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An American speaks out

Posted by Richard Monday, October 11, 2004

"Britain and other EU member states should steer clear of a constitution that promises little benefit and much hardship."

So says Richard Epstein, professor of law at the University of Chicago and senior fellow at the Hoover Institution, in a storming article in The Financial Times, previewing a lecture he is to give this evening at the Cass Business School, London.

"Appearances can often deceive", he writes. "On the face of it, the proposed European Union constitution imitates the American federalist form". But it does not replicate it. The US constitution created a nation, with a president as commander-in-chief who presided over a national army and had the power to call state militias into federal service. The states were barred from entering "into any Treaty, Alliance, or Confederation", thereby ceding the federal government monopoly power over foreign relations.

It moved America towards a national free-trade zone, barred states from coining money, and allowed Congress to impose a uniform tariff wall against the world.

But, although the constitution did contain strong classical liberal guarantees that protected life, liberty and property from government regulation and taxation, the US still managed, through the 1937 New Deal, to promote the ill-founded belief in large government that simultaneously expanded federal power and constricted individual rights.

This, Epstein asserts, illustrates how even mostly sound constitutional structures can fall prey to political pressures and intellectual fads. "And that lesson counsels all defenders of market institutions, both in Britain and elsewhere in the EU, to oppose adoption of an EU constitution flawed at its inception."

No EU constitution can deliver one big benefit of the US model: a unified defence force or foreign policy. It can only "help with social and economic affairs", but "the proposals enshrine principles that can only work to perpetuate the EU's economic malaise and lead to unwise social legislation."

Its root difficulty, however, "lies in solidifying the worst aspects of the status quo by trying to serve the causes of freedom and regulation simultaneously."

It voices a deeply felt commitment to open borders and free movement of capital and labour within the Union. But it also embraces "the sustainable development of the earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and protection of human rights". It then extols "growth, price stability, social progress, full employment, balanced economic growth and price stability, a highly competitive social market economy, aiming at full
employment and social progress".

This infinitude of ends means no nation can know what it signs up to. Some deep conflicts occur. Free trade allows each nation to buy and sell goods across borders. But "fair" trade invites a prohibition against trading with nations that fail to adopt the right minimum standards for workers and the environment. The same provision could either open markets or slam them shut. Requiring that trading partners lavish resources on their environments promotes "sustainable development", while wage and price controls promote price stability. Yet both stifle competition from poorer nations.
Unfortunately, concludes Epstein, "ducking hard choices today invites larger conflict tomorrow." The alternative is to push hard for a comprehensive free-trade agreement that avoids the risk of oppressive centralised regulation and exerts pressure for the EU to liberalise its own internal markets. “But do not make the foolish bet”, he adds, “that the EU's byzantine political processes will cleanse its cluttered and flawed constitution.”

This has to be the most succinct and unequivocal condemnation of the EU constitution I have ever seen from an American academic. However, his argument is double-edged. The Europhiles would see in them the need for further political integration. And that is the real divide – the question of more or less. No rational person could believe the current EU constitution is the end of the process. We must either go further, or carve out our separate ways. The status quo, represented by the constitution, is not an option.