From time to time a political issue takes on a totemic role.
It acquires a significance beyond its practical import and becomes a symbol or
icon of virtue. Support for the issue becomes a badge to identify a political
in-group.
Something like this has happened to the question of Britain
joining the European Economic Area. The rational assessment of the pros and
cons or the choices about trade-offs implied by EEA membership have been
eclipsed by the symbolism. Support for the EEA has become a symbol of pro-EU
commitment.
Last week, I read in a Sunday paper that “true Remainers want to stay
in the EEA”. I suspect that true Remainers (I’m one) want to stay in the EU. It
is the choice of a good alternative that is not easy.
Many pro-EU politicians have concluded that this is not the best option for post Brexit Britain. But the 75 Labour MPs who rebelled on Wednesday are using the issue to signal that they are more European than their colleagues.
Many may indeed believe that this formula for access to the
single market is the best available. There are good arguments on their side. It
would appear less economically disruptive to minimise the changes in the
framework of business and trade relationships. Studies suggest a small net benefit
to the long run level of economic activity in this scenario. In addition, there
is an administrative simplicity in opting in to an existing framework compared
to the risks and effort involved in creating a new arrangement.
The pro-Europeans who are not convinced by the EEA
membership have a diversity of reasons related to political strategy,
regulation and economic performance.
For some, particularly MPs in leave voting areas, there is a
need to placate the electorate’s concern over immigration. If there is one area
where single market rules would inhibit Labour’s manifesto promises it is the
pledges made in 2017 on immigration.
Others who are wary of the EEA point to the difficulty of
implementing “rules” over which the country has no say and little influence.
Under the rubric of removing non-tariff barriers, single market regulations
cover not just product standards, but public health, environment, public
procurement, competition and a mass of important public policy issues.
The concern is not so much that current rules might thwart
existing policy ambitions. (Although even advocates for the single market
acknowledge that some objectives would require careful navigation around the
rules.) The real problem is that future rules dealing with technologies yet
unknown or problems yet to be identified will impact on policies yet to be
imagined.
How would a rule-taking government react if a British
regulator declared that single market rules may pose an unacceptable risk to
customers or taxpayers, as the Financial Services Authority said of banking
regulation in 2009? Inside the EU there is scope to fix such problems which
would not be available in the EEA.
At a deeper level rule taking has an economic effect. The
best known economic impact studies treat the economy like a self-equilibrating
machine. Politicians might set the controls but the mechanism runs by its own
logic. A more modern understanding does not separate the economy from its
social and political context. An economy is embedded in the norms and standards
of a society and adapts to its choices on what behaviour and risks are
acceptable. Adopting the rules made for a different social context can inhibit
economic development.
Making the EEA into a totemic issue for pro-EU signalling
obscures the important questions that need to be explored. The choice is not
straightforward. Faced with trade-offs different politicians will make
different judgements and arrive at different conclusions.
Creating an in group may serve to paint those who reject the
totem as less pro-EU. For some opponents of Labour’s leadership that might be
the point.
