My posts below, as well as Shannon’s have gotten a lot of comments. I had meant to respond today, but I’d rather digest all those thoughtful comments for one more day. I also promised some posts on the Euro, which I also hope to be able to post tomorrow.
For now just this: I see from some of said comments that people have gotten the wrong idea about me. I actually value individual freedom and free markets as much anyone, but unfortunately we are not living in a perfect world where such things can be taken for granted, as some may have noticed. Like it or not, we need some institutions to at least achieve a reasonable (or even an unreasonable) approximation of same.
So, to rank the possible institutional arrangements in order of desirability:
1) In a perfect world, none at all. There didn’t need to be any EU, or WTO for that matter, for countries would have rational policies, without any obstacles to trade. Individuals and businesses would be unhindered in the free and voluntary exchange of goods and services (even so I would frown rather fiercely on the free and voluntary exchange of, say, money and arms between Germany and China; then again, in a perfect world the Chinese would only want to buy our weapons systems because they like their aesthetically pleasing looks, and wasn’t it Roger Bacon who said that this here *is* the best of all possible worlds, so… – but I digress).
2) Given a non-perfect world (leaving Roger Bacon and sales of weapons to China aside and under the table, respectively), where barriers to trade exist, both in the form of tariffs and the bureaucratic intransigence Jim Bennett was hinting at in his comment to Shannon’s post, some kind of institution is necessary to facilitate free trade in Europe. The institution I have in mind would be very different from the EU existing now, though. In this I am following the lead of James A. Buchanan, one of the Chicagoboyz above (he’s the sixth from the left), who received the Nobel Price in economics for his Public Choice theory. Buchanan and Viktor Vanberg, one of my professors at the University of Freiburg im Breisgau, had co-authored a paper (memory fails me as to title and publication date of the paper, but I think it is ‘Rational Choice and Moral Order’ from 1988), in which they laid out their idea for a European Union that would offer the most individual freedom and the best prospect for growth, given the constraints imposed on both by the world we live in.
In the European Union proposed by the two authors, each member nation would set all its policies concerning taxation, regulation etc, etc, independently from all others. The two guiding principles of the Union would be ‘voice’ and ‘exit’. This means that the citizens of each nation would have a say over all of these policies (voice), and that those who didn’t like the policies in the nation they are living in could relocate themselves as well as their possessions to the member state of their choice, without any bureaucratic hindrances, taxation and levies on their property etc, etc (exit). The only purpose of the European Commision would be to make sure that the two principles are observed by the various national governments.
The advantages this arrangement would offer are obvious: It is altogether democratic, while having the policies of the individual member states compete with each other. Nations would be free to put foolish policies into place, but would suffer the consequences immediately by seeing the most wealthy and industrious citizens leave for more accommodating environments. Over time this competition would weed out the most damaging political ideas. We see some of this in the real world, due to globalization, but it is a much slower process that also allows people to ignore problems for a long time, for they can live of the economic substance and wealth of their nation instead of actual income for decades, thus risking slow but inevitable collapse.
Unfortunately this system proposed by Buchanan and Vanberg is all but impossible, for Continental policies are traditionally extremely dirigiste, and our electorates would never tolerate this much freedom anyway. In fact, right now especially German and French voters would like nothing better than to sit on their behinds, live of the wealth created in the past, and to complain about the unfairness of the world all the way down.
This brings us to
3) the European Union that we have have, as the third-best solution I mentioned in the title of this post. For all of its warts, halitosis, running sores and so on and on, it still is the best that we can do right now. Its policies are horribly dirigiste and socialistic, but not nearly as dirigiste and socialistic as the policies the individual members would have if they were free to formulate them in any way they wanted to.
So, free trade among the members of the EU enforced by Brussels and common laws is the best we can hope for right now. Besides, while the various interest groups, trade unions, farmers’ associations and so on are united in their avarice, authoritarian leanings and general pigheadedness, the interests of the national subgroup of each diverge from that of the other subgroups. For the cake they want to carve slices from now is a Pan-European one, and the only way they can increase their own share is to go after that of their counterparts’ in other countries. Thus they keep each other in check, and the whole affair is as entertaining as a cage fight.
And to address this particular concern, too: There also is no danger of a European super-state. The centrifugal forces (so to speak) are too strong for integration beyond a certain point, and the attempt to proceed further anyway would rip the EU apart.
And for completeness sake there is
4) the EU dissolving, and the individual members again free to pursue the protectionist and even more socialist policies described above. The way least favored by myself.
In a nutshell, I’m no fan of the EU in its current form, but it is the least bad solution I can think of, given the current political climate and real-world constraints.
