The Prime Minister is trying to gain agreement from our continental partners on reshaping our relationship with the EU. Of course, there is more to this than economics, but that is the aspect I am concerned with here. The final judgment on it will involve comparing lots of numbers. Ordinary people may draw back, thinking they cannot come to a reasoned assessment of where the net balance of advantage lies.
I have considerable sympathy. Over the coming months, they can expect a barrage of contradictory assessments. These can conveniently be expressed in terms of how many pounds per annum the average family will gain or lose from leaving the Union. This is a necessary part of the debate, but I doubt it will be convincing.
On one side will be a set of figures suggesting we must stay in, and on the other side, a set of figures suggesting the opposite. The debate will be influenced by the perceived merits of the rival collections of business people and economists identified with the conflicting sets of numbers.
One argument, though, goes beyond the shuttlecock exchange of estimated costs and benefits. It is insufficiently appreciated that, after an initial burst of success, the EU has done relatively badly economically. This is true not only by comparison with the rapidly growing emerging markets but also by comparison with the US, Canada and Australia, and with the non-EU European countries, Switzerland and Norway. Why?
There are three reasons. First, there may be a general European malaise whose roots are partly cultural but which has little to do with the Union. Second, the EU has tended to make decisions that inhibit economic performance. Third, the euro has been a disaster. I will leave the first reason aside and concentrate on the other two. In practice, they are related.
Why was European economic performance relatively weak, even before the euro was formed? Until recently, the EU’s biggest venture, and its most colossal waste of money, was the Common Agricultural Policy, which inflated prices for food and incentivised farmers to overproduce, thereby leading to wine lakes, butter mountains and the rest. At a lesser level, the EU squandered money on ill-considered subsidies and pet schemes. Moreover, it overregulated and misregulated, especially in the labour market.