Most discussions about the possibility of the United Kingdom leaving the European Union focus on its consequences for Britain. Fair enough. But there are also potential implications for the EU – and they are not all bad, writes Chief Economist Henrique Schneider of the Swiss Federation of Small and Medium Enterprises.
No, this is not about getting rid of the British. Who would want that? The UK is an important member of the EU; a member that is serious about governance, fiscal discipline and free markets. It also constantly reminds the bureaucrats in Brussels that their regulatory verve can only be legitimized through the national governments.
In short, the UK is a shining example that it is possible to reconcile clear-cut sovereign interests with those of the EU as a whole. This makes Brexit especially difficult for like-minded countries in the union.
So why not treat it as an opportunity?
The proponents of “better-off-out” are making a compelling case that a bright future awaits the UK once it is out of the EU. Setting aside the merits of their arguments, the very fact that such a debate is taking place is good.
When there is a debate, there is a choice. One option is to remain in Europe, and the other is to leave. If Brexit succeeds, leaving becomes a possible choice not just for Britain, but for each and every member of the EU.
For an economist, the compelling thing about choices is that they create competition. In this case, competition between the model proposed by the authorities in Brussels and its alternative, national sovereignty. Competition between ideas is always good news.
What works as a principle of social organization can also work as a principle of institutional development. If all EU members enjoy the opportunity to exit at any time, the EU will have to work harder at making itself attractive to member states.
This could force Brussels to relax its all-encompassing bureaucratic grip. It might encourage the emergence of a more democratic system for representing national governments and the wider public, thereby increasing the political legitimacy of the union.
Constantly faced with the alternative of exit, the EU could develop into a common market with free agents, few boundaries and less regulation. Does that ring a bell? It was the goal of the European Economic Community in the first place.
The whole Brexit discussion has been conducted from a moralist or essentialist point of view. Instead of worrying about the future of the EU without the UK or the UK without the EU, more attention should be paid to the principle of competition. A continuous reassessment of the alternatives – “in” and “out” – could help the EU arrive at the right decisions, ones that are aligned with its members’ goals.
Competition is a valuable principle. It makes organizations, products and services better. Why not apply it to economic and political union? Simply by forcing people to think about whether the future looks better outside the EU, the Brexit campaign has done Europe much good. For the first time, the EU is being confronted with competition. And when there is competition, we all gain.