A Momentous Referendum will be held on June 23 to determine whether or not Britain will quit the European Union (EU). A vote to pull out would be a catastrophe, ultimately imperilling all the post-WWII political and security structures that enabled a shattered continent to recover rapidly from the war’s physical devastation and to miraculously banish the murderous rivalry between Germany and France to history’s dustbin. Today war between these two countries is utterly inconceivable.
The EU—despite flaws that have helped bring us to a potential precipice—has been a remarkable success. Barriers between once wary states have been largely obliterated. Intra-European trade has blossomed. Thanks to a common currency, capital now flows unimpeded among the 19 countries that have adopted the euro, just as capital flows among the states in the US.
Since the fall of the Berlin Wall the EU has been a tremendous force for liberalising and democratising eastern Europe’s once communist states. It has provided the impetus for these countries to make major reforms over the potential opposition of entrenched domestic special interests.
There is much to dislike about how the EU has evolved. Headquartered in Brussels, its bureaucracies are repeatedly beset with corruption scandals. The EU has been a volcano of petty, intrusive and ridiculous regulations, down to defining what constitutes a banana. The British, especially, resent judicial rulings that rudely fly in the face of British common-law tradition. And the EU’s antitrust actions have been routinely and stiflingly anti-innovation.
Too many European political leaders and bureaucrats are addicted to higher taxes. A constant EU theme, especially from high-tax France and Germany, is ‘tax harmonisation’—newspeak for obligatory higher tax regimes for all 28 member countries.
The EU’s evolution has far exceeded what its creators originally intended as a free-trade area with growing political cooperation. Instead, continental leaders have forcibly tried to build an actual political union, a quasi United States of Europe. Unfortunately, this has been pushed without gaining the consent of the governed each step of the way, which has fuelled the rise of xenophobic political parties.
Currently, an ever hotter flash point for the growing number of Eurosceptics in England (and elsewhere) is immigration, which in the face of a none-too-vibrant economy is exacerbating social tensions.
But the biggest culprit tearing away at the EU fabric is economic stagnation. Leaders have forgotten what enables an economy to grow: Sensible levels of taxation, spending and regulation, particularly as regards the hiring and firing of labour. When the 2008–09 crisis hit, the private sector suffered most of the ‘austerity’, thereby hobbling recovery. The poster child for this self-defeating stupidity has been Greece, which is choking on a diet of ever higher taxation and government bloat.
Why, then, should Britain remain in the EU? A British exit would stoke the forces of disintegration now threatening the EU and would have ugly political and economic consequences. A bust-up would fan the flames of protectionism and extreme nationalism, forces that are once again stirring and gaining strength. The 1930s are proof of where all this can lead.
It was the horrors of the Great Depression—sweeping trade barriers and competitive devaluations—that were the impetus for the post-WWII moves that led to the EU.
A British bugout would also imperil the UK: Scotland came close to seceding in 2014. The Scots want to stay in the EU, and the prospect of a ‘Brexit’ has already re-energised separatist forces. We also must not forget that the always precarious peace in Northern Ireland could be jeopardised.
The adverse consequences of a British withdrawal are real. Brexit supporters blithely assume the Sceptred Isle would maintain its current free-trade access to the 27 remaining EU countries. Fat chance of that. Norway and Switzerland, non-EU members, pay fees to gain access to this gigantic market and must also abide by most EU regulations. As a warning to other countries that might want out, the EU would make British access especially expensive. Moreover, the EU has special free-trade agreements with numerous countries around the world, such as Mexico. Britain, which relies heavily on exports, would have to negotiate new deals with these states—but without the bargaining clout of the vast European market.
Instead of turning its back on Europe and making itself poorer in the process—not to mention inflaming the ugly antiliberal forces now rising everywhere—Britain should do the opposite: Remain and wage an aggressive, constant and well-thought-out diplomatic campaign to reform the EU. Germany and France would resist, but London is fully capable of gathering support from other members, such as Poland and most of the other central and eastern European countries, as well as the Baltic states of Latvia, Estonia and Lithuania—all of which want to break out of the malignant economic rut the continent finds itself in.
Britain, as a living model for others to follow, should lead the charge on reform and proudly make public statements on what it’s doing. The UK is already following Ireland’s example regarding the corporate tax rate, which is slated to go down to 18 percent. Cut it some more. Slash the ridiculous 28 percent capital gains tax, which hinders the creation and nurturing of new businesses and the giant companies of tomorrow. Move toward a flat tax, as a number of newer EU members have already done. And point out, during the endless array of EU ministerial meetings, what’s been accomplished in Britain’s public sector: It’s down more than 1 million workers over the past six years, thus freeing up resources for economic growth.
Britain saved civilisation in 1940. In a very much less dramatic way—and before we reach such an abysmal abyss once more—it can do so again.
Nancy Reagan—the Other Half of an Amazing Team
The death of Nancy Reagan and the inspiring service for her offered a poignant reminder of how far the morale of the US has deteriorated since her husband’s presidency.
The marriage between Ronald and Nancy Reagan was one of the most extraordinary partnerships in history. He would never have reached the White House without her. The trust between them was total, and each strengthened the other. They were, as many observers have noted, as close as two human beings could possibly be. She always—always—had his back. He trusted her instincts about people and events, realising she came up with crucial insights that he could not. And woe betide any individual she felt was letting her husband down! She strongly encouraged his move into public life and was instrumental in his decision to run for the presidency again in 1980 after the deep disappointment of narrowly losing the GOP nomination to President Gerald Ford in 1976.
Almost everyone today acknowledges that Reagan was one of America’s great chief executives. His presidency pulled the country out of a malaise as deep as the one we’re experiencing today.
I got to know Nancy after the Reagans left the White House, primarily through serving on the board of the Reagan Library. In 1991 they travelled on our plane to several European countries where Reagan delivered a series of speeches. Their mutual devotion was palpable. (As a history buff, I was thrilled to observe Reagan working on his memoirs between stops. He could never sleep on a flight.)
A couple of memories: In 1992, former President Reagan agreed to appear with ex-Soviet leader Mikhail Gorbachev at Forbes’s 75th anniversary celebration at Radio City Music Hall. Forbes was launched in the same year as the Russian Revolution, and it seemed fitting that the man who had done more than any other to bring down the ‘evil empire’ keynote the occasion with the man who had presided over its demise. Just before the festivities were to start, Gorbachev got in a snit over something petty and threatened to walk off. Reagan was appalled and was working hard to control his temper. Nancy weighed in with a few firm but very diplomatic and calming words, and the crisis was averted.
The other: Nancy would occasionally visit friends on the East Coast. One evening I was near her when she called her husband, who had descended into the nightmare of Alzheimer’s. Her tender words, as she tried to reach out to him, were heartrending.
Truly, with the union of Ron and Nancy, one plus one equalled infinity.
Steve Forbes is Editor-in-Chief, Forbes
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(This story appears in the 29 April, 2016 issue of Forbes India. To visit our Archives, click here.)