June 20, 2016

By: Bobby Casey, Managing Director GWP

So Iceland bailed on the EU bid… Britain is soon going to have a referendum to leave the EU… and now Switzerland is withdrawing her bid for membership.

I said it about Britain and I’ll say it about any other country walking away from the EU: good for you! The less centralized the better! Switzerland would’ve been a huge boon for the EU, but alas, they will not get the one member that stood to bring deep pockets to the table.

And who could blame them? As one of the richest countries in the world, with a GDP per capita of $80,675 USD in 2015 per the International Monetary Fund, they stand more to lose than gain by joining at this point. Britain’s GDP was nearly half as much at $43,771 in the same year.

If it wasn’t evident before, it is undeniable now that the EU is a losing proposition; and for the most part a dying proposition. The popularity of the EU, especially when it comes to its current powers and trajectory, is waning.

I found this article presenting 9 pros and cons of Britain leaving or staying with the EU. They aren’t all unique to Britain, and the same benefits and short-falls could apply to other member or would-be member countries. Admittedly, I have to ask if the countries’ own policies aren’t really what’s standing in their way?

1. Immigration: on the one hand you have individuals from member states able to move about freely from country to country… which is a good thing! But free movements from one geography to another is a matter of each countries’ policies. Britain doesn’t need the EU to have an open border policy, and the EU certainly isn’t conducive to closed border policies. While I’m all for open borders, EU membership isn’t requisite for this.
2. Crime: Member countries have a shared European Arrest Warrant. It means that British citizens can be held to account in other countries’ courts of law where the penalties for crimes might be harsher or more lax than in Britain. Likewise, if a crime is committed in Britain, those member country individuals are subject to British laws and penal codes.So if someone murders someone in Britain, they can flee to their home country and never be brought to justice. If they aren’t a member, couldn’t you still have an agreement with any country to extradite violent criminals back to the country where the crime was committed so that country might exact its justice in accordance with its laws? Do you need an EU for this agreement? We have Hague Convention Treaty Partners. Couldn’t they just get on board with something like that?Understand that remaining member countries suffer the same concern that if Britain were to leave, then British offenders would flee back to their home country without justice being served. So it would seem to be in the best interests of all countries to have some agreement that provides for violent criminals.
3. Trade: Why would a centralized power or government be necessary for trade? We already have various means of exchange. The only obstacle is what? Imaginary lines and protectionist policies? “Was the euro needed for countries to trade? No, it wasn’t. The UK, Poland and Sweden are happily trading without being a member. Was it needed to force a crisis which could then be abused to centralize power and organize transfers? Yes it was.” (Source: Zerohedge)A trade agreement need not come with a central government, singular currency, monetary policy, and a bailout program. I manage to do business all the time with NONE of these contingencies in place. I enter contracts that oblige neither party to do anything other than give me X goods/services for Y price. And so do you! This isn’t some obscure thing.
4. Laws: The idea that there would be a larger government legislating down to member countries, is nothing to be excited about. I think the United States is a fine example of the failures of sweeping federal policies superseding those at the state level as well as the mission creep of trampling states’ rights.Lest we forget that the United States once was supposed to be much like the EU: a federation of nation-states that were sovereign except for uniting causes like defense and the facilitation of interstate trade. Now we have federal policies ranging from education, marriage, highway safety, substances, and healthcare – to name just a few – micromanaging our daily lives.Perhaps right now there are only a few EU laws that affect member countries. If you think it won’t grow, think again. If England, or any country for that matter, needs those laws, it’ll create and adopt them.
5. Jobs: So what becomes of the jobs in member countries like Britain that are linked to the EU? That is a concern for those wishing to remain a member, but should it be a deciding factor? An estimated 3 million British jobs are tied to the EU right now. My first question is: are they necessary? If they are, then ostensibly their job will remain, albeit maybe under different management. If they aren’t, then they need to make themselves useful because encumbering an entire nation so that a few can cling to nonessential jobs is a non-starter.What happens when any company dissolves? Well, when GM went bankrupt, several people who had jobs tied to their previous standing lost their jobs. Everything got restructured. If you were a member of their marketing team and were laid off, you could still go do that for someone else as it is an essential trade or skill.
6. Clout: Britain losing some of its global “street cred” is apparently an issue. Britain losing street cred is a bed of its own making, and no amount of EU is going to dilute that fact. Britain truly needs to get its affairs in order rather than relying on the EU as the rosy lenses to mask its shortcomings. Their myriad of scandals and misappropriations of resources is their problem to solve, and if a Brexit means they will contend with it sooner rather than later, then all the better.This same line was put to Switzerland, and they are obviously fine. It’s an idle threat to maintain dependency. Plenty of countries stand on their own and build their own reputations without being EU member states. Look at the Scandinavian countries. They do fine. Hong Kong has no natural resources of its own and manages to be a thriving economy. Trust me when I say, if England really wanted to make a go of being an independent country again, it most certainly can. Its government simply needs to get out of its own way.
7. Finance: There is a worry about capital flight if Britain leaves the EU. One of the marketable things about England is its connection to the EU. No question, the network is awesome. It’s time to get creative on how they can compete to keep the businesses they have in Britain. Time to talk to these corporations and say, “What can Britain do to keep you here?” That’s what California did with Google and Apple. That’s what Oregon continues to do with Nike. That’s what Washington does with Boeing.If this is truly an issue, then how can we explain Switzerland who never joined in the first place but still manages to be economically strong? I think it is overstating things to say that EU membership can make or break the financial industry of Britain. Perhaps it could be said of less stable countries like Greece, but certainly not yet of Britain.
8. Sovereignty: This is an important issue for countries, but even more so for individuals. Without it, a person or country is not free, but either beholden or indentured to another person or country. Taking things on a case by case basis means that terms are not assumed, but rather they are agreed upon by the parties involved. If it makes sense to cooperate or contract with other countries, then they will. But allowing for sovereignty allows for voluntary interaction and ultimately more peaceful relations with other countries. The pro-EU argument largely rests upon this “greater good” idea. England, Switzerland, and Iceland understand that the interests of the greater good do not necessarily amount to the best interests of their own countries. If an entity is working for a majority, who’s to say you aren’t the minority in any given scenario?  It’s ridiculous to treat these things as an all or nothing thing. It’s like a friend saying either they must be involved in every aspect of your life, or they will deny you even exist. What kind of nonsense is that? Anyone who truly desires peaceful relations would say, “If you need anything let me know, and I’ll see what we can do.” If my neighbors can extend that without further conditions, certainly neighboring countries can do the same!
9. Defense: This is one of the biggest objections when I suggest that the United States should become 50 separate countries. “What about national defense?!” What about it? Again, like trade or extradition, if it makes sense to cooperate, then we can. But we don’t need an overriding central government in order to do this. The same is true for the EU. As it stands there is no EU army. That’s not to say there won’t be.Imagine for a second if each state in the US had its own military. Then at the state level, we could decide whether to participate in any given war. Would there be as much war? Maybe not? But being able to control something as large as defense at a state level would be far better than at the national level where it has blown up our national debt like a small town in Iraq.

Ultimately, this comes down to the pitfalls of centralization. Britain and other countries are learning that it might not be worth the trade-offs. The economic tumult of Cyprus, Greece, and even Spain, Portugal, and Ireland along with the EU response to them was terrible. The shaky conditions of France and Italy aren’t exactly instilling confidence either.

Moreover, it looks like the pro-EU position relies on a certain amount of insecurity and complacency from its members.  These countries have to believe they cannot be okay on their own, and that it would be easier to pool their resources and bail one another out than to have to stand on their own.

Unless the EU can prove to be a tide that raises ALL ships to a better place and not just some, it will eventually fail. Unless the EU stops indenturing responsible, solvent countries to irresponsible, insolvent countries, it will fail on its own long before other members have a chance to leave. There are two forces at play here: the one that wants to centralize and grow, and the one that wants to remain fragmented and free. The struggles of the EU are the adolescent stages of what the US has matured into.

If you think it’s bad for countries and states, imagine how insignificant the individual becomes. A very scary prospect indeed.

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