Behind Cameron's Referendum on Britain's Secession from the E.U.

Governors of other E.U. states reacted quickly to David Cameron’s announcement that if his party would be re-elected to lead the House of Commons, he would give his state’s residents a chance to vote yes or no on seceding from the European Union. The result would be decisive, rather than readily replaced by a later referendum. Cameron said the referendum would also be contingent on him not being able to renegotiate his state’s place in the Union. This renegotiation in particular prompted some particularly acute reactions from the governments of other “big states.” Behind these reactions was a sense that the British government was being too selfish. This was not fair, I submit, because the ground of the dispute was on the nature of the E.U. itself as a federal system. 

David Cameron, PM of Britain

With the basic or underlying difference still intact, it should be no surprise that the renegotiation did not go well. German Foreign Minister Guido Westerwelle said at the time that Britain should not be allowed to “cherry pick” from among the E.U. competencies only those that the state likes. What then should we make of the opt-outs at the time—provisions in which states other than Britain benefitted? Surely one size does not fit all in such a diverse federal union (that goes for the U.S. as well). Westerwelle was saying that Cameron had abused the practice that was meant as an exception rather than the rule. Britain was exploiting this means of flexibility in the Union because that people in that state tended to view the E.U. as a confederation or, worse, a trade "bloc" even though the E.U. and its states each had some governmental sovereignty. 
The president of the European Parliament, Martin Schulz, said the approach of the British government would lead to the detriment of the Union. Specifically, he warned of “piecemeal legislation, disintegration and potentially the breakup of the union” if Britain was allowed to be bound only to the E.U. competencies that the party in power in the House of Commons liked. A player joining a baseball team undermine the game even in demanding that he will only bat because that’s the only part that is fun. In higher education, the education itself could only be incomplete if students could limit their classes to what interests them. Such a player or student would essentially have a different view of the sport and education, respectively. The view itself of the nature of the thing was so at odds with the fundamentals of the thing that it would be undercut severely. This is what had been going on in the case of Britain navigating in the E.U. 
Carl Bildt, the Swedish foreign minister, also touched on the detriment to the whole from what he erroneously took to be the selfishness of a part. He said that Cameron’s notion of a flexible arrangement for his own state would lead to there being “no Europe at all. Just a mess.” French foreign minister Laurent Fabius said that “Europe a la carte” would introduce dangerous risks for Britain itself. So if the British government was being selfish, it could have been at the state's detriment, though of course I contend that selfishness does not go far enough. 
In short, the visceral reactions in other states to Cameron’s announcement manifested recognition of selfishness of one part at the expense of the whole. Those reactions were rash and, even more importantly, lacking in recognition of the underlying fault-line in the Union erupting between Britain and the Union out somewhere in the Channel. Cameron and plenty of other Brits viewed the E.U. simply a series of multilateral treaties in which sovereign states could pursue their respective interests. “What he wants, above all,” according to Deutsche Welle, “is a single market.” Therefore, he “wants to take powers back from Brussels” to return the E.U. to a network of sovereign states. It followed according to this view that each state, being fundamentally sovereign, “should be able to negotiate its level of integration in the EU.” Such would indeed be the case were the E.U. merely a bundle of multilateral international treaties, or a network to which Britain was a party, rather than a federal union of semi-sovereign states and a semi-sovereign federal level. Herein lies the real conflict of ideas within the E.U. Cameron’s strategy is selfish only from the assumption that the E.U. is something more than a network to which Britain happens to belong.
Ultimately the problem was the uneasy co-existence of the two contending conceptions of what the union was in its very essence. The real question was whether the E.U. could long exist with both conceptions being represented by different states. The negative reaction from state officials of other states who held the “modern federal” conception (i.e., dual sovereignty) of the E.U. suggests that ultimately Cameron’s conception of the E.U. was utterly incompatible with the union’s continued viability, given what it actually was at the time. 

Sources:

“EU Leaders Hit Out Over Cameron Referendum Pledge,” Deutche Welle, 23 January 2013.

“Cameron Wants Another EU,” Deutsche Welle, 24 January 2013.

Essays on Two Federal Empires, available at Amazon.

Essays on the E.U. Political Economy, available at Amazon.

Corbyn as Labour Party Leader in Britain: Are Increased Deficits Implied or Avoidable?

The notion that a political party oriented to redressing the widening economic inequality during the years following the financial crisis of 2008 and the subsequent debt-crisis in the E.U. necessarily must increase government deficits to do so is, I submit, faulty. That is to say, being especially oriented to the plight of the poor, with the goal being the elimination of extreme poverty, can be consistent with fiscal responsibility. The election of a socialist as leader of Britain’s Labour party presents us with an interesting case of assumed fiscal irresponsibility.

Jeremy Corbyn upon being elected as leader of the British Labour Party (Jeff Mitchell/Getty)

Jeremy Corbyn was elected leader of Britain's opposition Labour party in September 2015. He won 59.5 percent of the ballots cast, or 251,417 votes, in the leadership, winning in the first round. He vowed to work toward justice for the poor. "I say thank you in advance to us all working together to achieve great victories, not just electorally for Labour, but emotionally for the whole of our society to show we don't have to be unequal, it doesn't have to be unfair, poverty isn't inevitable," he said.[1] He a impressed many Labour party members by repudiating the pro-business consensus of former leader Tony Blair—going instead with wealth taxes, nuclear disarmament and ambiguity about EU membership." Additionally, he promised to increase government investment though money-printing and renationalising vast swathes of the state’s economy. The Tories have used the economic crisis of 2008 to impose terrible burden on the poorest people in this country," he said. All this would not come without a cost.

For his part, Prime Minister David Cameron assumed that Corybn’s platform would mean larger government budget deficits—a problem the E.U. has struggled to address by levying penalties on wayward state governments. Cameron said—and this is crucial—"It's arguing at the extremes of the debate, simply wedded to more and more spending, more and more borrowing and more and more taxes. And in that regard they pose a clear threat to the financial security of every family in Britain." He is using rhetoric in characterizing Corbyn’s platform as extreme. In any case, Corybn said nothing about borrowing more and thus increasing the state’s public debt, yet Cameron assumed that it goes along with such a platform. To be sure, Cameron has a political incentive to make the inference, at least publically. According to Reuters, “The likely abandonment of the political center ground, particularly on the subject of balancing Britain's books, is seen by many as a gift for the Conservative Party that could herald a prolonged spell in power for the center-right party.” For the media to take the Prime Minister’s inference at face value, as if Corybn himself had said it, is hardly fair not only to him, but also to the residents of Britain.

I contend that the inference is invalid—that is to say, fiscal irresponsibility is not necessarily part of the mix in going with policies oriented to relieving poverty and even socialist policies—socialism being having the government own the means of production (regulation being government control over private property).  Corybn mentioned wealth taxes; he could also have pledged to reduce or end corporate tax-subsidies and even increase other taxes, including on business. He could also have vowed to decrease government spending in areas that do not affect the poor. Obviously, a downside goes with each of these measures, but this is not my point here. Rather, I submit that increasing government revenues and even decreasing government spending overall is consistent with having policies oriented to relieving and even eliminating the scourge of poverty, which dehumanizes people and limits them in so many ways, including in productiveness. Accordingly, Corybn could have said that he would work on behalf of human rights within Britain.

Regarding nationalizing economic sectors by printing money, government debt would not increase; rather, the means is inflationary. Were Corybn to change his position on using monetary policy for a large-scale fiscal purpose, we would be wrong in assuming that he must increase the state’s deficits to do so. Alternatively, he could prioritize the sectors to be nationalized and do so gradually. If even this approach would strain government finances, he could float government bonds specific to the government investments and use the revenue from them to pay off the bonds. This use of debt is acceptable in the business world, and thus qualitatively different than simply adding to the state’s deficit without a tie to future revenue. For anti-debt purists, the nationalization policy could be subordinated to the anti-poverty spending such that nationalizations occur only when the government can afford to pay for them—say from running a surplus, which I contend is consistent with an emphasis on anti-poverty measures.

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[1] William James and Michael Holden, “Socialist Elected UK Opposition Labour Leader,” Reuters, September 12, 2015. Source of all quotes in this essay.

On the Credibility of the E.U.: Transfer Payments and State Deficits

In October of 2014, the prime minister of the E.U. state of Britain blatantly (and quite publically) refused to pay a “bill” that the E.U. Commission charged the state on account of upward revisions of its economic growth. “We won’t pay it,” David Cameron said defiantly into a microphone. Meanwhile, Jyrki Katainen, the E.U. commissioner for economic and monetary affairs, accepted the draft budgets of the states of France and Italy even though they violate the limit of 3% of GDP in the European Growth and Stability Pact. Those two states could face fines, however, and the commissioner also noted that the budgets would face strict scrutiny. I contend that these instances of tension between the state and federal levels speak volumes as to the attitude of state officials and likely their constituents toward the E.U. itself. The attitude does not bode well for the European Union as a system of public governance. 

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Can the Euroskeptic States Topple the E.U.?

Can we say that an E.U. state is Euroskeptic? If so, Britain would be a consistent candidate for the label. Yet what about when Tony Blair was the prime minister? Poland and the Czech Republic have also swung back and forth in line with the electoral winds within those states. If states are less fixed than typically thought with respect to being Euroskeptic, then what looks like intractable skepticism may in fact be more easily overcome at the state level. It follows that the E.U. itself has more chance than typically presumed to obviate its own decline and dissolution.

Did the residents of the Czech Republic suddenly become pro-Europe when a pro-integrationist party took power in the Castle, or are the labels more a function of partisan politics? 

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Unanimity as Outmoded in the E.U."

In the U.S., states can get waivers from having to comply with regulations, depending on the particular law; federal legislation is not passed as if only between some of the several states. It is pretty much a one-size-fits-all notion of federal law, with opt-outs possible typically only on particular regulatory requirements. One such publicized waiver enables states to be exempted from the health-insurance mandate if they can show they have achieved the aim (universal healthcare) by another means. Massachusetts, for example, had a pre-existing program of universal health-care.

In Europe, David Cameron vetoed the European Council proposing an amendment to the E.U.’s basic law that would have strengthened the enforcement mechanism constraining state governments that exceed deficit and debt limits established by the E.U. His message was on behalf of state rights. So it was very smart indeed that the Europeans came up with a way to avoid the downside of unanimity while recognizing that some of the states jealously guard the sovereignty they have retained.  Hitherto, the veto mechanism that any state can use to block laws in important areas like taxation has crippled or at least hampered the E.U. institutions in meeting even the responsibilities entailed in the E.U.’s current competencies. Besides gradually increasing the percentage of the E.U.’s competencies (domains of authority) subject to qualified majority voting rather than unanimity, it turns out that groups of at least nine states can go ahead with legislation if a proposal is stalled or vetoed by a state. Crucially, the vetoing state need not be subject to the legislation. Valuing this is a distinctive European trait in the annals of modern federalism. Adding competencies to the E.U. government need not require every state, including most notably euroskeptic, veto-prone states like Britain, to give up more sovereignty.