Brexit Puzzle

In an insightful recent Reason article, prominent Swedish libertarian commentator Johan Norberg offers a compelling libertarian case against Brexit, and a qualified defense of the European Union. Norberg makes many good points. Here are a few of them:

[W]hile many of the criticisms leveled against the E.U. for being too big, too costly, and intervening where it shouldn’t may sound like familiar gripes in the United States, the E.U. and the U.S. federal government are in no way equal.

The E.U. commission has 33,000 employees—half the number employed by the U.S. Social Security Administration alone. The E.U. has no right to tax, and its budget is around 1 percent of the GDP of the E.U. countries, compared to around 20 percent in the U.S….

Most often, nationalists complain that Brussels is promoting a “neo-liberal” agenda that stops them from protecting their markets with tariffs and technical trade barriers and from subsidizing national champions and local industry.

This is part of what the E.U. does, and it is consistent with F.A. Hayek’s 1939 vision of a European Federation that guaranteed free trade and openness between the member states, to make peace and cooperation possible. Since it allows local experiments and guarantees that capital and labor can move freely between markets, to those that are the most welcoming, it makes institutional competition possible.

A Timbro study by Alexander Fritz Englund showed that E.U. membership for the 28 countries resulted in a statistically significant increase in economic freedom in all of the sub-categories in The Economic Freedom of the World index. The biggest improvement comes in the year of membership, but it increases afterwards as well.

Norberg is not claiming that the EU is some sort of libertarian utopia. Far from it. But, as he explains, EU membership does tend to make governments adopt more libertarian economic policies than they would otherwise. He also emphasizes that Brexit might make both Britain and the rump EU less libertarian, rather than more so:

Brexit can paradoxically make both the E.U. and Britain less free market at the same time. An important voice that often urged restraint in Brussels is now gone and diminished internationally, leaving the possibility for the E.U. to become more centralized. At the same time, Britain will implement all those rules back home, tailored to local demands and local lobbying. And that could very well be worse.

For obvious reasons, we libertarians heard mostly the arguments put forth by decent liberal Brexiteers. I certainly hope that their vision of an open and deregulated Britain will be realized, but sadly, those voices were drowned out by the nationalists.

Furthermore, most free-market Brexiteers did not even campaign for those ideas. Instead leading free-market Tories Boris Johnson and Michael Gove drove around in a campaign bus emblazoned with the message that government health care will get another £350 million a week outside of the E.U. The Leave campaign also promised more tax money to universities, scientists, and distressed regions.

At least with respect to Britain, Norberg’s pessimism may well turn out to be prescient. Theresa May, the new post-Brexit referendum prime minister, has a distinctly non-libertarian record on many issues.

The European Union has many flaws. But thanks to its promotion of free trade and freedom of movement, and the limitations it imposes on national-level regulation, it has, overall, done more to enhance liberty in Europe than undermine it. Free market advocates on both sides of the Atlantic would do well to work to improve the EU rather than try to get rid of it. At the very least, it would be unwise to junk the EU at a time when the alternative is likely to be statist nationalism, often with authoritarian tendencies of the sort evident in many anti-EU parties, such as France’s National Front.

Norberg’s take on Brexit and the EU has much in common with Jacob Levy’s earlier libertarian critique of Brexit, which I discussed here.

UPDATE: Legal scholar Seth Barrett Tillman responds to this post and other libertarian critics of Brexit here. Tillman’s main point is that the EU is far from an unequivocal good from a libertarian point of view because it imposes a variety of tariffs, taxes, and regulations. This is true. But it ignores the important point of the net effect of EU membership on economic freedom. As Norberg and Jacob Levy explain, that net impact tends to be positive, as shown by the fact that EU membership significantly increases economic freedom in member states, and by the reality that there does not seem to be any great push for deregulation that the EU is somehow blocking.

Tillman also disputes the argument that Brexit will strengthen the hand of nationalist xenophobic parties such as the National Front. He argues that growing support for those parties is really about EU’s “democracy deficit,” a concern that can be met by leaving the EU. Unfortunately, however, these parties are not simply pushing for more democracy. They are advocating severe curbs on free trade and immigration, and that is what most of their supporters want (including a high percentage of Brexit supporters in the UK). If Brexit were primarily about democracy, it would have happened a long time ago; the EU is not noticeably less democratic today than it, and its predecessor, the European Community, were two or three decades ago. What has changed is growing nationalist fear of immigration and trade.

Tillman’s discussion of immigration is notable for its implicit assumption that we can assess immigration policy while completely ignoring the freedom and interests of potential immigrants themselves. This approach is highly dubious for a variety of reasons, and clearly inconsistent with libertarianism. It’s also worth noting that EU migrants are major net contributors to the British economy, whose exclusion would inflict considerable harm on native Britons as well as the migrants themselves.

In an interesting part of his post, Tillman points out that limiting EU intervention might promote beneficial competition between European states. But such interjurisdictional competition is only likely to work well if people are free to “vote with their feet” between jurisdictions – in other words, if they are free to migrate to nations with better policies. That’s the very thing that all too many Brexit advocates (and their analogues in other European countries) seek to prevent.

Tillman laments the passing of the “time when libertarians understood that the virtue of Western institutions,… was that rulers who chose bad policies could be peacefully replaced through democratic means.” I think that a major virtue of Western institutions resides in the insight that democracy often needs to be constrained in order to protect freedom and justice. Libertarians in particular should be among the first to recognize that democracy often goes wrong because majority public opinion is heavily influenced by ignorance, illogic, and prejudice – factors that likely played a significant role in the Brexit vote.

Finally, Tillman points out that I don’t offer any detailed program for reforming the EU. That is a fair point. But in the meantime, even an unreformed EU is likely better – at least from a libertarian perspective – than the available alternative. In the longer term, as Jacob Levy notes, EU abuses are likely to be easier to constrain than those of national governments precisely because the EU is viewed with suspicion and is not a focus of nationalistic loyalties.