Our place in Europe

As Tristan has noted, Cicero has another well-thought-out post on his blog. Personally, I’m kicking myself as I nearly went to Andrus Ansip’s lecture at the LSE but bailed out at the last minute. (I might have known Cicero’s true identity!).

Cicero writes “The Liberal Democrats have an opportunity to speak out for a genuinely Liberal Europe… in favour of free trade and freer movement in services and agriculture, [and] against a European super state and "ever closer union". He is spot on.

I have been advocating for some time a shift in emphasis for the Lib Dems from “The party of Europe” to “The party of European reform”. This would contrast with Labour, who are largely in favour but have learnt to keep quiet and not rock the boat for fear of alienating the voters, and the Conservatives, who largely want to leave but have learnt to keep quite and not rock the boat for fear of alienating each other.

I agree that it is in Britain’s interests to be in Europe, but it is not in Britain’s or anyone else’s interests for Europe to pursue “ever closer union” or to develop into a socialist state.

The European Union needs to trim down its areas of competence and embark on a massive liberalisation and deregulation programme. As liberals we should not meekly go along with the European agenda; we should be pressing loudly for an end to farm subsidies, an unfettered free-market within Europe (for goods, services, labour and capital) and less protectionism against imports (from any of those four categories) from abroad.

What is more, “harmonisation” should not be used as an excuse to eliminate variety, innovation and competitive advantage. There is no reason why a single market cannot thrive where different tax codes, different regulatory regimes and even different currencies exist. Of course Europe should not tolerate manipulation of regulatory regimes as a covert form of protectionism, but neither should we assume that bland uniformity from Athens to Aberdeen is a necessary feature of any market. There is no amount of economic efficiency or market clarity that justifies refusing to allow individuals to transact in their traditional quantities and measures.

Neither is there any reason why job protection should be the same in every corner of the Union: can workers not judge for themselves when considering taking a job abroad how the labour laws will affect their future? Or do we need a paternalistic super-state to protect us from the effects of making a decision.

Again, there is no economic justification for suggesting that one member state should not be allowed to experiment with a low-tax high-growth model while others opt for a high-tax high-welfare system (Oh! That the UK could be allowed such variety!). Efforts to impose tax harmonisation are an attempt by high tax economies to undermine the comparative advantage of lower tax competitors in the name of the “level playing field”.

Britain’s place is in Europe. But it is in a liberal Europe. The Liberal Democrats should press that point home in Brussels, Strasbourg, Westminster and their constituencies. It will appeal far more to voters than unquestioning loyalty to European integration or a shy admission of support. It is also the right position to take.

What next? The Corn Laws?

The Tories are resorting to protectionism again. No surprises there - their free trade credentials were always suspect. In his speech to the Oxford Farming Conference, David Cameron has called for a “buy British” campaign and condemned the government for not measuring how much of the money it spends on food goes towards British produce.

He says that it is "completely wrong" that food "can be imported to Britain, processed here, and subsequently labelled in a way that suggests it's genuinely British". Perhaps, but it creates more wealth to import raw materials and package them here than either to generate the raw materials here or to buy already finished goods. That “value added” is why developed economies are rich and farming societies are not.

Neither is it a "scandal" that the government does not measure how much of its £1.8bn food budget is sourced locally. The most important thing is that the food is of high quality and represents value for money – buying more expensive produce will leave less money for school books, nurses or flak jackets. It would also cost money to draw up this useless statistic.

Rather than pandering to farmers, David Cameron should be promising to dismantle trade protection both at home and in Europe so that we can half the price of the average UK shopping bill and bring wealth to third world farmers. But that would be too much to hope from a party that is more interested in protecting landed interests than boosting the welfare of all.