Epstein Compares EU and US Constitutions

The dangers of a contradictory constitution
Richard A. Epstein
Financial Times
October 11, 2004

Appearances can often deceive. On the face of it, the proposed European Union constitution imitates the American federalist form. But its specific provisions move in an entirely different direction.

First, American federalism forged a unified front against the rest of the world. The president as commander-in-chief presided over a national army and had the power to call state militias into federal service. The states were barred from entering "into any Treaty, Alliance, or Confederation", thereby ceding the federal government monopoly power over foreign relations.

Next, the economic front. The American constitution moved towards a national free-trade zone by prohibiting all taxes on imports or exports except when "absolutely necessary" for executing inspection laws. States were barred from coining money, so a national currency became the norm. Yet the protectionist impulse was not entirely squashed, for the power to regulate foreign commerce allowed Congress to impose a uniform tariff wall against the world. Its power to regulate commerce among the states could also be used to create domestic cartels in navigation and transportation.

Despite the uncertain direction of its structural provisions, the American constitution did contain strong classical liberal guarantees that protected life, liberty and property from government regulation and taxation. Supreme Court case law largely tracked sound principles of political economy: protect competition both among individuals and between states; constrain monopoly; control common problems for wildlife and natural resources; and control force and nuisances. But the justices of the 1937 New Deal rejected that focused vision, and their ill-founded belief in large government simultaneously expanded federal power and constricted individual rights.

American history illustrates how even mostly sound constitutional structures can fall prey to political pressures and intellectual fads. That lesson counsels all defenders of market institutions, both in Britain and elsewhere in the EU, to oppose adoption of an EU constitution flawed at its inception. First, no EU constitution could deliver one big benefit of the US model: a unified defence force. Rather, current jealousies and foreign policy differences invert EU federalism, by allowing nation-states to conduct independent foreign policies and military operations. So a new constitution could only help with social and economic affairs. But the proposals enshrine principles that can only work to perpetuate the EU's economic malaise and lead to unwise social legislation.

Its root difficulty lies in solidifying the worst aspects of the status quo by trying to serve the causes of freedom and regulation simultaneously. It voices a deeply felt commitment to open borders and free movement of capital and labour within the Union. But it also embraces "the sustainable development of the earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and protection of human rights". It then extols "growth, price stability, social progress, full employment, balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress".

This infinitude of ends means no nation can know what it signs up to. Some deep conflicts occur. Free trade allows each nation to buy and sell goods across borders. But "fair" trade invites a prohibition against trading with nations that fail to adopt the right minimum standards for workers and the environment. The same provision could either open markets or slam them shut. Requiring that trading partners lavish resources on their environments promotes "sustainable development", while wage and price controls promote price stability. Yet both stifle competition from poorer nations.

Unfortunately, ducking hard choices today invites larger conflict tomorrow. Britain and other EU member states should steer clear of a constitution that promises little benefit and much hardship. The alternative is to push hard for a comprehensive free-trade agreement that avoids the risk of oppressive centralised regulation and exerts pressure for the EU to liberalise its own internal markets. But do not make the foolish bet that the EU's byzantine political processes will cleanse its cluttered and flawed constitution.</