14): ‘A political union needs to be our political horizon.’ (September 2013)

Guy Verhofstadt MEP (leader of the ALDE Group): ‘We must dare to take an even more radical leap: a leap towards a fully-fledged European nationality.’ (October 2012)

Angela Merkel: ‘We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy, And we need most of all a political union – that means we need to gradually give competencies to Europe and give Europe control.’ (June 2012)

Hitherto, the UK has often acted as a break on political integration within the EU, to the frustration of many EU politicians (and voters). This was eloquently articulated by the French politician Dominique Riquet, who argued on this basis that the UK should leave:

In this respect, both the UK and the rest of the EU might be better off in the long run, after a Brexit; it would leave the other EU states free and unshackled to pursue their more federalist vision, and it would leave the UK free from the risk of being pressured into further political integration.

Needless to say, democratic issues are an extremely important utilitarian consideration: citizens who feel their views are being ignored or overridden, are typically not very happy about this!

2. The principle of subsidiarity – its limited applicability

The democratic / constitutional problems outlined above would be less serious, if the ‘principle of subsidiarity’ Gowers describes, was widely applicable. But the EU’s principle of free movement of people, goods, services and capital (between member states), means that the ‘principle of subsidiarity’ does not apply, or is not applied, in many of the most important areas of civil life, both technically and in practice. For example, employment law (there is a huge amount of important EU legislation on this), immigration and asylum, human rights, justice, crime prevention, privacy, consumer rights, and of course external trade and foreign and security policy. It should be noted that the UK has an opt-out/opt-in agreement in some of these areas (e.g. immigration, asylum, justice and crime prevention), under which it can withdraw from the decision-making process, but if it does participate, it has to abide by the outcome of a ‘qualified majority vote’. See

https://commonslibraryblog.com/2014/09/08/extending-qualified-majority-voting-in-the-european-union-does-this-mean-the-end-of-british-sovereignty/

for more details.

The ‘principle of subsidiarity’ did not protect Greece from crippling austerity (the issue was indeed a supranational one, though the main country affected was Greece, from a utilitarian perspective.) Also, some recent high-profile EU legislation highlights the very limited definition of ‘subsidiarity’ the EU works with. The cap on bankers’ bonuses, which mainly just affects the City of London, seems at first sight to be a particularly flagrant violation of subsidiarity: in simple terms, it interferes directly with the amount of money employers/shareholders are permitted to pay their employees as a reward for their performance. It was of course defended by the European Court of Justice, on the grounds that banks pose a particular risk to the financial stability of the EU, but on these kinds of legal grounds, almost anything could be said to fall outside the scope of ‘subsidiarity’, in today’s highly interconnected world. Though I don’t necessarily want to go into the rights and wrongs of the bonus cap, the Bank of England argued that the bonus cap actually drove up bankers’ basic salaries, and this may undermine the post-crisis efforts of financial institutions to tie renumeration to long-term performance.

3. The ‘prisoner’s dilemma’, the ‘iterated prisoner’s dilemma’, and international treaties

One is left with the question of how to achieve the desired degree of international cooperation, in the aftermath of a Brexit. The ‘prisoner’s dilemma’ situations Gowers describes, do indeed demonstrate the desirability of international agreements/treaties, but these can and have been made (and adhered to), without the participants belonging to EU-style organisations. Further, if they are to be of much use, they must often involve nations from outside the EU, such as the US and China, especially in the given cases of climate change, corporation tax and overfishing in the North Sea.

Of course, for these to work, there needs to be a ‘penalty for reneging’ on the treaty. Such a penalty, however, is not contingent on belonging to an EU-style organisation. It can involve agreed sanctions (financial and otherwise) from other participants in the treaty, but even this is unnecessary. Because in fact, there is an extremely potent ‘natural’ penalty for reneging: namely, the unwillingness of other nation states to trust you in the future if you renege! And indeed, experiments simulating the ‘iterated prisoner’s dilemma’ in human populations have consistently found that ‘cooperative’ strategies are adopted by a majority of participants, and that these consistently outperform ‘greedy’ ones. (Axelrod famously tested a range of strategies against one another in computer simulations, and found the same thing.) This has been used to explain the evolution of cooperative behavior in both animal and human populations, see e.g. Axelrod’s ‘The Evolution of Cooperation’. Mathematically, in the ‘infinitely repeated prisoner’s dilemma’ where future payoffs are not discounted too much, cooperative strategies are ‘stable’. Of course, the ‘iterated prisoner’s dilemma’ is much closer to the situation in international relations, than the one-round version.

International cooperation is surely not contingent on ‘pooling sovereignty’ to the extent of having shared governmental structures with the powers of the European Parliament or the European Commission, with all the attendant democratic and constitutional problems this has (and which I discussed above). It can be achieved via other supranational organizations structures such as the UN or the OAS. Do we think the nation-states of South America or North America should have a common parliament and executive with similar powers to the EU’s, in order to achieve the desired level of cooperation? Should the US and Canada have such shared structures, for example? I humbly submit that this would be deeply unpopular on both sides of the border!

4. Utilitarian problems with EU policies

It should be mentioned that some EU policies have caused a major reduction in (worldwide) ‘utility’. In the Balkan crisis, perhaps the most serious foreign policy test the EU has faced, it failed miserably to prevent war and genocide, and in fact was instrumental in arguing for a UN arms embargo which prevented Bosnians from properly defending themselves against Karadzic’s marauding Bosnian Serb forces. Ultimately, the US and NATO were required to bring about an end to the conflict. Having said that, the EU’s post-conflict intervention has been a (mixed) success. See for example

Another example is the Common Agricultural Policy, which accounts for about 40% of the EU’s annual budget. Major effects of the CAP have been to subsidize farming in areas of the EU where it would otherwise be unprofitable, to keep food prices in the EU artificially high, to subsidize exports to outside the EU, and to impose high tariffs on imports from outside the EU. This has led to a net loss for EU citizens (for an indication of this, the OECD estimated in 2004 that state support for farming in OECD countries costs the average family of four \$1000 per year), and the CAP has long been criticized for harming producers in the developing world (through tariffs and ‘export dumping’), and hence stalling development there.

EU incentives for farmers to protect the environment have been welcome. But surely it is also in the UK’s (‘selfish’) national interest to protect our environment? I fail to see George Eustice’s problem with the protection of birds and wildlife habitats! Our agriculture cannot be ‘genuinely’ competitive (without subsidies) anyway. Were we to exit the EU, a sensible UK government would continue to subsidize farmers but to a lesser extent, prioritizing environmental protection over production to a much greater extent that the EU currently does.

5. The economy, and freedom of movement

I began by saying I thought it was perfectly possible for a thoroughgoing utilitarian to come down on either side of the debate, depending mainly on how heavily they weight the democratic problems of staying, versus the costs of leaving. To my mind, two of the most important costs of a Brexit would be the economic cost (both to the UK and to the rest of the EU), and the restriction on freedom of movement (again, for both parties).

Almost certainly, in the event of a Brexit, there would be a short-term economic cost to the UK (and probably a smaller cost per capita to the rest of the EU), though I would hope and expect that a trade and immigration deal fairly advantageous to both sides, could be worked out before too long, and that a desire to ‘punish’ the UK for leaving, and to disincentivize other exits, would not trump the common interests of both sides. There would also be a cost to those who (like myself) support freedom of movement for EU and UK citizens throughout the EU and the UK; in the short term, this freedom would certainly be reduced, though I don’t completely despair of winning the democratic argument within the UK for a high degree of openness to skilled workers from the EU. On the other hand, after a Brexit, the UK government would find it far politically easier to lift our extremely harsh restrictions on skilled workers from outside the EU. While I am personally in favour of a very high degree of openness to immigration from the rest of the EU, it does raise problems for our democracy (and cause widespread disenchantment therewith) when 77% of UK citizens view immigration as ‘too high’ (according to Oxford’s Migration Observatory) and yet the UK government cannot legally do anything to limit immigration from the EU.

To conclude, I plan to vote for Brexit, mainly due to the EU’s democratic and constitutional problems, but with a heavy heart, mainly due to the likely impact on the economy and freedom of movement.