Matt Ridley | 22 Feb 2016
My Times column on why the EU is bad for innovation:
For me, in the end, it’s all about innovation. The European Union is bad at doing it, good at discouraging it, repeatedly sides with those who have vested interests in resisting it, and holds Britain back from achieving it.
This may not be a fashionable reason for voting to leave. Pollsters tell us that safety is the first wish of most voters, not exciting change, and it’s clear that both sides are playing to that rule book: one side arguing for us to take control by leaving, the other saying we are more secure if we stay in. But if history teaches us anything it is that enterprise is the father of peace, that innovation brings not just economic but ethical improvements: it demonstrably makes us kinder and safer as well as richer. There is no security in stagnation.
The leaders of the Leave campaign are mostly people who get this. Boris included, they are radicals who want to see change, who think the world is a vale of tears compared with what we could make it: people such as Douglas Carswell and Daniel Hannan, who want to create digital politics, to Frank Field, who thought the unthinkable about welfare reform, to Sir James Dyson who repeatedly causes creative destruction in established industries. Iain Duncan Smith and Michael Gove are Tory radicals, the two ministers who achieved most reform during the coalition years (and therefore incurred the most fury from the vested interests). The same would have been true of Owen Paterson if the vested interests had not managed to get him fired.
Sure, there may be some leavers who think out means a return to the 1950s, but the cautious conservatives are mostly on the Remain side, comically arguing, as Sajid Javid did yesterday, that the European Union is “a failing project, an overblown bureaucracy in need of wide-ranging and urgent reform” — but we’d better stay in all the same. The most powerful section of Mr Gove’s explosive manifesto, published on Saturday after he left the cabinet meeting, was this:
“The EU is an institution rooted in the past and is proving incapable of reforming to meet the big technological, demographic and economic challenges of our time. It was developed in the 1950s and 1960s and like other institutions which seemed modern then, from tower blocks to telexes, it is now hopelessly out of date. The EU tries to standardise and regulate rather than encourage diversity and innovation. It is an analogue union in a digital age.”
This is a serious charge, but fair. Europe is the only continent without significant economic growth since 2008. Italy’s GDP is lower than it was then; while India’s, China’s and even Ethiopia’s have roughly doubled. Then think about where the innovations that transform our lives are coming from: America and Asia, even Africa, more than from Europe.
There is a reason for this. The way Brussels works is fundamentally antithetical to innovation. It is top down, with regulation promulgated by officials behind closed doors in meetings with lobbyists. There are about 25,000 lobbyists in Brussels, representing the likes of Big Pharma and Big Green, and they are often in the room when rules get written that erect barriers to entry against irritating new competitors.
The way in which Volkswagen, using carbon-dioxide emissions as a cover, got the rules rewritten to suit diesel engines and discriminate against petrol engines, despite the fact that nitrogen oxide and particulate emissions from diesel were far higher and more dangerous, was only the most visible such scandal.
Sir James Dyson was amazed to find that Brussels set energy ratings for vacuum cleaners without testing them filled with dust, because this suited the German bagged vacuum cleaner manufacturers that he threatened: “Washing machines are tested with washing in them, cars are tested with people in them, and fridges are tested with food in them. But when it came to our request to test vacuum cleaners with dust in them, the big German block of manufacturers complained.”
Then there’s the need to get agreement among 28 member nations, which leads to agonisingly slow convergence on lowest common denominators. Look at how the use of biotechnology in agriculture,
with its proven ability to cut pesticide use, has been stymied by green politicians from certain implacably conservative countries.
Then there’s the “precautionary principle”, formally written into EU thinking and widely interpreted to mean that only the harms, not the benefits, of new technologies must be considered. This has repeatedly prevented the displacement of bad technologies by better ones.
In any case, as Mr Gove says, for innovation you need diversity. It is abundantly clear that trial and error is the story of almost all change. Different people come up with different ideas, try them out and many fail. Those that succeed then recombine their ideas with those of others to produce new ideas. The EU’s obsession with harmonisation militates against such experiment.
In encouraging innovation, there is a role for international standard-setting, for sure. But not at the level of one continent. Standards in finance, the internet, food or cars are increasingly decided at the global level. The EU is little more than a substation of the process and a foot-dragging one at that.
The EU says it favours innovation, but what it means by this is not encouraging a ferment of new start-ups à la Silicon Valley, but top-down spending of taxpayers’ money on pet projects in science and technology. Yet even here there is no justification for an officious European Commission. The flagship science collaborations of Europe are not confined to the EU at all: they include countries such as Israel, Switzerland and Turkey. CERN’s accelerator crosses an EU border.
The prime minister wants us to stay in a “reformed Europe”. But the one thing we can all agree on is that — in sharp contrast to what he aimed for in his fine Bloomberg speech three years ago — his renegotiation has not “reformed Europe” at all, just Britain’s relationship with the EU, and that in minor and easily reversible ways.
In the 1950s, you could just about make the case that Britain’s destiny lay in a regional trading bloc. But now? When container shipping has collapsed the cost of intercontinental trade? When the internet and budget airlines and Skype have made it as easy to do business in Asia and America and Africa as in Europe?
Let’s take a leap into the light, rejoin the world and become its leading innovators again. Incidentally, the film Independence Day 2 opens in Britain on June 24. Tee hee.