February 16, 2006


Single market as far away as ever (David Rennie, 17/02/2006, Daily Telegraph)

If this was such a blow for free markets, why, exactly, was the Tory in charge of shepherding the directive through the parliament, Malcolm Harbour MEP, being given manly hugs by Martin Schultz, head of the Socialist group in the European Parliament, and Robert Goebbels, a Lefty from Luxembourg? Mr Harbour contrived to look pleased, arguing that it did not matter at all that the heart of the directive - "the country of origin" principle - had been cut out at the demand of colleagues from Germany, Belgium, Austria and France. The principle was still "implicit" in the text, Mr Harbour insisted.

Now Mr Harbour is a decent sort, and committed to a free single market. But after a while in Brussels, my rule of thumb is that, if a piece of market-opening legislation is cheered by French MEPs and earns you bear-hugs from German socialists, something has gone badly wrong.

In one of those little ironies that history likes to throw up, on this very day, 20 years ago, Margaret Thatcher signed the Single European Act (SEA), signing away thick slices of British sovereignty in the name of creating a true "internal market" for Europe.

The loss of various British veto rights, Mrs Thatcher was persuaded at the time, was justified by the great cause of a single market, defined in the SEA as "an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured". Those freedoms had been a long time coming - the "four freedoms" of goods, people, services and capital can be found in the Treaty of Rome, in 1957.

Fast-forward 20 years, to poor Mr Harbour in his Socialist bear-hug. Everyone in Brussels knew the service directive was doomed to be watered down since the moment last year that Jacques Chirac called for it to be scrapped and "started from scratch".

Just in case MEPs forgot the hostility to any hint of free market reforms, they were visited this week in Strasbourg by 30,000 trade unionists from France, Germany, Belgium and the other usual suspects, baying about "economic liberalism", "Anglo-Saxon" dog-eat-dog capitalism, and the rest.

Small surprise that free marketers in the parliament were sunk in gloom this week. I found Chris Heaton-Harris, a Tory MEP, in mourning for the "good and liberalising" Bolkestein directive that left the internal market committee on which he sits, many months ago, before having its heart ripped out at the orders of Paris and Berlin.

In this current toxic climate, I would argue, it would be impossible to launch the single market from scratch as a project. It would trigger too much rage from French voters, and put too much pressure on Angela Merkel's "grand coalition" government in Germany.

Mr Heaton-Harris told the parliament the 30,000 protesters were doing themselves a disservice by fighting reforms - not to mention a disservice to the EU's 20 million unemployed. He was booed for his pains by MEPs, with the exception of new members from east and central Europe, whose constituents are itching to try their luck in the single market.

That is, as soon as they are allowed to work in it. Alex Stubb, a centre-Right Finnish MEP, reflected gloomily on the current state of the "four freedoms". It is not just the freedom of services, he said. The free movement of capital is being challenged by Polish and Italian authorities, moving to shield local banks from competition. The freedom to move goods has not stopped Paris unveiling a policy of "economic patriotism", blocking foreign ownership of strategic firms.

The free movement of people is a hollow boast, thanks to laws that keep EU citizens from Poland and other eastern and central new members from working freely in most of "Old Europe".

"We're fighting tooth and nail to keep the four freedoms alive," said Mr Stubb. The idea that Europe must defend its welfare states from capitalism is a dangerous fallacy that is gaining ground, he argued. "Populists from Left and Right are trying to argue that the single market leads to insecurity. But without the four freedoms, without the internal market, I defy any member state to find enough growth to fund their welfare states."

But the beauty of secularism is that you live only for yourself. The folks around now figure they'll get their welfare and they don't give a fig what happens when they're gone.

Posted by Orrin Judd at February 16, 2006 11:38 PM

A unified Europe would have 450 million people, 50% larger than the US, their GDP would also be larger than ours. A growing China is throwing its weight around, follow closely by India. Both China and India are getting less socialist (relative to their recent history), and are gaining on us. We need a Europe sleeping soundly in their welfare state ...

Posted by: ic at February 17, 2006 2:05 AM

The folks around now figure they'll get their welfare...

Only if they die within the next fifteen years.
After that, all bets are off.


Yes, a GDP larger than America's, but as has been pointed out in this forum, per-capita much lower - 50% more people, after all...
And the Eurozone economy is barely growing. They're ecstatic if they get 1.5% a year.

"China is gaining on us" - yes, their economy is growing much faster, but from a MUCH smaller base.
Besides, what happens if they get up to a Euro-level of prosperity ?

They stop undercutting America on labor costs, and provide a huge market for American goods and services.
All in all, a benefit for the U.S.

Posted by: Noam Chomsky at February 17, 2006 7:03 AM


Their population would be briefly larger, their GDP would be lower soon, if not already.

America is the only thriving capitalist democracy with over 100 million people. There's no chance Europe, China and India will duplicate that success without serious fundamental Reform of their cultures.

Posted by: oj at February 17, 2006 7:24 AM

oj. Awesome, dude!

Posted by: erp at February 17, 2006 10:16 AM