The Myth of EU-induced Overregulation
The EU-induced overregulation claim has little evidence for it, why do many libertarians want to believe it?
As some commentators aptly noted, given that Brexit poses a serious risk to the maintenance of free trade between the UK and its largest trading partner and the free movement for a large number of people between the two, without any guaranteed major gains on these issues elsewhere, the default libertarian position should be ‘Remain’. Why, then, do many if not most, libertarians appear to favour ‘Leave’?
These libertarians largely seem to believe that the EU causes a lot more government intervention in the domains beyond foreign trade and immigration than would have been present without the EU. Unfortunately, the only evidence that they provide involves anecdata on singular bizarre regulations (like the one on the curvature of bananas) whose significance in the big picture is pretty dubious.
It is of course difficult to prove anything about counterfactual scenarios in social contexts, because we are not in a position to arrange true controlled experiments. However, recognizing a key feature of the EU legislation provides us with the best (if still flawed) possibility to theorize about a situation where there had never been a EU.
Most EU legislation does not impose final rules. Instead, it establishes minimum standards below which national legislators are not allowed to go. The implication of this is that if the EU had been imposing minimum requirements that were considered excessively interventionist in at least some member states (whether by the majority of the population, or by powerful interest groups that could sway the legislative process), the national rules adopted in accordance with the minimum standards would have tended to stay at or close to the minimum level.
Here, I will deal with two major areas of harmonisation in the EU’s purview: the standard value-added tax rate and labor regulations. I hope that the significance of these issues is straightforward enough for me not to spend ink explaining it.
The EU has set the minimum standard VAT rate at 15%. Astonishingly, none of the EU countries has stuck to the minimum, and only one has the standard rate at 17%. In the majority of countries, it is at or above 22%, and the maximum rate is 27%. Even the UK law sets it at 20%.
As for labor regulations, for the sake of brevity, let us consider only the EU and UK law. This will suffice for our purpose because the UK is one of the most liberal EU countries in terms of labor regulations (as indicated by a relatively high 71.8 labor freedom index by the Heritage Foundation). There is one major area in which the UK has stuck to the minimum standard established by the EU, namely, the maximum work week duration (48 hours on average for 17 weeks). However, in at least three other important respects, UK law is a lot more demanding than the EU law. The latter requires a minimum paid holiday of 4 weeks while the former sets it at 5.6 weeks. The EU-set minimum paid maternity leave is 14 weeks and there is no minimum pay, whereas the UK law demands 52 weeks, with 90%-of-the-salary minimum pay in the first 6 weeks and £140 per week for the remainder. Finally, the EU is not even entitled to set the minimum wage, but this has not prevented the UK from establishing a whopping £7.20-per-hour one (at the behest of the ruling Conservative government no less).
In light of the actual evidence from two clearly significant intervention domains, EU member states, thus, seem to tend to go well beyond the EU-imposed minimum standards without any pressure from the EU to do so. This flatly contradicts the widespread belief among libertarians that the EU renders its member states far more interventionist. If anything, the most plausible hypothesis is that the EU merely reflects the broad consensus among them on the minimum level of interventionism. Why then do so many libertarians stubbornly believe otherwise?
I suspect that most are understandably seduced by the simplicity of the institutional solution to promoting liberty. If it is true that the EU strongly amplifies interventionism by its member states, then it suddenly becomes much easier to achieve much more liberty in our lifetime. We need just to remove the supposed centralized bureaucratic monstrosity, disempower the unpleasant, unaccountable guys like Jean-Claude Juncker and give national polities leeway to redress the wrongs. It is a pipe dream, but its attractiveness is understandable.
Picture: Creative Commons Michael Sauers
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