There is no tick box for the status quo

First up, we have to understand the choice. The two campaigns have chosen their angle of attacks: vote remain is focused on economics and the monetary cost of leaving, vote leave seems to be focused on the issue of sovereignty.

One thing the campaigns don’t focus on much is the effects of choosing to stay. An ‘in’ vote is described as a vote for the status quo. But I don’t believe that: the status quo is unsustainable. Both in and out are votes for change, and the question is only which change would be better.

The status quo is unsustainable because in the past six months the direction of the EU has become increasingly clear (at least to me). To many of the EU’s biggest supporters, the union is a utopian project that is striving for the creation of a United States of Europe. They see the EU as the primary cause of peace on the continent, and believe quite genuinely that the alternative to the EU is World War 3. A good example of this worldview is the President of the EU Commission, Jean-Claude Junker (source):

Eurosceptics should visit a military cemetery, Jean-Claude Juncker said yesterday, as he warned that the “enormous stupidity” of two world wars could return to Europe.

“Europe gains whenever we point out that Europe is a major project for peace. Whoever does not believe in Europe, who doubts Europe, whoever despairs of Europe, should visit the military cemeteries in Europe.”

Juncker conflates Europe with the EU here, but his meaning is clear.

As you can imagine, people who believe Brussels is preventing armageddon also tend to believe the EU project must proceed at any cost. Here’s Junker again in 2005, talking about about the French referendum on one of the EU treaties:

“If it’s a Yes, we will say ‘on we go’, and if it’s a No we will say ‘we continue’.”

Rejection in a vote? A minor detail that will not derail the vision.

And in case it wasn’t crystal clear yet, here’s another:

“There can be no democratic choice against the European treaties”

This guy is a bottomless source of outrageous quotes, but that’s enough to illustrate the point. David Cameron also believes this and began his 2013 “Bloomberg speech” on the EU by talking about World War 2 and the Berlin wall.

To the people building the EU, anything that slows down the creation of the United States of Europe is bad because it risks war, and anything which speeds it up is good. They seem to honestly believe this with a quasi-religious ideological commitment.

Only a minority of Brits have ever agreed with this idea and as a result, the UK has generally spent its time in the EU resisting the trend towards the creation of a federal superstate, and when it wasn’t able to avoid new transfers of power to Brussels (the capital of this new country) … it tries to secure opt outs. Which it has sometimes succeeded in doing, sometimes not.

I don’t think the UK could continue like this in the event of a vote to remain. The EU would take it as a strong signal that resistance to their plans in the UK had been definitively crushed, and would no longer allow the UK to opt out of any new integrations. The future of the UK would be one of ever more transfers of power to Brussels until it ended up with a national Parliament that was little more than a tourist attraction. After all, what are the Brits gonna do if forced to do something they don’t like? Leave?

And that is what a vote for “in” stands for: not the status quo, but an acceleration of current trends.

What would a United States of Europe be like?

What’s the big deal with unifying Europe under one government anyway?

The argument against federalism goes like this. In government, bigger is not always better. How well would the USE work? We can look at the USA to find out. In recent years there has been a clear trend towards the USA becoming more and more politically dysfunctional:

• Congress has an approval rating lower than cockroaches (source)
• The cost of mounting a presidential campaign is now several billion dollars (source). That figure excludes spending in the primaries.
• There’s a widespread perception that politicians are corrupted by lobbying. Donald Trump partly owes his popularity to the belief that because he was already very rich he doesn’t have to depend on wealthy donors, and is therefore incorruptible.
• It was previously assumed the debt of the US Government was the safest debt on earth because an economy as successful as the USA would never default. But constant showdowns over the debt ceiling now raise the real possibility that it could happen.
• This is all symptomatic of a bigger problem: the American people have split into camps that strongly disagree on many things, and yet they’re welded into a powerful federalist union. The result is political deadlock leading to the least productive Congressional sessions in history (source). A spirit of compromise has given way to a tribal “win at any cost” mentality.

What is causing this trend?

About 10 years ago I was walking through a park in California with an ex-colleague of mine. He was my first encounter with an American libertarian of the Ron Paul variety, and his political views seemed very alien to me. I asked him why he felt so down about the direction America was heading in, and I’ve never forgotten his answer: “The problem with America is that it’s just too big”.

He thought one government attempting to rule 350 million people wasn’t working well. People’s views and needs differ, often across geographies, and his opinion was that a state was about the right size but the USA itself was not. He longed for a return to the style of government America had used in the 1800's.

The idea that a country could be the wrong size had never occurred to me before, but I found it hard to argue with him. Why was bigger better? Less duplication of bureaucracy? Sure. But you don’t need a single government to fix that: international treaties often reduce paperwork without one. More power on the world stage? My friend didn’t care about that: governments exist to serve their own people, not others.

And what of the downsides? The huge costs of running a political campaign across a thing as enormous as America speak for themselves. There are 435 representatives in Congress for 350 million people, meaning most Americans will never get a chance to meet or talk to their representative at all. And the US forces together very different economies: keeping Wyoming in the same economic union as California requires massive transfer payments (source). Transfer payments are unpopular which is why they’re often disguised as something else: the way American military contractors carefully arrange their factories to cover as many congressional districts as possible is legendary (source). Congress then forces the military to buy weapons it doesn’t need or want, thus redistributing income from richer states to poorer states. This kind of gaming of the system feeds the reputation for corruption.

The correlation between dysfunctional politics and size isn’t something that can be proven conclusively because we don’t have a copy of the USA which never federalised. But we can prove that America centralised a lot over the course of the 20th century. Here is a graph of Federal expenditure since 1790 in millions of inflation adjusted dollars (source):

Up until World War 2, the Federal government was small and not growing all that fast. In fact there was not even a permanent income tax until 1913. Using spending as a proxy, since WW2 the size of the Federal government has increased exponentially.

America works — just about — because the people there consider themselves Americans first and Texans, Californians etc second. They all speak the same language and their culture emphasises their American identity much more than their regional identities.

And perhaps the most important difference — in America, secession from the union is not allowed and attempts to do it trigger civil war. The EU does not have these advantages.

But is it sustainable? The growth in power and size of the federal government has been accompanied by a steady decrease in American’s faith in democracy (source, Pew Research, see left).

This is a deeply disturbing trend. The graph doesn’t show it, but the decline in American’s trust in each other is a long term phenomenon. Since 1964 there has been a more than 20 percentage point drop (source).

Put simply, as Americans have delegated ever more power to Washington their confidence that their system actually works has steadily fallen. These data sets are not proof of anything by themselves, but they are suggestive. We should think twice before implementing the same policies in Europe.

British influence in the EU is non-existent

The UK voted in 1975 to join the precursor to the EU because it wanted free trade, and it has fought against the conversion to a super-state ever since.

This resistance has come with a price. The UK is perceived in the EU not as a friendly partner who just doesn’t share the goals of other countries right now, but as a troublemaker. Allowing the UK to opt-out of projects is seen as an extravagant sacrifice made unwillingly and at great cost. New members to the EU are certainly not allowed any flexibility: the EU is supposed to be take-it-or-leave-it. The notion of a “multi-speed Europe” or a “Europe á la carte” (i.e. pick which bits you like from the menu) is seen as a disgusting and dangerous perversion of the European dream; a dream which is at heart driven by emotion not logic.

In case you doubt this, here are some quotes from major European newspapers on David Cameron’s pre-referendum negotiation:

“From the start it was all about finding formulations that would allow Cameron to score points at home but didn’t really change the European status quo,” — Frankfurter Allgemeine Zeitung

Centre-left daily Le Monde … worried that this victory “amplified the movement towards Europe à la carte” and puts added pressure on a Europe already under strain from the migrant crisis. “The divisions and lack of solidarity in Europe has never seemed so deep,” it said.

Leftwing daily Liberation said that concessions made to satisfy the latest bout of “British hysteria” risked a “dangerous spiral” for Europe. “What will stop Poland or Hungary organising their own referendum?” it wrote.

The EU deal met a frosty reception in the Spanish press, with an editorial in the Sunday edition of El País declaring that the EU had “paid a high and unjustifiable price to secure the continued membership of a wayward partner”.

The more conservative El Mundo daily echoed that sentiment on Sunday, saying European leaders had been forced to produce a “tailor-made suit” for the British prime minister. Mr Cameron, it said, had put the other EU leaders “on the spot to save his own political skin” and behaved “like a true pyromaniac”. Still, the decision to accommodate London had been the right one. “The pact represents a clear slowdown in the progress of the union,” El Mundo said in its editorial. “But Brexit would have been even more lethal to the EU.”

Note the fear of referendums. And European leaders (source) …

German Chancellor Angela Merkel said: “I don’t think we gave the UK too much,” but she was clearly stung by David Cameron’s staunch opposition to EU “ever-closer union”. “Ever-closer union is an emotional question. We want integration to progress, and it’s not easy when someone says something quite different,” she said.

Czech Europe Minister Tomas Prouza told the BBC he understood how crucial it was for the UK to get this deal, and get it now. But he criticised what he called Mr Cameron’s “non-negotiation approach”. “We heard the same message again and again,” he complained, saying Mr Cameron “was refusing to bend — he was tougher than we expected”. Mr Prouza added: “Everybody else was trying to find a compromise.”

French President Francois Hollande cast himself in this “drama” as one of the bearers of the flame of European unity and integration. After the deal was done, he insisted that Europe was still a “joint project” and meant much more than “just a budget”. He was satisfied that the text underlined the “level playing field” in the area of financial regulation — so no special favours for the City of London, vis-a-vis the eurozone. But he pointedly reminded everyone that “you can’t have an a la carte Europe” if you’re in the EU.

Italy’s Prime Minister Matteo Renzi echoed that message. He called it a good deal with the UK, but said “Europe was a great dream — we need to build a Europe for the future”.

This viewpoint isn’t exclusive to politicians and newspaper editors. It is a common opinion throughout the EU population. The Germans even have a word for it: they say the UK demands “extrawurst” (more sausage). I have German friends who hold this view: why do the Brits constantly demand special favours, they ask? When Brexit came up recently in a debate with an Italian, she said the Brits were throwing a tantrum like little kids.

This German “comedy” sums up that point of view:

Cameron: I think it’s right for Britain to cherry pick the best things from the EU

(audience laughter)

Presenter: Yeah, that is the exact opposite of the European idea. England, what can we think of this island? Man! For centuries these guys pick the best parts. They pay lower fees, they are allowed to have real money instead of Euros ….

This viewpoint poses a massive problem for the UK no matter whether we stay or go. It is a fundamental and unresolvable disagreement. To the British, the UK is not demanding “special favours” as it really doesn’t care if other countries also manage to negotiate opt-outs (in fact the UK is in favour of that, as the perception of being special doesn’t help). The thing making the UK special is not the UK, it’s the other countries insistence that the “contagion” of flexibility doesn’t spread. Put another way, the British simply don’t think every idea for integration the EU dreams up is actually good. But to others in Europe, the UK is pissing all over a beautiful vision of a united and happy utopia, by refusing to make the necessary sacrifices.

And they are sacrifices. We can see that when the comedian says “allowed to have real money instead of Euros”. Germans in particular are not of the belief that bigger government is always better, but rather, that giving up local government is a necessary evil in order to ensure a united and peaceful Europe. Too often they feel they must make these sacrifices to atone for their Nazi past, no matter how unpleasant.