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| Barroso and Van Rompuy |
Our EU leaders are committed to ‘jobs and growth,’ they say. This comes as a suprising choice of words, knowing that the bulk of the EU government’s achievements, be them industry, environmental and labour market regulations, agricultural and fishing policies, subsidies and aid, and proposals for tax harmonisation, each serve to reduce competitiveness and entrepreneurship, and stifle jobs and growth.
But they are not unintelligent people; just disillusioned. They have a genuine belief that political union between European nations will bring us prosperity, and have far too much invested in the project to see otherwise.
Here in the UK, there are also those that share this belief in progressivism, that the future will shun small unattached nations, and that by leaving the EU we would be economically disadvantaged. This post attempts to explain briefly why we should leave the EU, purely in economic terms, by dispelling some commonly held myths.
1 - In an age of big ‘superpowers’ like China, India and the USA, we must unite to compete in a globalised world.
The wealth of a country does not depend on its size. It depends on many different things, but size is not one of them. The factors that really matter, the factors that create the conditions for a country to amass wealth and improve the living standards for its citizens include: confidence in the rule of law, a peaceful ‘neighbourly’ society, effective and affordable schooling and higher education, a competitive tax system and an unrestrictive regulatory framework that encourages free trade, entrepreneurial activity, flexible employment, training and apprenticeships.
Many other important factors are beyond our control, such as the location of natural resources and a country’s climate etc, but the total size of a country’s population makes little difference at all. In fact almost all of the wealthiest countries in the world have relatively small populations, namely: Luxembourg, Hong Kong, Qatar, Brunei, Norway, Monaco, Switzerland and Singapore.
Unless restrictions are put in place, large states can naturally gravitate towards an increasingly centralised method of government. A centralised government, like that of China, that imposes a one-size-fits-all approach to the whole country, will frequently allocate resources in such ways that would otherwise be done differently if local people were given the chance to allocate the resources themselves.
The decentralisation of power, as tried and tested in the original model of European nationhood, consists of smaller units, playing and competing with one another, and made Europe the dominant source of world trade and development for so long a period. Or enshrined in constitution, like that of the USA, that limits central government and emphasizes local decision making and local elections, has undoubtedly worked, whereas communism failed. If China was also founded in this way, they would no doubt have long since surpassed the United States in terms of wealth. Delegating responsibility for local issues to local people and pushing power downwards to smaller constituent units gives people the freedom to spend their own money and allocate resources efficiently, whereas a distant and remote government frequently misallocates resources and the effects of bad decisions are amplified.
For the last twenty years China has been embracing the virtues of decentralisation, allowing regional councils to make decisions about government spending and local development, and have consequently achieved the fastest ever period of economic growth. Here in Europe, we are going in the opposite direction, and relinquishing regional power to a centralised government. Even if our peoples, cultures and economies were compatible enough to enable us to unite without causing social unrest, it would still be unadvisable.
But they are not unintelligent people; just disillusioned. They have a genuine belief that political union between European nations will bring us prosperity, and have far too much invested in the project to see otherwise.
Here in the UK, there are also those that share this belief in progressivism, that the future will shun small unattached nations, and that by leaving the EU we would be economically disadvantaged. This post attempts to explain briefly why we should leave the EU, purely in economic terms, by dispelling some commonly held myths.
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"Jobs And Growth"
1 - In an age of big ‘superpowers’ like China, India and the USA, we must unite to compete in a globalised world.
The wealth of a country does not depend on its size. It depends on many different things, but size is not one of them. The factors that really matter, the factors that create the conditions for a country to amass wealth and improve the living standards for its citizens include: confidence in the rule of law, a peaceful ‘neighbourly’ society, effective and affordable schooling and higher education, a competitive tax system and an unrestrictive regulatory framework that encourages free trade, entrepreneurial activity, flexible employment, training and apprenticeships.
Many other important factors are beyond our control, such as the location of natural resources and a country’s climate etc, but the total size of a country’s population makes little difference at all. In fact almost all of the wealthiest countries in the world have relatively small populations, namely: Luxembourg, Hong Kong, Qatar, Brunei, Norway, Monaco, Switzerland and Singapore.
Unless restrictions are put in place, large states can naturally gravitate towards an increasingly centralised method of government. A centralised government, like that of China, that imposes a one-size-fits-all approach to the whole country, will frequently allocate resources in such ways that would otherwise be done differently if local people were given the chance to allocate the resources themselves.
The decentralisation of power, as tried and tested in the original model of European nationhood, consists of smaller units, playing and competing with one another, and made Europe the dominant source of world trade and development for so long a period. Or enshrined in constitution, like that of the USA, that limits central government and emphasizes local decision making and local elections, has undoubtedly worked, whereas communism failed. If China was also founded in this way, they would no doubt have long since surpassed the United States in terms of wealth. Delegating responsibility for local issues to local people and pushing power downwards to smaller constituent units gives people the freedom to spend their own money and allocate resources efficiently, whereas a distant and remote government frequently misallocates resources and the effects of bad decisions are amplified.
For the last twenty years China has been embracing the virtues of decentralisation, allowing regional councils to make decisions about government spending and local development, and have consequently achieved the fastest ever period of economic growth. Here in Europe, we are going in the opposite direction, and relinquishing regional power to a centralised government. Even if our peoples, cultures and economies were compatible enough to enable us to unite without causing social unrest, it would still be unadvisable.
2 - The European government has a 'jobs and growth' plan
Politicians do not create jobs; entrepreneurs do. Public sector growth is not real growth, as the public sector is paid for by the taxes of the private sector, and every intelligent person working for the government is one less who could be working in the productive sector of the economy, producing and inventing things, and creating jobs.
There are no additional resources ‘created’ by the EU. When they say that they will ‘create’ growth, they are talking about taking our money and redistributing it. When Mr Barroso announces a ‘jobs fund’, or a ‘growth plan’, he means, do the same thing that we have been doing for the last thirty years – borrowing more money to expand the public sector and/or spend what we don’t have on what we don’t need.
Despite its impotence in being able to create jobs, the EU is perfectly capable of destroying jobs. Every time the European Commission passes a new regulation, businesses have to adjust their affairs and spend more money in order to conform to the regulations; this in turn increases their costs which undermines their ability to pay their employees. For example, a regulation on the size or mineral content of a water bottle, increases costs to producers of water bottles, which is passed on to their employees in the form of wage cuts or job losses; or a regulation granting employee paternity leave pay, again increases wage costs to businesses, and therefore lowers incentives to hire workers.
In addition to labour market interventions and goods regulations, there are also devastating effects associated with environmental laws and financial market regulations.
The effect of regulations upon jobs is no secret, but the EU will continue to invent new regulations for the simple fact that, if they didn’t, then what would the European Commission be for? The number of people whose livelihoods depend on the EU is great, and without a mandate to create regulations, these institutions would lose their purpose.
9% of the UK's GDP is comprised of trade with the EU, 11% is trade with the rest of the world, and 80% is domestic produce, yet European regulation covers the whole 100% of our economy.
Leaving the EU would free us from these burdensome regulations and help the EU leaders achieve their stated objective: jobs and growth.
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Trade and Clout
From a UK standpoint, many derive the worth of the EU from the perceived benefits in trade and a greater voice on the world stage. Many agreeable phrases are used such as 'we are stronger together than ever we are apart,' or 'European solidarity,' which few would disagree with in principle. However, no one is suggesting that we end our friendship, cooperation and trading relationships with other European nations, merely that our peoples remain free and prosperous and that integration is allowed to take its course naturally.
3 - By remaining in the EU, our influence in the world is greater.
This could not be further from the truth. Joining the EU does not mean that our country has got any bigger. There are still only some sixty five million British people in the world. Just because some of our politicians have taken highly paid jobs in Brussels, does not somehow increase the British influence in the world. In fact, on closer inspection it actually decreases our influence as our voice is marginalised whenever it differs from the European majority.
The UK is now prohibited from entering into bilateral trade agreements with other nations, as it all now done on our behalf by the European Commission. For example, Switzerland is a present and active member in WTO meetings, whereas the UK is forbidden to take part. When international decisions are made, the UK is increasingly losing its voice to the collective EU voice. When our interests coincide nicely with our European partners, it is great to have a collective voice, but when our interests differ, as they so often do, it would be better to have the flexibility to make our own points heard.
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| Baroness 'Cathy' Ashton and Nick Clegg |
4 - We must remain within the EU to take advantage of the single market
The single European market is a great achievement and free trade is desirable for all European nations. However, it is not necessary to give away powers of market regulation in order to have a functioning free market, there simply needs to be provisions in place to ensure that if a good is marketable in one country, it is also acceptable in the others. International agreements could be made to accept minimum standards on exported goods, or a recognised ‘quality seal’ to distinguish certain goods, but this can all be done without a European government.
China, the USA, and indeed Switzerland and Norway, all trade with the EU countries quite happily and they do not pay membership fees to an EU government.
Free trade is itself actually hindered through the current setup of a highly regulated single market. With a single regulatory authority, EU legislation can render merchandise illegal, even when it was not meant for export, meaning that local producers can often be harmed as they are forced to increase their compliance costs even when their goods are only sold locally.
5 - In the future, large countries such as China and India will only do business with larger ‘trading blocks’ and will not want to engage with an independent UK.
It can definitely be said that a break-up of the single market would damage external trade with Europe, as international producers want to feel that their goods can be sold freely across the continent. However, as explained above, the single market can still be kept intact without EU government. It could also be said that in an ideal world, a single foreign trade and diplomatic service for Europe would save a lot of money, but the truth is that it is simply impossible for all of the 28 European nations to agree on common international trade and diplomatic policies; our interests differ too widely.
Governments do not trade with governments; people trade with people. The rest of the world will always want to trade with the UK, regardless of whether or not we are represented by a British foreign trade minister or a French one.
6 - By leaving the EU, we would be isolating ourselves.
On the contrary, it is the EU that is isolating us from the rest of the world. There is a big world out there. As a former imperial power, the UK has a great many trading links across the globe, and a very large political clout relative to our size. It is the historical commitment to our European neighbours that is holding us back from becoming an independently governed global trading nation.
European protectionism, such as the Common Agricultural Policy, protects French farmers at the expense of a less free market system. EU agricultural subsidies increase prices for consumers and restrict entrants from poorer nations.
We should be opening up trade with Africa and Asia, and encouraging them to develop, instead of encourging emmigration with welfare and protectionism.
7 - Thousands of British jobs depend on our EU membership.
Not a single one does. Well, there are some MEPs and government bureaucrats that will surely lose their jobs as a result of the UK’s withdrawal, but it’s doubtful that anyone will kick up much fuss.
The UK’s exit would be complete with a new 'single market' trade agreement like the preexisting EFTA and trade would continue as always. The UK is the biggest export market for both France and Germany, so the EU will certainly have no objections.
Of course, many jobs rely on the health of our neighbouring economies and their demand for our goods, but our membership of the EU will not be missed. It is precisely this reliance on European trade that makes it all the more urgent that we pull out of the EU and regain the ability to forge strong trade relationships with the faster growing parts of the world.
It can definitely be said that a break-up of the single market would damage external trade with Europe, as international producers want to feel that their goods can be sold freely across the continent. However, as explained above, the single market can still be kept intact without EU government. It could also be said that in an ideal world, a single foreign trade and diplomatic service for Europe would save a lot of money, but the truth is that it is simply impossible for all of the 28 European nations to agree on common international trade and diplomatic policies; our interests differ too widely.
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| British companies can trade far and wide with or without the EU |
Governments do not trade with governments; people trade with people. The rest of the world will always want to trade with the UK, regardless of whether or not we are represented by a British foreign trade minister or a French one.
6 - By leaving the EU, we would be isolating ourselves.
On the contrary, it is the EU that is isolating us from the rest of the world. There is a big world out there. As a former imperial power, the UK has a great many trading links across the globe, and a very large political clout relative to our size. It is the historical commitment to our European neighbours that is holding us back from becoming an independently governed global trading nation.
European protectionism, such as the Common Agricultural Policy, protects French farmers at the expense of a less free market system. EU agricultural subsidies increase prices for consumers and restrict entrants from poorer nations.
We should be opening up trade with Africa and Asia, and encouraging them to develop, instead of encourging emmigration with welfare and protectionism.
7 - Thousands of British jobs depend on our EU membership.
Not a single one does. Well, there are some MEPs and government bureaucrats that will surely lose their jobs as a result of the UK’s withdrawal, but it’s doubtful that anyone will kick up much fuss.
The UK’s exit would be complete with a new 'single market' trade agreement like the preexisting EFTA and trade would continue as always. The UK is the biggest export market for both France and Germany, so the EU will certainly have no objections.
Of course, many jobs rely on the health of our neighbouring economies and their demand for our goods, but our membership of the EU will not be missed. It is precisely this reliance on European trade that makes it all the more urgent that we pull out of the EU and regain the ability to forge strong trade relationships with the faster growing parts of the world.
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Nigel Farage makes a powerful case for an independent UK at a UKIP meeting.
Referendum campaign - the People's Pledge
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