Nosemonkey's EUtopia

In search of a European identity

A cost-benefit analysis of the EU and the Lisbon Treaty?

A comment I left over at The Devil’s Kitchen a couple of months back that I recently stumbled upon bears resuscitating as a quick post in its own right, as debates about the EU resurface ahead of the re-run Irish Lisbon Treaty referendum:

It’s impossible to do a cost/benefit analysis of *all* EU laws – that doesn’t mean you can’t do a cost/benefit analysis of individual new laws before passing them.

You can, after all, work out the likely impact of a law liberalising the market for product category x on related industries a, b, c, (etc.) and even make an educated guess about the overall impact that this law may have on the economy as a whole.

But when it comes to the economy you can never understand everything – if we’ve learned nothing else in the last 12 months, we’ve learned that. Hell, with something as complex as a continent-wide economic system, there are so many other factors at play, though it may be possible to make an educated guess about the impact of a piece of legislation (enough to judge if it’s going to be beneficial, at any rate), you’ll never be able to track *all* of its effects – countless other things will be affecting individual parts of the economy in countless different ways, from other bits of EU and national legislation (which still often overlap) through local levels of trades unionism, consumer spending patterns, passing fashions, local infrastructure, and so on and so on.

In other words, to be able to put an actual monetary figure on the costs/benefits of EU legislation *as a whole*, you’d first need to work out a system for tracking all the workings of the entire European economy (or, at the very least, the entire economy of the individual member state you want to study). Because without complete understanding how an economy works both at macro- and micro- levels, it is impossible to judge how introducing variable x might affect it – because who’s to say it’s not actually variable b, h or z instead if you haven’t also studied their influence?.

So *any* claims about the costs OR benefits of the EU must be nonsense. Because the only way we could actually tell is if a) we understood the economy of Europe inside-out (which we don’t), and b) we had a control sample of a Europe in which the EU never came into being to which we could compare our findings.

So although I feel that the EU has done more good than harm to both the British economy and the economy of Europe as a whole, there is no way that I can prove that. There’s also no way that anyone of a more eurosceptic bent can prove that the opposite is true. I could point to individual benefits, they could point to individual costs – we could add up more and more of each until we have a wealth of evidence and can start chucking around figures like 200 or 600 billion. But we’d still have only scratched the surface.

This is not a flaw in the way the EU works, it is just a consequence of the EU’s continent-spanning economy (which exists in a world that has become increasingly globalised, and so increasingly economically complex and volatile over the last fifty years) being an incredibly, vastly, inconceivably complicated system that no one can ever fully understand.

The Lisbon Treaty, of course, is not one single new bit of legislation (unlike its predecessor, the Constitution a sprawling mess of a document, but at least a relatively coherent one) – it is instead a vast number of often tiny, minor amendments to a whole array of earlier treaties and bits of legislation, affecting almost all areas in which the EU currently functions.

This makes doing a cost-benefit analysis of the Lisbon Treaty (both economic and social costs/benefits) just about as impossible as it is to do one of the EU as a whole. And as so much of what Lisbon does is kept in deliberately vague terms (it is a compromise document drawn up by 27 governments, after all), and as parts of it are arguably self-contradictory, the task is made even harder.

In other words, the proof of the pudding is in the eating. Lisbon’s effect on the EU and on individual EU member states will be determined by how it is interpreted by the Commission, Council, Parliament and member states after it comes into force far more than it will be by what it actually says. Unlike the Constitution, which attempted to lay down hard and fast rules, the Lisbon Treaty (foolishly, in my books) pretends to be laying down rules, but is actually more like a series of guidelines, to be solidified or modified over the coming years.

However, one major shift is the greater emphasis on the power of the European Parliament and of the parliaments of the member states to have a say in future EU legislation. Pass the Lisbon Treaty, and this ongoing process of interpretation and modification will have far more input from elected representatives than the alternative – which is not to make do and carry on, as some have suggested, but yet *another* round of negotiations for new EU frameworks. Another round of negotiations that will, once again, be dominated by input from the unelected bureaucrats, government officials and pressure-groups that have so dominated all previous such processes.

Is it undemocratic to force Ireland to vote again on a Treaty that they’ve already rejected? Well, yes. But through this bit of undemocratic second-chancing, the people of Europe as a whole may end up with far more ability to have a say in the inevitable future rounds of EU reform and, just perhaps, begin to shift the thing closer towards what they actually want.

So, is the Lisbon Treaty a bit rubbish? Yes. But it’s better than what we’ve got, and better than the likely alternative. Hard to be enthusiastic about, hard to actively support – but necessary if you want an EU that more closely matches the wishes of the people, even if it might come into force by forcing the people of Ireland to think again.