Refusing to trust technocrats & experts, the British people have won back ancient liberties from the ‘Virtual’ European empire
I voted in the first European referendum in 1975 to join the European Common Market. I voted in the second European referendum last Thursday to leave the European Union. In both cases I was on the winning side, which won by a massive majority in 1975 and by a slim one in 2016. There was a big generational gap in the voting pattern in the second referendum, with the young largely favouring “remain” and the over-55 “leave”. This was mainly because the young had always lived under the EU and most knew little about its evolution. What changed the minds of those who had voted for the Common Market in 1975?
I, along with many of my peers in 1975 came to see as the Common Market evolved into the EU, that we had been lied to by the Europhile political elites. Whilst selling us a free-trading area they were in fact surreptitiously co-opting us in the creation of a political union. A United States of Europe: a state run by unelected technocrats.
In an important article, Charles Moore, Margaret Thatcher’s biographer (Daily Telegraph, 11 June 2016) shows the linguistic sleight of hand that allowed the Eurocrats to change the Common Market which Britain had joined into a Single Market. As Moore notes, whilst both apply to a free-trade area, “common” means shared, “single“ means “uniform”. Markets allow people to buy and sell freely. When the Eurocrats combined the two words one the “single market” by the Single European Act signed by Margaret Thatcher, “it did not create a market: it created a single control of that market” by imposing a single regulatory regime for trading standards on all members. This Single Regulated Market’s “bosses were -and are the European Commission, under the European Court of Justice.”
With the Maastricht and Lisbon Treaties, the political project of creating a technocratic federal state, not subject to democratic control, had become clear. The most momentous aspect was sweeping new powers given to the European Court of Justice by the Lisbon Treaty – not just over commercial disputes but over defence, foreign affairs, immigration and home affairs. The EU’s charter of fundamental rights was made legally binding at Lisbon: the perfect tool for the ECJ’s ambition to advance the cause of European integration.
The British Government’s claim that it had an “opt out” from this charter was soon brushed aside by the ECJ as having no legal force. Thus 1,000 years of the development and application of Britain’s Common Law was now to be set aside by the superior powers granted to a court following an alien continental Napoleonic legal code based on “rights”. It is this central issue of sovereignty – who makes and enforces the laws of the land – which was for me, and for many others I believe, the central question in voting for Brexit.
The “Leave” campaign cleverly turned the immigration issue away form any xenophobic rantings of Nigel Farage’s UKIP, to attacking the EU migrant numbers which cannot be controlled under the EU’s free movement mandate. By advocating the Australian points system to allow popularly mandated migration quotas for immigrants from around the world. “Leave” turned the immigration issue into a constitutional one of regaining democratic control. This I believe was the winning card which won Brexit by a slim majority.
By contrast the “Remain” campaign under David Cameron and George Osborne was based on creating fear about the economic consequences of Brexit – a tactic which had succeeded in winning the Scottish Independence referendum. But this campaign based on a dodgy Treasury economic model was risible. As Professor David Blake has shown (“Measurement without theory: On the extraordinary abuse of economic models in the EU referendum debate” pdf ), the Treasury’s short term model was a VAR model which has no economic content. It merely projects existing trends among a series of variables which are not necessarily causally related. It cannot identify and predict the effects of a structural change which has not been previously observed to calibrate the model. So the Treasury just assumes that the Brexit shock will be equivalent to an “increase in the uncertainty indicator that is 50 per cent of the size of that in the Great Recession”. With no policy response included, the model leads to a “sunspot equilibrium”, where the uncertainty caused by the shock (unrelated to economic fundamentals) leads to a self-fulfilling prophecy, with ‘animal spirits’ in a downward loop and “a never-ending downward spiral in GDP”, so that “UK GDP will eventually become zero”. To avoid this patently absurd conclusion the Treasury stops its VAR model after two years – the time it takes to negotiate an exit under Article 50 of the EU treaties.
It then switches to a long-term “gravity model” which is similar to the Newtonian model of the orbit of the planets around the Sun. In the Treasury’s solar system the sun is the centre of the EU – the Eurozone. Other countries are planets around the Sun. Their economic relations with the Sun determine its gravitational pull. The rest of the world (ROW) is outside the EU solar system. “The gravity model predicts that this is a place you would not want to be, since it’s so far away from the Sun. It is very cold out there and you will be completely isolated from “ the warm inner Eurozone. The model implies that “there are no circumstances in which the UK could be better off outside the EU” and “it would be even better off joining the Euro Area – which is closest to the Sun”. Moreover, “all countries would be better off joining the EU, since according to the model, Europe is at the centre of the known universe…And this result holds even if the EU collapses into a black hole” which is not unlikely for the Eurozone. This is because in this model “once you become ‘trapped’ in a particular solar system, you cannot escape and you are “better off” remaining”. The Treasury did not say as they could and should have tested their model to see what the consequences were if the UK “jumped” solar systems and join one centred on the ROW”.
All the other important institutions touting the economic disasters from Brexit – the IMF, the Bank of England and the OECD – have used the same or similar gravity models. They are indulging in what the late Professor Ian Little used to call “mathematical politics”. It is particularly shameful that supposedly politically neutral international institutions and the UK central bank should have supported the “Remain” campaign with this technocratic statistical snake oil. Fortunately, enough of the British electorate refused to trust these “experts”.
There will be important, political and geopolitical consequences of Brexit which I will examine in a future column. For the present it is only necessary to salute the quiet Brexit “people’s revolution”, by which they have taken back their parliamentary democracy and ancient liberties protected by the Common Law, from the economically failing, undemocratic bureaucratic “virtual empire” of “Europe”.
First published at the Business Standard and posted here with the kind permission of the author
Deepak Lal is the James S. Coleman Professor Emeritus of International Development Studies at the University of California at Los Angeles, professor emeritus of political economy at University College London, and a senior fellow at the Cato Institute. He was a member of the Indian Foreign Service (1963-66) and has served as a consultant to the Indian Planning Commission, the World Bank, the Organization for Economic Cooperation and Development, various UN agencies, South Korea, and Sri Lanka. From 1984 to 1987 he was research administrator at the World Bank. Lal is the author of a number of books, including The Poverty of Development Economics; The Hindu Equilibrium; Against Dirigisme; The Political Economy of Poverty, Equity and Growth; Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance; and Reviving the Invisible Hand: The Case for Classical Liberalism in the 21st Century.