Back when I was doing research on the Great Depression, I read the New York Times from 1929 to 1938 (on microfilm.) Occasionally, I came across articles discussing the possibility of creating a United States of Europe. The Economist has a fascinating article about Richard Coudenhove-Kalergi, who was the most prominent interwar figure pushing for the creation of the EU:
Few Europeans remember Richard Coudenhove-Kalergi. But as Martyn Bond argues in a new biography, he deserves as much credit as anyone for creating the eu. In 1923 he wrote a bestselling book, “Pan-Europa”, advocating a United States of Europe. He launched a movement, the Paneuropean Union, which soon had thousands of members, including Albert Einstein and Thomas Mann. Adolf Hitler referred to him as “that cosmopolitan bastard”. He was probably the model for Victor Laszlo, the activist fleeing the Nazis in “Casablanca”. He counselled Winston Churchill and Charles de Gaulle on creating a European federation, and proposed Beethoven’s “Ode to Joy” as its anthem.
Yet today his name is best known on the paranoid right. Over the past decade and a half, xenophobic nationalist groups all across Europe have put him at the centre of their conspiracy theories. Seizing on predictions he made of rising migration and intermarriage, they have imagined a secret “Kalergi plan” comprising the EU’s real mission: to destroy European nations through miscegenation.
The problem with the European dream is that not everyone dreams of the same sort of Europe. In 2016, British voters opted to leave the EU, the first country to do so. On the other hand, the logic of European integration is still quite strong, as seen by the fact that very little has actually changed in Britain. Here’s the Financial Times:
Lamenting the “current direction of travel”, Frost complained that Boris Johnson is resiling from the dream of “a lightly regulated, low-tax, entrepreneurial economy, at the cutting edge of modern science and economic change”.
Other economic liberals voice similar concerns. Iain Duncan Smith, former Tory leader and co-author of a report for Downing Street on potential post-Brexit reforms, wrote recently: “We have yet to see the Government seize this opportunity” of moving from the “EU’s deeply risk-averse precautionary principle to . . a proportionality principle”.
With personal and corporate tax rises just introduced, ministers pledging not to scale back employment rights and an increasing role for the state, the buccaneering post-Brexit vision of a low-tax, low-regulation UK seems more remote than ever. So long Singapore-on-Thames, hello Sweden.
The Trump administration took the Brexit side of the debate, but one can argue that the US is the most important force pushing the world toward this sort of globalist structure. The US has been in the forefront of the move to unify taxes and regulations across borders. Consider the following:
1. Under the Trump administration, countries were punished for not adhering to US policies on everything from banking rules to economic sanctions. Through our control of the SWIFT payment system, we were able to bend smaller countries to our will.
2. The Biden administration has successfully pushed through a global rule to prevent “excessive” corporate tax competition.
3. Several administrations have been in the forefront of demanding that international trade pacts go beyond reducing tariffs, and require unification of all sorts of rules and regulations affecting consumers, labor, and the environment.
In this sort of world, the British have little hope of developing their own distinctive style of regulation. And where they do have a bit of freedom, domestic interest groups often oppose any sort of change:
The clearest changes so far are new immigration and agricultural subsidy regimes, neither very light touch. The state aid and takeover regulations seem more designed to facilitate governmental intervention than prevent it. In some sectors, wage inflation is practically an official policy. The new chemical safety regime offers more domestic bureaucracy for multinationals that need also to comply with EU regulation. Ministers are keen to break free of EU data laws but are rightly nervous of straying too far lest the UK lose its European data adequacy certification. In almost every trade-off, valuable market access was surrendered for a sovereignty that is being little used.
On the size of the state, Tories are in an uphill struggle. MPs may fret about tax levels but neither they nor their voters evince much appetite for a return to austerity.
The US increasingly dominates the global scene. English is becoming the de facto global language. American popular culture dominates almost everywhere. Our identity politics (both left and right wing versions) are increasingly influential throughout the world. Science is dominated by US universities. In a few decades, the entire Brexit debate will seem quaint, as smaller countries are crushed between hegemonic blocs such as the US, the EU and China.
A global free trade zone made up of independent states was a beautiful dream. Global unification of taxes and regulations is becoming a dystopian nightmare. For better and for worse, Richard Coudenhove-Kalergi’s vision is on the way to being achieved.
PS. Russia’s recent bullying of Ukraine is pushing Sweden and Finland closer to joining NATO. China’s bullying of Lithuania makes the EU seem more attractive to Lithuanians. For small countries, there is safety in numbers.
READER COMMENTS
Jose Pablo
Jan 11 2022 at 3:48pm
“Richard Coudenhove-Kalergi’s vision is on the way to being achieved.”
Where do you see that? I mean, the UK is closer to be broken apart that to re-integrate into the “United States of Europe”. There is a powerful separatis movement in Scotland that was narrowly defeated in 2014 and they will very likely vote again on this issue in the future.
Same thing in Spain where there is a strong separatist movement in Catalonia that almost broke with Spain few years ago with the support of, at least, 50% of the population (the ex-President of the regional government at the time is still a fugitive in other European Country). The Basque Country wait and see how things develop in Catalonia.
To say that Belgium is ONE country requires a significant stretch of the concept. A conflict that results in it breaking apart in 3 different countries is always “an issue for discussion away”.
Although less formalized and developed, there is an strong “sentiment” in the North of Italy against being part of the same nation than the South.
I think that there are reasons to believe that a “Europe with more independent countries” is closer in the future than the “United States of Europe”.
Actually, maybe paradigmatically (or not), the very existence of the European Union and NATO encourages this trend.
Scott Sumner
Jan 11 2022 at 4:37pm
It seems like every year there are more and more regulations that European countries must adhere to in order to have access to the single market. Even non-EU member like Norway and Switzerland must adhere to those regulations.
Obviously, we don’t have a United States of Europe today, but things are edging in that direction.
Gene
Jan 12 2022 at 10:12am
IIRC, the “powerful separatist movement” in Scotland is led by people who want to figure out how an independent Scotland can REJOIN the EU.
Jose Pablo
Jan 13 2022 at 2:37pm
Every independentist movement in Europe wants to be part of the EU. After all, the EU is a wonderful “Federal Government” when you want to get independent from your former “oppressive” state: you will collect your own taxes, speak your own language, have a greater autonomy and, at the same time, will benefit from a common market and a strong currency (which, by the way, provides a wonderful scapegoat for you inaction when the economy goes south).
It is even better than the US Federal Government envisioned in the Articles of Confederation, since the EU has not the power to regulate foreign affairs, to declare war or even a military and has also a very limited capacity to borrow money (none without the backing of the sovereign states, which are the ones collecting taxes).
Very likely Scott is right when he envisions a growing body of common regulations (but this is true not only for the EU but for the world as a whole). But, at the same time, I think it is far more likely in the future to have more, no less, formally independent countries in Europe.
Anyone wants to bet?
Mark Brady
Jan 11 2022 at 5:26pm
Richard Coudenhove-Kalergi’s original dream of a United Europe in Pan-Europa (1923) excluded the UK, which would be part of the British Commonwealth, another of the five world-states into which he envisaged that the entire world would be divided.
Scott Sumner
Jan 11 2022 at 10:42pm
Prophetic.
Phil H
Jan 11 2022 at 8:41pm
“Global unification of taxes and regulations is becoming a dystopian nightmare. For better and for worse, Richard Coudenhove-Kalergi’s vision is on the way to being achieved.”
I can’t see why it’s worse. Look at it this way: the world’s largest economy is also its most dynamic. I don’t think this is a tautology, at least not in your argument. You seem to suggest that if these economic blocs become too large, that will be bad because… well, you don’t say in this piece.
Within any large bloc (state or customs union or trade group) there is still ample room for political churn (Brexit!) and changes in policy and innovation. I don’t see any reason to think that large blocs (large countries) are any worse for their people than small blocs/small countries. Is it just the sheer weight of extra layers of bureaucracy that you’re worried about?
Scott Sumner
Jan 11 2022 at 10:45pm
It seems to me that most of the regulations that the EU is imposing on its members are counterproductive. Consider the recent move toward mandating minimum wage laws.
Mark Z
Jan 12 2022 at 3:42pm
There would be less competition between states. The reasons some people fret over a few firms dominating a market apply even more so with few states (or unions of states) dominating politics, since states are already less competitive for citizens than firms are for customers.
Phil H
Jan 12 2022 at 9:31pm
Conceptually, that makes sense, but in practical terms, do states actually compete in that way? Traditional competition between states was war. It’s not obvious to me that much “competition” happens in terms of states trying to make life better for their people. On the contrary, life seems to get better for people when states *collaborate*. First, that means they’re not fighting wars any more. Second, markets get bigger. And joining blocs is a high-level form of collaboration.
Mark Z
Jan 13 2022 at 4:11am
States don’t just compete in war, they also compete with each other in taxation, regulation, the provision of services, etc. Right now, this competition may mostly be for businesses and tourists, but many states also have to worry about losing their best citizens to better countries, which can constrain how bad their domestic policies can be.
Supernational institutions, like the EU, that impose a set of regulations or minimum tax levels, can function like cartels for nation-states that prevent members from offering a better (and/or cheaper) ‘bundle of services’ to appeal to prospective citizens or businesses.
Jose Pablo
Jan 13 2022 at 9:15am
“Voting with your feet” is not easy at all.
There are a lot of barriers to moving yourself out of your own country. Even to the “best citizens”.
If you want to put it in “business terms”: governments are protected by a pretty deep moat surrounding them.
The EU reduces the size of this moat (that’s for sure the best feature of the “club”), apparently too much for the comfort of the Britihs laymen, but it is still pretty deep even there.
Mark Z
Jan 13 2022 at 3:26pm
To the extent that voting with your feet becomes easier over time (which I think it will as linguistic and cultural barriers to international migration erode), supernational institutions like the EU can make voting with your feet futile. If, say, the EU succeeds in lobbying for a global minimum tax, then there’s nowhere you can go to escape high taxes.
Nick O'Connor
Jan 12 2022 at 5:19am
Are smaller countries in a worse position now than they used to be? Fifty years ago they were required to choose between being an ally of the US and an ally of the USSR, with frequent military interventions by the two superpowers to extend their area of influence. A hundred years ago smaller countries were nearly all part of the empires of the great powers. By comparison, the current pressure to sign up to regulation is benign. The trend is towards less oppression of small countries by large ones, not the other way around.
The UK is in a worse position than it used to be – because economically it’s a smaller country, relatively, than it used to be, and so is more vulnerable to control by others. Though the same is true of the EU. As a percentage of the global economy, and even more so as a percentage of global growth, both are doing very badly. The EU’s regulatory order is a very bad thing for the size and growth of European economies, and while Brexit doesn’t mean that the UK can escape the regulatory influence of the EU, it means that the EU has less power over the UK than it used to have. The questions of how much less power, and what the UK does with its greater autonomy, still remain open. You’ll never be able to get an accurate idea of how things are going by reading the FT – as with the Economist, their political antipathy to Brexit overcame their ability to report on it accurately long ago.
If the EU can be transformed into an effective state then it would still have weight, and far greater weight than the UK, but creating a united Europe has been a fixation of the European intellectual and political elite for over a thousand years. The most successful attempt is still that of Charlemagne 1,300 years ago, which fell apart within 30 years of his death. The most significant European political issue this year, assuming there isn’t an invasion of Ukraine, will involve Germany and Russia uniting to push through the Nord Stream pipeline against the concerted efforts of the EU’s Eastern European members. I’m not sure the smart money would be on the EU being an effective great power any time soon.
Mark Brady
Jan 12 2022 at 5:28pm
Well said, Nick.
Scott Sumner
Jan 12 2022 at 9:32pm
Good post, but I disagree somewhat on the FT and the Economist. I don’t doubt their anti-Brexit bias. But I think their reporting is pretty accurate from a factual perspective, and I believe their skepticism has turned out to be pretty accurate. So far, the UK is pretty clearly worse off.
The article points out that it’s not too late for the UK to take advantage of the situation, so it’s not all anti-Brexit bias.
Nick O'Connor
Jan 13 2022 at 5:45am
There are degrees of bias, and both the FT and the Economist make an effort to report accurately and include alternative viewpoints. I would say that they fail, and that this failure is caused by their intense emotional attachment to the Remain cause, which is far greater than the attachment either publication has ever had to a British political party. The editor of the Economist sounds like she has suffered a family bereavement when she discusses Brexit on the radio. But then, as someone who voted for Brexit, I’m not exactly an impartial observer myself.
Nick O'Connor
Jan 13 2022 at 5:51am
Replace “ever” with “in living memory” in the above sentence – I’ve never read the 19th century Economist, but it was founded to oppose the Corn Laws, and I wouldn’t be surprised to find that it was a fierce partisan of Gladstonian liberalism
Jens
Jan 13 2022 at 3:00am
With regard to Nord Stream 2, I wouldn’t be so sure that the new German government is following the same course as its predecessors.
Weir
Jan 12 2022 at 11:56pm
“In 2016, British voters opted to leave the EU, the first country to do so.”
But not the first country to vote against the EU.
The Irish voted against the EU in 2008 and were made to vote again. The Dutch voted against the EU in 2005. So did the French.
Britain was an outlier in the sense that, this time, there would be no cancellation.
David Cameron was rock solid on this in his great speech from November 2015: “This is a huge decision for our country, perhaps the biggest we will make in our lifetimes. And it will be the final decision. So to those who suggest that a decision in the referendum to leave would merely produce another stronger renegotiation, and then a second referendum in which Britain would stay, I say: think again. The renegotiation is happening right now. And the referendum that follows will be a once in a generation choice. An in or out referendum. When the British people speak, their voice will be respected–not ignored. If we vote to leave, then we will leave. There will not be another renegotiation and another referendum.”
Democracy, the peaceful transfer of power, the rule of law, keep calm and carry on. It’s all in stark contrast to his junior partner in the Coalition, Nick Clegg, who published a book in 2017 called How To Stop Brexit. That was Clegg’s reaction to the outcome of the vote.
Matthias
Jan 18 2022 at 3:18am
To be fair, legally the Brexit referendum was not binding. It was politically important, of course.
So Nick Clegg is not ‘undemocratic’ when he publishes a book like that; and he’s not opposing rule of law or the peaceful transfer of power.
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