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Nosemonkey's EUtopia

In search of a European identity

What are the economic costs of the EU?

You can work out the likely impact of a law liberalising the market for product category x on related industries a, b, c, (etc.) and even make an educated guess about the overall impact that this law may have on the economy as a whole.

But when it comes to the economy you can never understand everything – if we’ve learned nothing else in the last 12 months, we’ve learned that. Hell, with something as complex as a continent-wide economic system, there are so many other factors at play, though it may be possible to make an educated guess about the impact of a piece of legislation (enough to judge if it’s going to be beneficial, at any rate), you’ll never be able to track *all* of its effects – countless other things will be affecting individual parts of the economy in countless different ways, from other bits of EU and national legislation (which still often overlap) through local levels of trades unionism, consumer spending patterns, passing fashions, local infrastructure, and so on and so on.

In other words, to be able to put an actual monetary figure on the costs/benefits of EU legislation *as a whole*, you’d first need to work out a system for tracking all the workings of the entire European economy (or, at the very least, the entire economy of the individual member state you want to study). Because without complete understanding how an economy works both at macro- and micro- levels, it is impossible to judge how introducing variable x might affect it – because who’s to say it’s not actually variable b, h or z instead if you haven’t also studied their influence?.

So even more than with claims about the percentages of laws coming from the EU, *any* claims about the costs OR benefits of the EU must be nonsense. Because the only way we could actually tell is if a) we understood the economy of Europe inside-out (which we don’t), and b) we had a control sample of a Europe in which the EU never came into being to which we could compare our findings. We can put a figure on how much we pay in to the EU in the form of taxes, therefore, but we can’t sensibly do the same for the wider economic benefits or costs.

So although I feel that the EU has done more good than harm to both the British economy and the economy of Europe as a whole, there is no way that I can prove that. There’s also no way that anyone of a more eurosceptic bent can prove that the opposite is true. I could point to individual benefits, they could point to individual costs – we could add up more and more of each until we have a wealth of evidence and can start chucking around figures like 200 or 600 billion. But we’d still have only scratched the surface.

This is not a flaw in the way the EU works, it is just a consequence of the EU’s continent-spanning economy (which exists in a world that has become increasingly globalised, and so increasingly economically complex and volatile over the last fifty years) being an incredibly, vastly, inconceivably complicated system that no one can ever fully understand.

It does, however, mean that arguments about the benefits and costs of the EU are always going to come down to subjective feelings, not objective truths. Chuck onto that the fact that most EU legislation is by its nature quite vague (being in the most part a compromise between disparate interest groups from 27 member states, compromised upon yet further during discussions between the European Parliament, Council and Commission), and is often implemented in vastly different ways from member state to member state, depending on the whim of the local authorities, then proving that the EU is beneficial to those who feel that it is not is, therefore, just about an impossible task.

(Modified from a comment left on this post at The Devil’s Kitchen.)

19 Comments

  1. EUrosceptics give real examples of how the EU is not a benefit but just a cost, but EUrophiles never give a real example of how the EU is a benefit . All that`s said is the EU is good for trade,or the enviroment or peace and understanding,all Glittering Generalities but hardly anything specific.
    On the basis of that vague EUrophile logic we should join every single group regardless of the membership fee, in case we miss something.

  2. You’ve partially got a point – but the trouble is that whenever any pro-EU types mention something beneficial (lower mobile phone roaming charges, breaking Microsoft and Intel’s near-monopolies on computer software and processors, etc.), anti-EU types can respond by disputing the extent to which it’s beneficial, and even whether the EU should even be acting in that area. Because nothing is ever a simple black and white.

    The real question with EU legislation should always be – and is always meant to be since the subsidiarity principle was introduced with Maastricht – “is the EU the best level for this kind of legislation to be introduced?” Then it’s a case of seeing whether multiple existing national systems are impeding economic growth, and so EU-level harmonisation may be beneficial.

    After all, the vast, vast majority of EU laws and regulations are merely replacing existing national systems with EU-wide ones to ease cross-border trade and so boost the economy.

    A few weeks back we had that little business about the use of apple geranium in quince jelly – raised by an anti-EU blogger as an example of the EU legislating for no good reason. How was that legislation intended to help the jam industry? I have no idea, and little inclination to find out. I also very much doubt many people would be interested in me writing a post about how the EU is helping quince jelly manufacturers.

    But is it necessary to have regulations covering jam manufacture? I’d say yes – and as such, it makes sense to have these regulations set over as large a section of the market as possible, to ensure maximum compatibility and consumer safety. The person who raised the quince jelly issue, on the other hand, is a self-professed libertarian who believes that we’d all be better off with as few regulations and as little legislation as possible – his objection, therefore, wasn’t specific to the EU, but to an entire system of governance.

    But this is, mostly what the EU does – legislate and issue regulations for fiddly, tiny details about obscure things that most people have never heard of and certainly don’t care about. Pro-EU types could go into details, and would never run out of material – but all those details would be insanely dull, and the individual benefits appear incredibly minor.

    But if, by legislating, the EU scraps 27 different pieces of national legislation about quince jelly with one standardised system, that will – down the line – result in savings for quince jelly producers, who can produce one standard type that will be acceptable in all 27 EU member states, rather than slight variations to conform to 27 different national requirements. This principle remains the same with pretty much every other EU law that harmonises national systems – in the short term there may be a cost as the new regulations are adopted and adapted to, but longer-term they should bring benefits.

    That, however, isn’t as easy a sell as claiming “Brussels bureaucrats ban X”, or ridiculing legislation about the production of quince jelly (even though, in almost all cases, the story is far, far more complicated than that). This is why you get more anti-EU arguments using specifics – not because there are necessarily more examples of “bad” EU legislation/regulations, but because it’s far quicker and easier to make them out to *look* bad than it is to explain why they’re good.

  3. Depends on what is considered a value. Political and economic stability is CENTRAL to economic development. Given the history of Europe, the stability brought about through the various European economic and political projects (not just the EU), a process very actively encouraged and supported by the USA, is beyond value.

    Economics as a discipline has been elevated to a level of physical laws, as something totally rational and predictable…as Nosemonkey points out, reality is a bit more complex. Robin, many of the figures quoted by EUroscpetics focus on cost at its most reductionist level, ignoring a wide range internal and external costs…something that economics is very good at doing. You did read the article? That was the whole point of it.

    I cant help but think Monnet was right, the EU is a political project, not an economic one. Yet, through the political, the economic is shaped. If the EU did not exist, then it would have developed anyway. The technical, economic and political development of humans requires new ways to manage our relations. As Europe is the most densely populated and economically developed section of the planet, political developments like the EU was going to happen earlier. Two world wars are as much a cause as a result of these developments.

    Getting back to the main point, I cant help but think alot of the Eurosceptic arguments is made by people who oppose ANY regulation….from a libertarian or at least libertarian light perspective. These people hold a rather blinkered view of economics, and a rather atomist view of the human creature as a rational economic creature. Two world wars and a host of economic melt downs would seem to prove otherwise.

  4. There’s a difficulty with putting numbers on a complex counterfactual.
    Fine.
    But is it a good thing to get rid of non-tariff barriers? That’s an ideological precommitment for many eurosceptics. It’s part of their worldview, and the Single Market fleshes out their frequent call for a “return” to a free-trade area.
    When you sit them down and explain why a free market might need a common rule on (say) banana curvature instead of twenty different incompatible rules, why Margaret Thatcher signed the Single European Act, why on the other hand Laurent Fabius campaigned against the Constitution, and why the European institutions reinforce what the free-traders claim to support, the response tends to be either an awkward silence or a retreat into thousand-years-of-history nationalism.
    My point is that, even in the absence of numbers, the value-judgments of your chosen economic worldview can lead you to give the EU due credit. What might stop you being led in that direction? A concern with the costs of regulation, of course (though, pace EvilEuropean, the total number of genuine British libertarians is vanishingly small). Far more widespread, in my view, are the darker tribal commitments.

  5. Nosemonkey,

    What you say is true about subsidiary, which leads on to the whole point about the UK being in the project – can we do without it?.Nearly any and every benefit mentioned about the EU could be answered by; could we just go ahead nationally and bring this about ? If it`s an international issue; could we not deal with the countries concerned bilaterally ? Even if there is one or more benefit that could only be achieved by the EU ,the question has to be asked does it cover the other costs of membership ?
    Is the EU really neccessary for cross border trade when we have organisations like SITPRO and ISO that make agreements on such items as measurements ?
    And the big question. Is Britian right for the EU ?
    The example of your quince jelly manufacturer can show this. After all that the EU does, all the detail and negotiations over it, all the benefits are negated if our own civil servive and government cannot be intelligent enough to take advantage of this free trade area. If they tax our own jelly manufacturer and dont impose reciprocal taxes (ie taxes imposed by other EU nations on us ) on the foreign competitors, then allow subsidies by the EU for the foreign manufacturers (paid for with our taxes), and regulate our manufacturers more stringently than the foreign opposition, then all the benefits of this EU are null and void for us.
    It`s not any good for a free market and free movement of goods (and services) for industries and trades that are non existent because they`ve been decimated by our bureacrats who think they are doing it umwittingly at the behest of the EU.
    So our quince manufacturer doesn`t save anything. Because he`s been put out of business.By the very system that is supposed to bring benefits.

    Evil European,

    This project may possibly be of bigger value to others in Europe but of what value is it to us ? If we are not in it, would the rest of Europe be in great turmoil ?
    I agree with what you say about economics. If you want to know how to study in an academic way, speak to an economist. If you want to see the realities, go into business.
    And as you say, the EU is set up as a political project.Using econmics as its face.
    On your last point, dont forget that there are many different types of EUrosceptic, as there are EUrophile. So some of them are as you say.Most probably are not.

  6. Bert,

    I`m surprised you found the EUrosceptics not well informed because experience shows they are usually well aware of the nature and workings of the EU. But as I`ve said, there are different reasons for people to be EUrosceptic.
    The thing about the EU project though is that it goes beyond just common rules for measurements for trade.
    I also find that nearly all EUrophiles dismiss the effects of this project on individual lives (“details” ) and want to counter theese drawbacks with nebulous Bigger Picture scenario.
    It is a shame about tribalism. That`s how most people vote I think, which is why we`ve had the Tory/ Labour hegemony in politics.

  7. Robin:

    Over on the article on the costs of the EU at €40 million a day, you (“EUrosceptic”) had one example of the costs of the EU; that you had lost your job, of course you have my sympathies, however that really is not a very strong anti-EU argument. I (“EUrophile”), by contrast, gave you a plethora of concrete examples on how the EU benefits its members, including the transport initiatives in Scotland and Ireland, its initiatives in support of small business, enterprise, civil society, its actions to safeguard basic human rights, industry regulation and quality control. You responded with your oft and aforementioned “glittering generalities”, without a) providing any real evidence to what has suffered due to the EU’s actions, other than your imminent self, b) Refuting any single one of my claims with anything other than a “glittering generality” c) Once referring to those who disagree with you as anything but a “EUrophile”, a tactic employed governments around the world to dehumanise their enemies when they know that they have no platform on which to stand other than unquestioning intolerance of a certain societal demographic.

    You do your cause no justice by acting in this way. By consistently referring to individuals who have formed a positive opinion on the European institions as EUrophiles, all you do is convince people either a) that supporting the EU is clearly something only deviants would do, thus breeding ignorance of the institution in the same way that associating the belief that the world was flat with heresy successfully hindered the advancement of philosophical and scientific thinking for some centuries b) that EU detractors (or Europhobes, to stick a convenient and yet eminently infuriating label on it) have no real case; that their arguments are the basis of small minded denial and that there is no sense listening to their arguments, let alone taking them seriously.

    Creating or propagating divides serves (as well as using terminology such as “glittering generalities”) neither the “EUrophile” nor the “EUrophobe” camp any good, it simply reinforces the beliefs of both parties that they, and not the other, are right, when in fact they are, in all probability, both wrong.

    As such, I would be eminently grateful for a reduction in the surplus ad hominems and a response which contains no single glittering generality to exemplify your earlier statement that “EUrosceptics give real examples of how the EU is not a benefit but just a cost”. I await your imminent reply with great pleasure.

  8. *Line 17 should read round world, not flat.

  9. There’s no proof that the EU is of any economic benefit to the UK? It may have a negative economic effect then? Incredible. I thought “economics” was the only concrete reason for giving up our sovereignty and independence on so many issues. I don’t hear the politicians saying this; clearly they should.

  10. Peter: There’s no proof of positive *or* negative effects – this is economics we’re talking about. It’s mostly just theories – because the economy is far too complicated to be explained via a simple balance sheet.

    It is, however, possible to make a case for either – depending on which economic assumptions and which figures you choose to apply in your workings. The question then is which argument do you find most convincing. Personally, though I remain unconvinced about the benefits of Britain joining the Eurozone, I find the theories that suggest EU membership to be more beneficial than detrimental more compelling than those that suggest the opposite.

    More importantly, however, I have yet to see a single convincing economic theory supporting British withdrawal – they pretty much all rest on combinations of unsupported hypotheticals, misunderstandings about the situations of the EFTA countries, or (in extreme cases) assumptions that Britain’s geopolitical situation can be rolled back 40-odd years practically overnight to the joy and delight of the rest of the world (in particular the Commonwealth, which often features as a key plank in visions of a non-EU British future). It was partially this lack of any compelling theoretical backing for British “independence” that I first started shunting into a loosely pro-EU position.

  11. Hunter,

    I give you an imminent reply now, hopefully able to remember the posts you allude to.(like you I have a very bad memory ).

    Firstly EUrophiles and EUrosceptics are the monikers given to the respective camps in this debate.There is nothing wrong with either if we are to discuss ths topic, otherwise we would have to use wordy terminology like Those Who Are Enthusiastic Or Broadly For The EU and Those Who Are Against Or Dubious Of The EU. I`m surprised you find being called a EUrophile offensive but I`m willing to use any other terms that are appropiate.

    Secondly the reason I bring my self into it is because again I have a bad memory. I know others and read about other drawbacks of the EU but cannot remember the details. I`m lucky breathing doesn`t require a memory .But I can remember some details about my trade, a trade which took me through this EU project, out of it and back in again. I was able to see the workings at the coalface.

    Thirdly it`s not just my job but my way of life. And not just mine, but other individuals as well.Lots of them. And when I read of others in other jobs, trades and industries I can understand as there are similarities to mine.The hypothetical quince jam manufacturer is a case in point.
    If it was destroyed for a good reason I would accept it. But no good reason has been given.

    You say you gave a plethora of concrete examples of why the EU has benefits for us ,and are annoyed that I discounted most or all of them.
    Please remember that for a benefit to be a real selling point for the EU it must
    (1) Be a benefit that only the EU could provide, not something that could be done or provided by our national government or local council.
    (2) Be a benefit that is worth the cost of our membership, and compensate for the drawbacks
    (3) Actually be of benefit, not just classed as a benefit because it is a policy announced by the EU.
    Did you know that you could buy a DVD recorder that is programmable for up to 99 years ? No doubt a salesman at a retail shop would tell you this is a “benefit” in his sales spiel.but from the oldest man alive to a newborn child, what “benefit” is this to anyone. Such are many of the benefits sold to us by the EU.

    You seem to label any refutation of your points as an Ad Hominen attack.
    May I point out that I originally came to this site to see if my opinions of the EU are wrong.The fact that the EUrophile camp has not been able to persuade EUrosceptics otherwise is hardly my fault.I will also point out that I come into this lions den of EUrophiles and have been insulted, sworn at and shown bad feeling by EUrophiles some of whom are too cowardly to stay for debate.In that, these people share characteristics with some neo Nazis I have debated with. I hope I dont have misplaced optimism that most EUrophiles are not like that.
    So I am sorry Hunter but I do not see that I have given Ad Hominen attacks on anyone unless they they direct any my way.My first post was factual and you can debate it, but reclassifying an opinion as ad hominen is not helpful.

  12. Robin, just remind me again – how *exactly* did the EU destroy your way of life?

    Because I seem to recall on the innumerable previous threads that have discussed your personal situation, we managed to establish that, erm… The EU actually had nothing to do with the disadvantages you suffered, but that instead they were caused by a series of bilateral agreements between various European states *entirely outside of an EU framework* – and therefore it was a *lack* of European integration that caused you so much trouble.

    Correct me if I’m wrong, of course.

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  14. Correct Nosemonkey.You are wrong.

    I think that this complex situation would be hard to understand but it does help if you are in a particular trade or business.
    There are decisions that come directly from the EU, and could be bad or good for business/jobs/life etc.Then there are decisions made by our own powers that be that are made to conform to the EU, even if erroneously, and there are actions that could/should be taken but are not, because the powers that be think it would be against EU law or even the spirit of the EU.
    The haulage issues I`ve raised are only the half of it. I could show more examples but forbear because it requires great understanding (plus I hoped others would show examples both for and against in other commercial activities ).
    Remember;

    An EU member state may discriminate against its own citizens

    and you get 50% of the way there.

  15. Sorry, Robin, I don’t see quite how that answers the question.

    Back in April, in the comments to this post you repeatedly claimed that it was the failures of British civil servants that caused your problems. You came back to the subject on this post a few days later, which inspired in turn a post devoted to your specific haulage complaints on another blog.

    During all these lengthy discussions, we determined that the root cause of your specific problem was that a) British truckers are charged Vehicle Excise Duty, while non-British drivers are not, and b) that some European countries have negotiated agreements not to charge each other’s lorry drivers, but that Britain has failed to do so. Neither of which are because of anything the EU has done – but rather are due to a *LACK* of EU cooperation on haulage issues. (You even stated – I quote – “the Vignette system was devised in which the Benelux countries together with Denmark and Germany, would charge all foreign trucks as well as their own… We`re not in this system” – a system that has nothing to do with the EU, and which you blame as the root cause of your own difficulties.)

    In addition, you yourself have said that you blame the EU because the British civil servants blame the EU – while in the same breath dismissing that as an excuse.

    So, again – how *exactly* has the EU destroyed your way of life? Because from everything you’ve ever said about your career problems, I can’t see anything that can be blamed on the EU – other than the EU failing to assert its authority and force a level playing field for all EU truckers (something it has been trying to rectify over the last few years with the introduction of a “Eurovignette directive” specifically designed to rectify the problem of which you complain.

    Because if you can’t even give a concrete example of how the EU has ruined *your* life – and if, as it appears to me, your decision to blame the EU for your problems rests on a misunderstanding – then I can surely be forgiven for doubting your other assertions about the damage it has wrought on other people’s?

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  17. Nosemonkey,

    Firstly “exact” points at when or why a business folds can rarely be defined. As in when exactly did the motor industry go down in the UK ?
    But general points can be seen as to why an industry would decline.
    So this post will be long and probably tedious because it concerns a particular trade,has technical and bureacratic problems, but is probably indicative of our relationship with the EU.(And written live slowly, also giving perhaps personal info. )
    Please also remember that my main objection to the EU is that Britian is unsuited to the project, because, in the main, our civil service is rubbish.
    So to start; we pay everywhere in Europe (not just the EU) but we dont charge foreign hauliers when they are in the UK, and the main excuse is because the EU will not allow it. As I`ve pointed out, this is nonsense but that is how we are governed, because we are in the EU. It may not be what the EU desires, but it shows how our civil service cannot get any benefit from the EU, only drawbacks.
    I cannot take our government/civil service to an EU court because as I keep pointing out, a member state can discriminate against its own citizens.There is nothing anyone in the EU can do to rectify this iniquitous situation. Hence first reason to be out of the EU.
    Then many years ago , when I was doing a bit of Austrian work, the single markey came into force .From a particular day, the “permits” would not be stamped by customs (terminated). Each truck could make as many journies as it could. But Austria was not in the EU (or EC as it was then )!
    Here again our civil service managed to make another drawback. They did not terminate any permits, EU or non EU. But Austria still did because it still had a border with Germany and customs controls.
    This meant that an Austrain truck just needed one permit for the year, but a British truck needed a permit for every trip.Naturally the Austrians took advantage and limited to amount of permit issued, so that the work would go to them. I pointed out to Fells at the Dept of Transport then that Austria was advantaged by being outside the EU, and he did the usual civil service trick of obfuscating. hence another reason to be out of the EU.
    I registered my trucke in Holland. (A benefit of the EU !). Four times I got stopped in the UK, three by Dept of Transport and once by customs at Dover.In each case it was similar ;

    Official : Can I see your authorisation [a general form of permit ]

    Me; What does it look like ?

    Official; A blue A4 sized sheet ..

    Me; No, that is for English trucks. This is Dutch. What does it look like ?

    Eventually they would admit they did not know. A dutch truck ! So near and always in the country. Not Kazakhstan or Morrocan. they are not taught what to look for in dealing with foreigners. They are adequate only in dealing with UK citizens. Hence another reason to leave the EU.
    (Also one time I had a collar stud go on a wheel nut. In a DOT check, they had to let me go, rather than issue a GV9 and summons as they would to a British truck. Either the fault was petty,in which case why are British trucks hassles, or dangerous, in which case why are foreign trucks allowed to continue. In 2005, only two (2) foreign drivers were prosecuted.Hence another reason to leave the EU )
    When I got rid of my trucks I went freelance and drove for haulage companies and agencies. Not what I wanted but I was always in demand. Until the NMS came in, and drivers who could take advantage of the high pound effectively earning a bank holiday rate every day came in.Hard to compete with that. Hence another reason to leave the EU.
    Then I went to the tax office to persuade them that all my worl should be seld employed and could they stop hasstling an agency who was so afraid that I could only be PAYE. No they couldn`t have that otherwise all those romanians could come here and do that. Hence another reason to leave the EU.
    This sort of thing goes on every day to Brits, always a negative experience of the project, rarely if ever a positive.
    Hence why we should leave the EU.

  18. Robin – first thank you, and you really do have my genuine sympathy. It sounds like you had a deeply unpleasant experience.

    However, from everything you’ve said, the problems you experienced appear to be due to British national regulations causing difficulties. The situation you found yourself in sounds to me like precisely the sort of thing that a pan-European organisation would be in an ideal position to solve, by putting in place one standard set of rules.

    You were denied a level playing field by Britain – and an international organisation like the EU could have made your situation fairer by preventing Britain from discriminating in the way you describe. (I haven’t read the proposed Eurovignette directive in full, I must confess, but I get the impression that this is precisely what it is intended to do.)

    I also can’t see how the situation would have been made any better were Britain not a member of the EU. You still would have been unable to take the British government to court, and the fluctuating exchange rate would still have led to advantages for non-British truckers.

    Surely if your major complaint is (as it appears) that British civil servants are incompetent and British rules put British truckers at a disadvantage, you should be in favour of a pan-European system that could override such discriminatory national regulation and give you a higher legal authority to which to complain in situations where you have been unfairly punished by officials misapplying rules?

  19. Nosemonkey,

    Thankyou for your time and understanding.
    I use to think that we might be better off if some economic decisions were made by the EC/EU but the project seems beyond that, and I also came to the conclusion the smaller the government and more localised the better, which is something the EU cannot be.
    As you can see, you can have no faith in our civil servants to get the best deal in any international dealings. They might be adequate to adminster the Ascension Isle or a land on another planet, but not here when the continent of Europe and foreign competition is 21 miles away.
    Notice also that even when there is an agreed one set of rules, how they are enforced and administered differently.
    If we were not iin the EU though, there would be no excuse from the civil service that EU law forbids charging of foreign trucks, and the exchange rate would not be a problem
    I`ve asked university proffessors specialising in EU law how to rectify the situation, but there is no hope.It comes down to the fact that a member state can discriminate against its own citizens, something that is not usual in the other countries.
    My major complaint IS about our civil service, and I have said elswhere that leaving the EU is not the end of the problem , but the start of good governance.
    Regards.