Brexit, free trade, and Enlightenment principles

August 1, 2016 – 11:14 pm by John

As I read about the rationales given for each side in the recent "Brexit" decision as well as their respective complaints and predictions about the UK's present and future situation, one thing strikes me as particularly funny above all: All the economic and social objections to the UK exiting the EU are straight-up libertarian ones. Pro-Remainers extol trade without barriers, freedom of movement, fewer stifling regulations, and a lack of protectionist/mercantilist laws. Yet the people who seem most disdainful of the Leave voters abhor the idea of teaching free-market economics in college, much less grade school, where it might have done some good to teach Britons the value of free-market globalism and the drawbacks of more protectionist/mercantilist economies.

Maybe this is just an example of their "neoliberalism", which is more than an already overused buzzword. I think it's safe to say this term encompasses globalist, liberal economics and politics within the framework of the modern regulatory and welfare state. As Jeffrey Tucker says, their free-trade globalism isn't individualist or laissez-faire, it is centrally managed and decided. And it's true there is more to free-market economics than the four freedoms enshrined by the EU charter (free movement of goods, services, capital, and people). Low taxes, low spending, and no central banks, for starters. But on every issue that the politicians and commentariat cite as a benefit of EU membership, they come down on the more libertarian side.

It is amazing to me, and strange to admit, that the so-called elites of Europe and indeed the rest of the world are mostly right about the benefits of what we can lump together as "globalization": free(r) trade and free(r) movement of people compared to the overall world economy to this point, and especially compared to former communist states and to the mostly unfree developing world, which have benefited disproportionately from globalization in general and EU membership in particular. It certainly is strange, perhaps even paradoxical to someone like me who sees the world through a libertarian lens, that so many people in high-up corporate and government places could extol and implement mostly libertarian-ish economic policies, but only through the high-level bureaucracy of the EU and only by (more or less) forcing those policies on sometimes reluctant subsidiary jurisdictions.

The reasons for the dichotomy between the European elites' centralizing/welfare-state tendencies and their free-trade tendencies seem clear enough. First is their devotion to multiculturalism and anti-nationalism. Second, the corporate and governmental higher-ups who have created the policies of the EU approve of the results of free trade, especially as it benefits the poor but also themselves, but they don't want to relinquish their power and let the people simply travel and trade as they see fit, as they would be able to if left alone by their governments. They want to govern, in short, even if their governing, on basic matters of trade and movement, amounts to getting rid of separate national rules and regulations and making sure people and businesses aren't unduly inconvenienced. (Remember the EU has lots of labor laws, manufacturing standards, all kinds of other regulations; it's just that it requires most of these be the same for all member nations.)

I should make clear that I'm not chastising them for doing something right but not right enough according to my quixotic moral code. Policies that move in the direction of free trade—freer anything—are laudable. Their position makes sense from their perspective: they aren't anarchists or even minarchists, and they think a vital function of governments is to provide a safety net (etc.) for their peoples. From within that framework, these elites in Brussels, Washington, and elsewhere have instituted a socio-economic environment of mostly free trade, without the necessarily libertarian philosophical underpinnings to support its righteousness per se.

What results when leaders cite outcomes as the proof of a policy's correctness is that the masses also use outcomes to judge policies. Rightly or wrongly, many voters in the UK see their current status as worse than it should be, and they blame those faraway elites and their globalist system for it. What results is the Brexit vote, and probably similar ones to follow.

Jacob Levy makes a strong case that the Leave decision was entirely anti-free-market. Most of the comments to the article are also good, both agreeing and disagreeing with him. Levy's case is that libertarians should support policies or systems that create a freer society regardless of their nature (centralized vs. decentralized, supranational vs. local); that there's no a priori reason that libertarianism must always prescribe decentralization or the removal of layers of bureaucracy; and that many voters and politicians on the Leave side are vehemently anti-free-market, so there's good reason to expect the new UK to be less libertarian economically than it was before. He also notes that the rest of Europe will suffer from the UK's leaving because the UK was actually slightly more market-liberal than some other powerful countries, namely Germany and France, and now that those countries no longer need to placate Britain, they will move in the direction of less freedom in some areas.

The commenters disagreeing with him—some supporting Brexit, some who voted Remain, some more skeptical or indifferent—said some good reasons for opposing the EU are that it makes decisions in secret and without accountability; it overrules local votes on matters like the Lisbon treaty and Greece's budget; it has allowed too much entry and free passage of non-EU citizens; the UK is most likely to join the European Free Trade Association (EFTA), which will minimize the impact to its economy; the main goals of EU leaders are political integration, not economic freedom, so many EU-skeptics expect gradually more political power to be taken away from member states and concentrated in Brussels, irrespective of economic issues; the EU is too Utopian, with its forced integration of dozens of culturally, linguistically, and historically different nations, and is destined for disaster anyway, sooner or later; a "single market" has some good aspects, but one-size-fits-all rules for an entire continent are opposed to the libertarian idea of competition not only between firms but between policies; and while some libertarians might place higher value on market freedoms per se than on individuals' ability to impact their government and its policies, some libertarians feel the opposite, and it's easier to change laws and regulations in your own locale than in a supranational body that must account for an entire continent's desires and well-being.

It seems inconsistent for Levy to assert that the UK was holding back some EU members' more statist, dirigiste tendencies but left to its own devices as a completely sovereign nation it will implement economic policies that are less free than the EU's were. That logic is either confused or not fully explained, but either way, many think the UK will in fact become a less laissez-faire economy outside of the EU. Maybe the reasoning is that, now that the Leave side has had its victory at the ballot box, the formerly market-liberal (neoliberal) leaders will either change their tune or be voted out of office, resulting in protectionist/mercantilist policies inside the UK.

If I had to guess, I would guess that's what will happen. After all, there aren't many free-marketeers in the British voting public, though many Brexit supporters predict the UK will retain most of the economic benefits of EU membership by joining the EFTA while gaining more national sovereignty over other matters. The best-case scenario is that the UK's overall economic situation will be about like it was under the EU but with a few details changed here and there, more local sovereignty, etc., in which case Brexit will have been a good decision. After all, if I've learned anything about democracy, it's that the more things change, the more they stay the same, so maybe Britain's power elite will be about the same as it ever was, doing about the same things it's been doing.

(A good primer on the benefits provided by the EU's single market, particularly compared to traditional "free trade areas" or free trade agreements, is in this Financial Times article. If separate nations trade under, say, World Trade Organization rules, which are not the same as the EU's single market rules, then even in the complete absence of tariffs, there are other barriers to trade or legal/regulatory complexities that cost money and time and labor, necessarily reducing overall trade. Again, this is basic economic libertarianism.)

Perhaps an offshoot or extension of Levy's viewpoint would go like this: A good libertarian case for the EU—and EU-type bodies—is that in the current phase of mankind's political, social, cultural, economic, and intellectual development, nation-states aren't going away any time soon, and neither voters nor politicians will support the existence of sovereign nation-states that don't actually act sovereign; that is, we're going to have nation-states in some form, and if there's no supranational body making some political-economic decisions that are binding to collections of those nations, then what we'll have is relatively uncooperative, disconnected nations that try to act in their own separate interests by, basically, cutting off their free-trade noses to spite their faces. In other words, nation-states aren't going to assert their sovereignty in order to implement 21st-century versions of the Articles of Confederation and mostly leave people, families, and businesses alone, letting them travel and trade mostly as they wish. If given the chance, they will assert their sovereignty in order to, you know, be sovereign, and separate, from other nation-states, by passing laws and erecting barriers that protect their "national" interests, usually to the detriment of the average citizen. And so the only way to achieve free trade in this current state of mankind's development is to form supranational unions that, somehow, will allow nations to be mostly sovereign but will bestow enough, and obvious enough, economic benefits on all their members so as to enjoy continued support. The history of the EU mostly supports this case.

Conversely, a good libertarian case for Brexit is that the destiny of economic freedom is to decentralize power in every form, increasing the importance of local politics and increasing the ability of each individual and family to govern themselves and impact their local political, cultural, and economic climate to the utmost extent possible. Only then will people and businesses be able to operate freely, trade freely, move (mostly) freely, and truly take charge of their own lives and their own futures.

I strongly support the latter case more than the former, but it's not the least bit out of the question to expect that the best (only?) way to get to the latter scenario is through the former. That is, to create supranational federations in which citizens of different nations see that a global free market not only multiplies wealth far more than any less open system but spreads it more widely and more equally, while simultaneously allowing for more flexibility and dynamism in every market, so that the "losers" won't necessarily be losers for long. The success of this free-ish economic system will lead to piecemeal secession from the (inevitably overbearing and unresponsive) federations without abandoning the principles of free trade that the federations were founded on. In other words, after living under such supranational free-trade unions for decades, people will realize the truth in what Jeffrey Tucker said above: we naturally have the right to trade freely, and we don't need a government to provide that right, protect that right, or set up a system in which that right can be exercised; we need to get governments out of our way so that that right can flourish as it should. Maybe forging supranational unions to get national governments out of our way is the best way to make billions of people—especially politicians—realize the truth in this libertarian belief, and then we can get rid of the supranational unions without returning national governments to their old roles.

It could also be true that supranationalism isn't the only path to an economically free world. Maybe it'll work well enough in Europe and, say, Latin America, but not in the U.S. and Canada or parts of Africa or Asia. Maybe in some of those regions, progressive federalization, decentralization, and secession will lead the way.

I focus on dissolution and decentralization because I firmly believe that gradually dissolving political control over all aspects of our lives, starting with national (or supranational) governments and going down the jurisdictional hierarchy, rather than solidifying control in ever-higher hierarchies, is the only way for humans to achieve lasting peace and reach our greatest potential. This is why I hope that either of those two scenarios leads to super-decentralization rather than, say, a single world government or a few continental governments.

I'm sure I'm the millionth person to ask this, but if it's so obvious that the EU is better for everyone in Europe, why are similar unions across the world not better for every other region? Clashing cultures? This reason would be hard for Utopian leftists to admit, because that allows room for the same argument to be made by Europeans against other Europeans and, especially in the present context, against Middle Eastern and North African Muslims.

Or is it because other supranational unions just wouldn't work as well? Then we're back to mere ad hoc utilitarian reasons and not philosophical ones about human rights and freedom.

Or should the Americas and eventually the rest of the world move towards such unions? Then, again, I ask why not right now? If the answer is we're not ready yet, then we're back to point #2 about outcomes vs. philosophy and about how millions of UK voters didn't think the EU was right for them now, either. If any substantial number of EU stalwarts think supranational federations are the best politico-economic goal for most of the world, why have I heard so little about it? Why is such a goal not espoused vehemently and repeatedly on all available platforms by all EU supporters across the world? Because it's immensely unpopular and unrealistic? So is libertarianism, but that doesn't stop us. Stand up for yourself and say what you believe.

As with all political factions, EU stalwarts claim to support the EU and its four basic freedoms because of how much they help the poor. Why does no one seem to want to create an African Union to lift those billion people out of poverty? Because it has to be Africans who forge their own union? But a lack of an African Union is against their economic best interest. A majority of UK voters wanted out of the EU, allegedly against their economic best interest. Why is that so offensive but the lack of an African Union isn't?

I think that, as easy as it is to admit that an American Union and an African Union and other unions are hopelessly impractical now, it's hard for many people to admit that millions of Europeans feel the same way about the EU, and for mostly the same reasons: cultural differences, language differences, opposition to free immigration, and the political sovereignty problem. I think admitting that these are perfectly good reasons why other unions are impossible opens the door to admitting that they are at least fairly good reasons for Europeans to dislike the EU, and this makes people uncomfortable. But it's good to remember that it's a sign of a well-read, fair, sophisticated mind to occasionally hold contrasting thoughts at the same time, as I do about these issues. I like the idea of a single European economic community but also like the idea that a lower-level polity, such as the UK, will secede if it wishes. (I also like the idea that all the Remain voters could declare themselves citizens of the EU and all the Leave voters could declare themselves citizens of the non-EU UK, or any other government that will have them.)

Maybe people who love the EU and lament the Brexit decision don't appreciate how good it is, in and of itself, that a group of people can deliver a big "Fuck you, we're out of here" to any governing body, for any reason or no reason. True, it might not be good, in and of itself, to actually deliver that message in a specific situation. But we mustn't forget what a basic right secession is and how many power-grabs are prevented by that threat.

Actually, I think Brexit might have been the wrong solution to the right problem. It could have been an overreaction, and an overly emotional reaction, to the many problems plaguing the EU. Problems I expect will be inherent to any supranational union.

My takeaway is that it's hard for EU stalwarts to explain why the EU or any other supranational union is a good thing per se, because the reasons it is good can be equally true of a super-decentralized world in which laws are extremely permissive and most economic decisions are made on as small a scale as possible.

If the British masses had been taught the unreserved virtues of Western Enlightenment thought, including laissez-faire economics and distrust of centralized authority, they might have liked the EU for its free-trade policies, or they might have demanded even more secession and federalism. Same for Continental Europeans. Or the Leave voters might have ended up basically the same as they are today, and they would have eschewed their well-learned politics and voted in their perceived self-interest the same as they did in June, blaming 18th-century Enlightenment principles for their stagnation and frustration.

Various political philosophies and factions, including many libertarians, posit that with extreme federalism and more local, community autonomy, people see themselves as being in control of their own lives, responsible for their own destiny and that of their descendants. This agency, I think, is what is missing most of all from the various disaffected populations across the developed world, mainly in the lower and middle classes. They see their economies, their industries, their jobs, and therefore their very lives as being short-shrifted by uninterested elites far away, and they aren't content to hear that globalism takes a long time to adjust to and that change is generational. If they don't provide their children with at least a middle-class upbringing, their legacy might be generations of poverty or even extinction of their lineage. They don't care that their grandchildren will certainly be better off materially than they are in absolute terms; they want their grandchildren to be at least as well off relative to the rest of the population as they are.

Seeing foreigners take their jobs or eliminate the need for their jobs, all the while seeing kids from rich and powerful families grow up to be rich and powerful in faraway metropolises, along with a strong dose of tribalism against people who look, speak, and worship differently, has led the British masses to think the system is against them (or at least indifferent to them) and is causing their country to become something nearly unrecognizable without even logging their objections.

This is what is missing, I think, from the EU's globalist neoliberalism: agency and autonomy. The power to shape one's own future, and that of their family and country. People feel like they don't get to make political and economic decisions for themselves, and they react by grasping at whatever political sovereignty they can.

It's hard to say whether European leaders as a whole have done a good job of selling the benefits of the EU to the average European, but in the UK they have apparently failed overall. It's also hard to say whether a culture that had instilled all those Enlightenment principles throughout life would have had better success at ensuring lifelong, unwavering support for free trade. People vote emotionally, not rationally, and against their own best interest all the time. (No, I mean literally every time.)

It makes some people uncomfortable to admit that Britons might have had good (or at least understandable) reasons to support the Brexit, so predictably they resort to cries of "Racism!" They see opposition to immigration, so they shout "Xenophobia!" They see distaste for Middle Eastern immigrants and Islam, so they shout both "Racism!" and "Xenophobia!" When all you are is a race-baiting hammer, everything you see is a racist nail. (To them, "xenophobia" just means racism across borders.) It's pathetic, and it wouldn't be worth mentioning if it weren't so prevalent. From all corners, people dismiss the British masses with that type of disdain and then wonder why (a) the masses vote against those people's wishes, and (b) no one is afraid to be called a racist or a xenophobe anymore, those terms having lost all impact and almost all meaning, and in fact whole political movements have sprung up around pride in such sentiments.

The similarities between Nigel Farage's Brexit movement and Donald Trump's isolationist-autarky movement are clear but superficial or even ahistorical. Nevertheless, supporters of both would have benefited from an economics and history education that instilled an appreciation of the superiority of liberal Enlightenment thought, including the suspicion of authority, the right of everyone to live free of political (and religious) control, the equal moral standing of all individuals, the importance of a vibrant and robust civil society apart from the political apparatus, and, yes, the absolute moral and material superiority of free, unfettered markets compared to mercantilist (and especially more communist/socialist) ones.

Instead, the political economy that dominates and permeates our world is one of factions vying for control of the police power of government to actively shape the world according to their respective visions. In the mainstream, the central political debate is not about whether a government does or should have a certain power, it is about whether the government should go in one direction or a slightly different direction with its (assumed) power. It is about whether one side will get to wield the power over the other, or vice versa. It is, in the UK's case, about whether regulatory and spending decisions should be made by politicians and bureaucrats in another country or politicians and bureaucrats in their own capital.

In this sense, Brexit was a political decision, one about sovereignty, and one that I think most people outside the EU can't relate to very well.

I oppose the regulatory state and even the very idea that economic decisions should be subject to political approval, but I have to give credit where credit is due. Within their worldview of the necessity of nation-states and even supranational bodies, the pro-EU, pro-globalization elites have proven the case for free movement of goods and people, as former communist states and the Third World have flourished (historically speaking) and the global extreme-poverty rate has dropped below 10% for the first time. If libertarians and other people who support laissez-faire economics on principle can win over enough minds across the world, then maybe the UK, the EU, and other people who live and trade under various economic regimes will reap the full benefits of truly free trade.

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