In June, the British voted to leave the European Union, a move called “Brexit.” The runup to the vote had been marked by dire and probably grossly exaggerated predictions of the disaster that Brexit might cause, so it is not particularly surprising that stock markets reacted badly to the news. Opponents of Brexit claimed that those who had voted for it were overwhelmingly older and less educated. That sounds impressive, but it can be restated: The opponents were those who remembered pre-European Union (EU) days, more than 40 years ago. At that time there were far fewer college or university graduates in the United Kingdom—but the lower-school education that many did have was considerably better.
Those who experienced the pre-EU United Kingdom also are largely retired to affordable places outside London. Those who voted for the European Union had never known anything else; they were voting, as many people do, for the status quo. Those opposing the European Union were uncomfortably aware that through their lives their country had been on a slippery slope away from self-control toward government by Brussels.
Brexit seems to have been a reaction to the shift of the European Union, over the 40 years of British membership, from a free-trade association obviously beneficial to Britain, to a quasi-state, which is a very different proposition. The United Kingdom joined what was then called the European Common Market to gain full access to the markets of Western Europe; the slogan at the time of that referendum was that Britain had to join Europe. To do so the British cut their special trade ties to Commonwealth countries, which seemed to offer much less economic advantage. Now that one of them, India, is a major economic power, this bargain may seem somewhat less attractive. Since that time, the fastest-growing economies in the world have been in East Asia and in the United States, not Western Europe. It can be argued that Western European social policies, which the European Union increasingly wants to extend to the United Kingdom, are responsible for that difference. It also can be argued that access to European markets with much less access to other markets is a real problem for a trading nation like the United Kingdom.
At the beginning, eliminating tariffs inside the European free-trade zone generally reduced prices and boosted all the economies within the zone. Americans have experienced exactly that benefit: For many years the United States was the largest free-trade zone in the world. After World War II, the U.S. government strongly supported creation of a United States of Europe (which is where the European Union is going) on the theory that it would be inherently strong, like the United States, and hence would be able to stand up for itself against menaces like the Soviet Union.
Things have not quite worked out that way. Those running the Common Market learned what many Americans complain about: Free trade may lift average prosperity, but it has victims. If someone else in the free-trade zone consistently undersells you, you suffer. If you have sufficient political power, you can bend the free-trade rules to protect yourself. Americans in “rust belt” states have watched manufacturing employment collapse, and they blame free trade (automation is at least as important a factor). If the U.S. government stepped in to protect their jobs, other Americans in our free-trade zone would have to pay more. It is almost impossible for anyone to balance the two factors, which leads to considerable anger.
In Europe, the first and most prominent prospective victims of free trade were farmers, particularly in France. As a prime mover in the original European Common Market, the French government managed to protect its farmers with heavily subsidized prices. British farmers, who generally have been very efficient, have not benefited nearly as much, and agricultural subsidies have become a major EU scandal. If you are British, and you remember the pre-EU days (pre-1973), you also remember lower food prices and, often, higher quality. What the British now see is protection extended to other noncompetitive industries, to the distinct disadvantage of their more competitive economy. For example, the European Commission (which sets up European Union regulations) has tried to limit working hours because otherwise French workers, who now are limited to 35 hours per week, would be at a disadvantage. The constant theme has been to “harmonize” laws throughout the European Union to snuff out any local advantage. Individual national leaders have some veto power, but in many cases what count are regulations that, in theory, implement agreed EU laws—in unexpected ways.
Loosely speaking, the European Union now consists of two groups of countries, one advocating the freest possible trade and the other the most effective possible protection, often to support workers’ privileges. The British fall firmly in the first category, the French and the Germans in the other. The problem with the second category has been that the privileges, as they now stand, often are unaffordable. That is why the French government currently is trying to renegotiate some of them, and also why France is now beset by a summer of strikes and increasingly violent riots.
‘An Imposed Government’
Brexit seems to have won on the ground that the loss of British sovereignty to the European Union no longer was acceptable. The issue generally was expressed in terms of the loss of control over immigration (the European Union allows free travel within its borders, and free access to all labor markets by all of its citizens). Whether immigration helps or hurts the United Kingdom is beside the point: It was an issue that made the loss of sovereignty particularly obvious. As an abstract principle, sovereignty is easy to decry as a primitive kind of nationalist attitude that only causes problems. It becomes a lot more concrete when particular political decisions—in this case, most strikingly on immigration—are made by unelected bureaucrats in Brussels rather than by an elected parliament in Westminster. For years the British public has been treated to stories of EU arrogance and the meek acceptance of its dictates by a supine British government. Successive British prime ministers have gone to European summits promising that they would take back important powers from Brussels, but generally they have failed.
Overall, the European Union has shown its contempt for popular feeling by forcing countries that rejected its most recent treaty to keep voting until they reached the “correct” result. The current agitation for a second referendum on Brexit falls squarely into this pattern. The European Union has never managed to gain much popularity or any equivalent of pan-European patriotism. Most people in Europe appear to see the European Union as an imposed government, making decisions that affect them without taking their wishes into account. There is a European parliament, but it has virtually no power and is widely seen as a way to give jobs to failed politicians. The EU bureaucracy (the European Commission) makes nearly all decisions, because the only other decision-making mechanism is a council of the heads of state of all 28 member countries, none of which has been willing to cede full sovereignty. The difference between the United Kingdom and nearly all the other members of the European Union is that it actually gave its population the option of leaving the Union (a possibility allowed for in the Union statutes). Prime Minister David Cameron did so because during the last British election he felt compelled to promise a referendum. That promise in turn reflected deep distaste for the Union within the British public and also within Cameron’s own Tory Party.
The European Union is in trouble, and the Brexit vote is a warning sign. The attempt to unify European currencies (as the Euro) probably was a step too far. When they agreed to abandon the Deutschemark in favor of the Euro, the Germans had one nonnegotiable demand: The new currency had to be managed to avoid inflation. The Germans had national memories of the disastrous 1923 inflation, which many thought had made the rise of the Nazis possible (they forget that the inflation was deliberately triggered to eliminate the World War I debt to France). Unfortunately, participation in the Euro made it easy for countries like Spain and Greece to borrow money, because creditors assumed that the debt was as good as the Euro itself. When times turned hard, the European bankers enforced a policy of austerity, which killed jobs and caused massive suffering. That is unlikely to have kept the European Union very popular in the countries involved. The alternative way of dealing with excessive government debt, which is to accept a degree of inflation, was unacceptable.
Bankrolling Brussels Bureaucracy
It seems clear that the “European project” achieved nearly all the positive effect it could almost immediately on coming into being, when it created a free-trade zone. Everything else has been downhill. Every time you pay a bill in an EU country you are forcibly reminded of what the Union’s bureaucracy costs, because it is financed largely out of the sales tax (in Britain, value-added tax) attached to your bill. Repeated stories of massive and unpunished corruption in Brussels do not help. The British probably would have much preferred to be part of a reformed European Union that limited itself to avoiding trade barriers within Europe.
Much has been made of the supposed security implications of Brexit, as though it would instantly sever ties between British and Continental security services. That would be less than beneficial to the Europeans. They need to know about what terrorist plans are being hatched in Britain quite as much as the British need to know what is happening in France, Belgium, Germany, and beyond. Similarly, Brexit is most unlikely to sever military relations.
The most potent argument for the European Union is that it is insurance against the horrific 20th-century wars ignited, it is said, by nationalism.
What happens now? Should Brexit proceed (there are some ways in which it might be circumvented), it probably will be seen as the first step in the unraveling of an increasingly unpopular European Union. This very real possibility probably explains the rather exaggerated claims as to the disaster Brexit may become for the British. We may liken what is happening to the failure of another pan-European project—the one Napoleon tried to promote by conquest. His army was advertised as a liberating force, and in many places it was. When it overran much of Central Europe, there was little sense of national identity. The attempt to unite Europe generated the national sentiment that drove much of 19th- and 20th-century history.