Is there a market liberal case for Brexit?

Jacob Levy has a very good post on this topic, here is one bit from it:

There’s a level of popular belief that the EU enforces illiberal and market-unfriendly policies on Britain. On the fiscal side, here’s a comparison of British public spending as a share of GDP just before entry into the EU, and just before the Brexit vote:

1971: 42.0
1972: 40.8

2014: 41.8
2015: 40.8


Even when you add in the <1% of GDP that is paid to Brussels, this is just not a picture of a system that has forced Britain to become a big-spending social democracy. (Neither, of course, is it a picture of a system that has forced Britain into neoliberal austerity, a charge one hears from the left.)

Here is another:

According to the 2015 Economic Freedom of the World report’s overall measure for regulatory burden, Czech Republic, Denmark, Estonia, Lithuania, Sweden, Ireland, and Romania are all less regulated than the UK. The most recent Heritage index of “business freedom” ranks Denmark, Finland, Germany, and Sweden ahead of the UK; for labor freedom, Denmark, Austria, and Ireland. In all these cases, these relatively-liberal EU countries compare favorably with other developed countries in or out of the EU.

Do read the whole thing, here are comments from Ilya Somin.


TC is a genius on this issue. He saw--many moves ahead--that immigration backlash was the root of this problem. Kudos.

Well, Little England at least.

Any loser can see that.

The leave voters were not interested in economic liberty (no scare quotes here either), as they fully expected the EU to bow before the desire of Great Britian to get what the British wanted - full access to the EU market without having to be part of the EU.

@prior_test2 - you post here 24/7? But seriously, are you taking about Cameron's pre-vote negotiations, the Leave voters thinking during the run-up to the vote, or perhaps the history of the UK vis-a-vis the EU, such as for example their having their own currency?

Nope - any comments I post will generally be between 6am and 8pm or so MET/MDT.

Which provides a certain advantage in responding to how ever so carefully Prof. Cowen releases a percentage of his posts, thus ensuring that they will indexed/linked before most North American readers wake up, providing a boost to his other posts during North American business hours. Though of course, his posting like that consistently may just be a personal quirk that just happens to work out that way. Likely in similar fashion to how MRU was just the work of two GMU econ professors, youtube, and a $4 app.

But the last few days have been fascinating watching how the leave voters seem to be dimly grasping that a future Little England just isn't that important. Along with the bewildering perspective among some commenters here (not to mention something similar from Boris Johnson) that when the UK decided to leave the EU, of course it gets to keep whatever benefits membership provides, and anything less than the UK getting what it wants from the EU is due to the EU being petty and vindictive.

And to be clear - though not a EU citizen, I share the belief held by a number of EU citizens that the UK becoming a former member is just fine. If only because the endlessly repeated threats to leave the EU as a way to squeeze further concessions to benefit the UK (though often enough, the benefits are really for the City) are finally over. Which seems to have come as a real surprise to the leave voters - almost as if they thought Little England was the dominant lion of the EU pride. In other words, the American media, unsurprisingly since mosts of that commentary is not in English, are not talking much about 'UK leave' from an EU perspective. The British media hasn't started talking about it much either, though it is becoming clear enough to them that the value of the UK to the EU is not what they had previously presented to their customers.

And do note how the Germans, dedicated Europeans, are reacting to the leave vote - they aren't asking the UK to stay, they are telling the British that they respect their vote to leave, and wish to get on with hammering out how the UK leaves in a measured amount of time. Apparently, the only difference between leading German political figures after the leave vote made clear the desires of a majority of the British electorate was whether the UK should be given days or weeks (up to a couple of months - Sept. 2 should be fine) to submit its article 50 notification.

Also notice how Cameron seems to have little leverage in his desire that the EU wait until the UK decided it was ready to handle its leaving the EU. The UK is not taking back control the way the leave voters apparently wished, but is starting to learn what the EU is like when a nation wishes to have all the privileges and benefits of being a non-member. Anyone want to guess if the EU will concede one of its basic principles to keep the UK a non-member, as Cameron seems to expect? Of course there will be diplomacy, but if the UK wants access to the EU market, it essentially has no power to extract concessions from an organization that it is leaving.

"when the UK decided to leave the EU, of course it gets to keep whatever benefits membership provides, and anything less than the UK getting what it wants from the EU is due to the EU being petty and vindictive"

The UK at the moment seems fairly comfortable to abrogate on the "benefits" of the EU Commission, the European Parliament, the EU Court of Justice, and of Freedom of Movement.

In your mind, these are "benefits" right? As a committed Europhile, surely you wouldn't think of these as undesirable and burdensome institutions and practices, taken on only because countries are forced into them to get the *real* benefits of the Single Market...?

Yet they-- or at least their representatives here-- seem desperate to keep their access to EU's free market-- and are already crying "unfair" at the thought of losing their membership perks.

Shorter PA - "to satisfy my revenge fantasies German and France will stop selling cars to the UK and put out of work large numbers of their citizens".

I thought--we were told so many times here!-- that England was the automobilistic Behemoth here. What does England produce again?

Who are you responding to? Was there a comment that said the UK doesn't produce cars that was deleted?

Well, I thought the British--well the Japanese in Britain at any rate-- had cars to sell to the continent and compete with the French and Germans.p

They might do it to satisfy their own revenge fantasies. Revenge is quite a viscreally satisfying emotion.

"They might do it to satisfy their own revenge fantasies" - possibly, I never underestimate the stupidity of politicians. But it's hard to see how this will hurt the British when they can buy pretty much the same product from say the Japanese, or even make the cars themselves.

Any comparison to 1971 is spurious. The old Common Market was not at all the bureaucratic EU of today. The point may be the same if 1991 is the point of comparison, though.

As with most ideologically-charged policy decisions, the Brexit will be neither as damaging as the Remainers warned nor as liberating & stimulating as the Leavers predicted. Short term disruption will also be less of a problem than pundits believe.

There is little doubt EU is moving more in the direction of an undemocratic regulatory state run by bureaucrats. The real question is national sovereignty.

Yes, many sources seem to confuse the EEC and the EU, which is a major error given the issues being debated. This particular point would be the same, however.

My intuition says that grabbing anything pre-Thatcher is cherry picking.

OldCurmudgeon is right, this shouldn't have even been reported so out of context. Let's see the annual trend from 1971 to 2014, probably a bath tub.

Yep. Three seconds of googling revealed the second graph at this link:

Maybe this was about vacuum cleaners and toasters. The EU's idea of energy efficiency is to have a flat ban on devices that use more than a certain amount of power, and this had already led to less powerful vacuum cleaners. Next up were small appliances such as hair dryers, toasters and tea kettles.

I haven't been able to find any evidence that the bans were based on true savings in terms of energy efficiency. Do people really just vacuum a set amount of time, whether or not the dirt has been picked up? Do they use their hair dryer for the same number of minutes whether or not the hair is dry? Do they run their toaster by time rather than by whether or not their bread is toasted?

Even if the regulators are valuing people's time at zero (which is likely), their bans still probably are not more energy efficient. Maybe the British are ready to go back to that wild, dangerous time before strict regulations on exactly how many blueberries must be in each carton.

Similar to low flush toilets- how does it save water if it takes three flushes.
If the UK embraced the change to weed out the regulatory thicket, it could to a positive outcome. I fear there is no chance of this.

We got one of the last good vacuum cleaners before these rules came in.

With a vacuum cleaner, it is at least plausible that some people will run it the same amount of time (just picking up less dirt) and use less energy, though this is still a dumb rule. But the regulations for kettles and toasters seem absurd. Clearly these will just be run longer until the toast is brown and the water is boiled.

I take it you do know that traditionally the 'quality' of a vacuum cleaner was rated by how big a horsepower motor it had, until Dr. Oreck came along and proved it's not the horsepower, but the entire system that determines quality. In fact, too strong a horsepower motor will actually cause the dirt to blow back into the atmosphere. You knew that, right dan1111? Or are you an ignorant Leaver? Of course not, you're a MR reader.

In the same way that the EU fails to see the forest through the trees by having unelected officials ban toasters and set fruit shapes, the Leave voters fail to see the big picture by leaving the common market over such issues. It is already clear that the cost of these regulations is petty compared to the cost of leaving the common market.

Forget Doc Brown. Regulators send us back in time without the complexities of a flux capacitor.

Thanks to them we have bedbugs again in the US. Nice.

Yes a good summary of why I was on balance for remain. The best thing about the EU is the free movement of labor and the prevention of subsidies. I fear the main reason that people voted for leave was so that these policies could be cancelled in the UK, not so that they could get rid of the regulatory burden imposed by the EU. I respect people like Danial Hannan who has been fighting for decades for the exit for regulatory reasons, but unfortunately I don't think he will be able to manage the future policy of the UK in this regard.

Was anyone making a market liberal case for Brexit? The right has good reason to support Brexit, because the EU is fostering a massive surge in immigration that is diluting national character. The left has good reason to support Brexit, because the EU is enforcing a neo-liberal world order that undermines national control of industry and labor markets, not to mention the fact that the massive surge in immigration is undermining support for precisely the kinds of tolerance and solidarity that the left prizes. People who value democracy have good reason to support Brexit, because the EU is among the least accountable off all the levels of government that affect the lives of member state citizens. But I can't image anyone trying to make a case for Brexit on the basis of market liberal principals. Sure, the EU has a multitude of ridiculous regulations. But national governments have even more, and those of national governments are much more likely to be protectionist and/or designed to protect locally influential incumbent industries. And the anti-liberal effects of those regulations are far outweighed by the massive increase in free movement of labor, goods, and capital that the EU fosters.

Brexit: the movie was an entirely market liberal case for Brexit.

Is there a market liberal case for the EU?

Ha ha ha. Yeah, "market liberal". Down with the Poles!

If you listened to Nigel Farage yesterday it was not about regulations or the economy. It was "I had an idea, you laughed at me, now I won, who's your daddy?"

UK Independence party.

I watched his comments and I thought I heard him say something about the unaccountable regulators, but I don't really care enough to go back and watch again!

+1 You are correct Butler T. Reynolds! Farage did address regulation and bureaucracy.

Levy wrotes: "According to the 2015 Economic Freedom of the World report’s overall measure for regulatory burden, Czech Republic, Denmark, Estonia, Lithuania, Sweden, Ireland, and Romania are all less regulated than the UK. The most recent Heritage index of “business freedom” ranks Denmark, Finland, Germany, and Sweden ahead of the UK; for labor freedom, Denmark, Austria, and Ireland. In all these cases, these relatively-liberal EU countries compare favorably with other developed countries in or out of the EU.
None of these measures are perfect, but they shouldn’t be systematically biased against the UK. And what they tell us is:
b) the UK is not pushing the deregulatory envelope inside the EU, is not running into an EU constraint in its attempt to minimize the regulatory burden."

I am Estonian and I do know quite well what Estonian polticians/Estonia EU officials think. And years and years they have told that UK is our ally becayse UK helps to push inner EU arguments in favor of dergaulations (or at least helps to slow down new regulations). I do know a bit also of Latvian and swedish politics and what I have heard from their side, is similar, inside EU debates over rgeulation, they have searched and received support from UK.

In fact, in Estonia, main reaction to Brexit is that" oh no, we have lost our bigegst ally in fight of deregulation."

Interesting comment.

The EU strikes me as less about market liberalization and more about a cartel to prop up expensive social democracies.

No, a cartel to excise popular influence over policy questions. The nexus between the appellate judiciary, the law professoriate, and the har-de-har public interest bar functions much the same way in this country.

Is there a market liberal case for Brexit?

No, because libertarianism is too truncated and sterile to be of use in parsing many questions of public policy. The question at hand is the locus of sovereignty and the contours and properties of the body politic, questions which are not answered by chatter about markets. So, soi-disant libertarians default to their mental habit of assuming people are widgets.

The market liberalization case for Brexit is you don't need an supranational layer of taxation and governance to have trade between sovereigns.

In support, I note that one of the big complaints cited by Leave leaders was the EU blocking GB from signing bilateral free trade deals with India, Australia, and New Zealand. The EU requires that everyone negotiate as a block, and only as a block.

Wow. Even in their own commonwealth (except India).

As I suspected, EU is more a cartel to prop up expensive social democracies.

I had to scan through the Levy piece to figure out what a market liberal is, and there they are, the liberaltarians. Their motto is "Free Markets and Social Justice" - which will win out, force or freedom? This is a splinter of a splinter group, but it's fully on board with open borders.

"The market-liberal case for Brexit blends together a view that eliminating a level of government is usually good; generalized skepticism of distant and central authority; and specific beliefs about the planning, socialist, or overregulatory propensities of the EU in particular relative to the UK. For there to be a good market-liberal case for Brexit, the weight of these arguments had better be overwhelming, given the obvious goods of liberalized migration and trade across the EU."

Why the mania for liberalized immigration, which readily turns into open borders, especially if it trumps a reduction in government?

Speaking of widgets, I see that you've got a nice strawman factory.

a comparison of British public spending as a share of GDP

Which omits consideration of the share of revenue or earnings accounted for by state companies or the share of residents or real estate values accounted for by public housing. The reduction in these shares owed nothing to the EEC or the EU.

The Brexit is a fight between internal factions of Britain, in which one has been using the EU regulations as selective 'golden handcuffs' - i.e. 'We can't approve/disapprove that [internal] policy because we are constrained by our external partners! Thus, we win the argument by default!' Thus, Brexit was mostly a way to cut those internal bullies (sometimes referred to as the globalized elites) off from their external backstop, rather than actually a fight against those external partners. We see the same thing in the US, where the intellectual property trolls (like the RIAA) try to establish international legal regimes which are resistant to legal challenge. Naturally, they will cry foul...

Trying to figure out why people voted to leave is much like reading about the causes of the US civil war in 1860. Was it about slavery? Tariffs? States rights? Sovereignty? Cultural differences? Regionalism? Economic differences?

Unlike in the movies, sometimes there's more than one answer.

Lot of talk and strong opinions. People ought to be willing to put their money where their mouth is. Wonder how many Bremainers would take a bet against GBP/EUR climbing to 1.31 in less than 60 days?

If the EU is so awesomely swell, how about the Democrats put US application for membership in their party platform?

EU regulation not the epitome of sagacity re GMOs:

I am French, and an economist.
I think the relationship between bureaucracy, democracy and liberty is not that clear. While it seems quite clear to me that there is a lack of democracy at the EU level, I also think, being here slightly elitist, that it protects us from anti freedom state level "populism" or more fundamentally the lack of economic education within member states people and politicians.
What should be remembered is that the prime, historical, goal of the EU is the building of EU market integration. And the two mains area of EU power are competition policy (antitrust and anti discrimination) and environmental policy. European bureaucracy is actually much more pro market than most states (even the UK despite wishful thinking by some).
On the environmental front: concerning GMO the EU is more pro GMO than most member states, and it is banning that should be justified not the contrary, there is no EU ban on GMO; and for climate policy the UK, interestingly, is doing more than requested by the EU; the ban on hormone feed US cattle is a better example of EU level green protectionism even though protectionism seems less important than consumers (miss)perception of health risk.

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