As Asia rises, will we see Europe fall?
American writers have recently damned Europe, insisting a “pall of doom” hangs over the continent [Link]. The criticisms many of them make (Theodore Dalrymple, Michelle Malkin, Fareed Zakaria and more) are quite revealing as to how Americans and some others from both political leanings think of Europe.
Dalrymple asks whether Europe is doomed and seems to think that we and the French experience a “deep sense of existential unease to live in a country perpetually in decline, even if that decline is merely relative.” However he chooses the broad brush so many American commentators use when speaking of Europe, using it to tar us all. Europe’s obsession with Social Security seems to be the root cause of Europe’s fall from grace and power, causing us to be fearful of the future. It is true that especially on the continent, rigid social structures have made change difficult. But if I were to select one major country that allowed fear to dominate its agenda, it would not be on this side of the Atlantic. However, he rightly highlights a vague sense of protectionism which has pervaded the job market in Europe.
Returning to the UK and France, Dalrymple puts forward a somewhat unlikely scenario:
Hundreds of thousands of young Frenchmen, despairing of finding a job at home where about a quarter of people in their twenties are unemployed, have crossed the Channel to take advantage of Britainâ€™s relatively flexible labor market: which, however, the British government is in the process of destroying by means of ever-closer regulation in the French centralist style.
Taxes may have increased under Blair, but I cannot believe that Britain is a significantly business-unfriendly nation. Where are these hundreds and thousands of young Frenchies? I haven’t seen any! Probably because I’m in a drug-induced haze:
The dependent population does not like the state and its agents, indeed they hate them, but they soon come to fear the elimination of their good offices even more. They are like drug addicts who know that the drug that they take is not good for them, and hate the drug dealer from whom they obtain their drug, but cannot face the supposed pains of withdrawal. And what is true of Britain is true, with a few exceptions, everywhere else in Europe.
There is plenty more including a de riguer attack on France. He’s not too nice about Islam either. What is more interesting are his views on integration, where he believes America to be a bastion of multicultualism and Britain to have spent years with no “cultural confidence” or “social pride” (it’s in the past tense as he clearly supports the citizenship test as a test of national pride). Sunny has written about different European strategies for integrating immigrants. He ends with a Trevor Phillips-esque “Europe is sleepwalking into further relative decline.”
Old Europe, traditionally thought of as Germany, France and Italy (I’m not sure if we’re included) can be divided from countries like those in Scandinavia, which are enjoying an economic growth. The job markets are more flexible, unemployment is lower and the welfare state carries a stronger emphasis on job creation and retraining, which Britain has been unsuccessful in instilling. Sweden and co. also buck the theory that high taxes mean less jobs – as while income tax is high, corporate tax isn’t. However, two Swedish researchers, Frederik Bergstrom and Robert Gidehag, last year said that “40 percent of Swedish households would rank as low-income households in the U.S.”
Fareed Zakaria points to a Paris-based group who published a report entitled Going for Growth this week, which damns the European economy. The study estimates that in twenty years, the average American will be twice as rich as the average French(wo)man or German, with Britain somewhere in between.
A key problem is the EU’s reluctance to tackle the large farm subsidies – which goes straight to the heart of the protectionism debate. But Zakaria also identifies areas like biotechnology as fields where Europe’s dominance has been eroded. Is this a decline or just globalisation? Irrespective, apparently in ten years, the main companies in the pharmaceutical industry will be (wait for it) America, India and China.
What does all this add up to? Less European influence in the world. Europe’s position in institutions like the World Bank and the IMF relates to its share of world GDP. Its dwindling defense spending weakens its ability to be a military partner of the U.S., or to project military power abroad even for peacekeeping purposes. Its cramped, increasingly protectionist outlook will further sap its vitality.
The decline of Europe means a world with a greater diffusion of power and a lessened ability to create international norms and rules of the road. It also means that America’s superpower status will linger. Think of the dollar. For years people have argued that it is due for a massive drop as countries around the world diversify their savings. But as people looked at the alternatives, they decided that the chief rivals, the euro and the yen, represented economies that were structurally weak. So they have reluctantly stuck with the dollar. It’s a similar dynamic in other arenas. You can’t beat something with nothing.
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Filed in: Current affairs,Economics,The World