European Union economic governance

I spoke last night in the European Union (Amendment) Act debate:

Steve Baker (Wycombe) (Con): First, I wish to associate myself with the remarks of my hon. Friend the Member for Harwich and North Essex (Mr Jenkin). Too often when addressing questions such as the one under discussion we get bogged down either in procedural matters or matters that verge on the nationalistic, but this evening he has transcended that old territory and talked about what is good for the UK and Europe in broader terms. I shall attempt to add to his remarks.

If we wish to say something about what is going on in Europe today, we must talk about the broader sweep of political economy, and I therefore also refer to the remarks of my hon. Friend the Member for Stone (Mr Cash). We must say something about the EU, and I say this:

“It is the last gasp of an outdated ideology, a philosophy that has no place in our new world of freedom, a world which demands that we fight this bureaucratic over-reach and lead Europe into the hope and potential of a new, post-bureaucratic age.”

That is how the BBC reported the remarks my right hon. Friend the Prime Minister made in Prague in November 2007, which, coincidentally, was the month when I joined the Conservative party and approached my right hon. Friend the Minister for Europe to discuss becoming a Member of Parliament.

Mr Lidington indicated assent .

Steve Baker: I see that my right hon. Friend remembers that, but I suspect he regrets giving me the reference.

Mr Lidington indicated dissent .

Steve Baker: I am most grateful for that.

We have talked about political economy, and great matters are at stake. It seems to me that there have always been two visions for Europe: a classical liberal vision and a vision of a so-called social Europe—an interventionist Europe. A classical liberal Europe would enable free movement of people, services and goods, all of which are to be applauded because we know that human flourishing depends on free trade and peace. The big question is: when did Europe become a social Europe, a socialist Europe and an interventionist Europe? Is it right that we put our faith in the omnipotence of government to solve all our problems and to deliver stability and prosperity?

With this measure, the European Union becomes explicitly a transfer union and is explicitly moving money and wealth around from one member state to another, and I suspect that Germany has very nearly had enough of it. We should not persuade ourselves that this is an entirely new phenomenon. I was most grateful to my hon. Friend the Member for Stone for giving me the opportunity to write in his European journal with a colleague and friend of mine, Professor Philipp Bagus, a German economist at a Spanish university. We explained how the European Union is inherently a monetary transfer union. By monetising their debts, profligate countries have been able to appropriate for themselves wealth from the productive nations such as Germany. This has been going on in a way that very few people understand for a very long time, and I believe that it has substantially contributed to the crisis that we are in. Having lived with this principle of redistribution by subtle means for a long time, we now seem to be explicitly adopting the notion of fiscal transfer union and direct economic governance.

Mr MacShane: May I invite the hon. Gentleman to read the Hansard record from 1984 when Mrs Thatcher brought back the rebate? My right hon. Friend the Member for Blackburn (Mr Straw) said that she had hauled down the Union Jack and hauled up the white flag of surrender to Brussels. She replied that that was quite wrong, that it was right that we should transfer, and right that we aid Portugal and the poorer members of the EU. At times, I feel like a Thatcherite.

Steve Baker: I am grateful to the right hon. Gentleman for that, but the question is not whether we should help our friends in Europe, but how we should do so. Everybody here is interested in securing the maximum of human flourishing right across Europe—I do not doubt that—but the question is how to do that. Should it be done through the omnipotence of the state or through free trade, free markets and peace?

I believe in stability and prosperity for Europe, but I do not believe for one moment that the European Union is capable of delivering it. I finish by reading a quote from a great French liberal statesman. He said:

“The state is that great fiction by which everyone seeks to live at the expense of everyone else.”

If this measure goes through, Europe will indeed have adopted that idea and it will have done so very much to its disadvantage.

I mentioned “the omnipotence of the state” by way of an oblique reference to Mises’ Omnipotent Government: The Rise of the Total State and Total War, which I recommend. It is available here.

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