Tuesday, February 14, 2006

previous entry | main | next entry | TrackBack (0)

The Decline and Fall of Europe?

Cato Unbound is having a debate around the question of "Old Europe," centered around this Theodore Dalrymple essay:

The principal motor of Europe’s current decline is, in my view, its obsession with social security, which has created rigid social and economic systems that are extremely resistant to change. And this obsession with social security is in turn connected with a fear of the future: for the future has now brought Europe catastrophe and relative decline for more than a century....

The problem is multiplied when a rigid labor market is capable of creating large castes of people who are unemployed and might well remain so for the whole of their adult lives. To the bitterness caused by economic uselessness will then be added, or rather be multiplied by, the bitterness of cultural separation. In the case of Islam this is particularly dangerous, because the mixture of an awareness of inferiority on the one hand, and superiority on the other, is historically a very combustible one.

Responses come from Timothy Smith, Charles Kupchan, and Anne Applebaum.

Meanwhile, Fareed Zakaria touches on a similar theme in his Washington Post column today:

The Organization for Economic Cooperation and Development (OECD), headquartered in Paris, released a report, "Going for Growth," that details economic prospects in the industrial world. It is 160 pages long and written in bland, cautious, scholarly prose. But the conclusion is clear: Europe is in deep trouble. These days we all talk about the rise of Asia and the challenge to America, but it may well turn out that the most consequential trend of the next decade will be the economic decline of Europe.

It's often noted that the European Union has a combined gross domestic product that is approximately the same as that of the United States. But the E.U. has 170 million more people. Its per capita GDP is 25 percent lower than that of the United States, and, most important, that gap has been widening for 15 years. If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German.

Zakariacloses with some speculation on what Europe's decline means for world politics:
What does all this add up to? Less European influence in the world. Europe's position in such institutions as the World Bank and the International Monetary Fund relates to its share of world GDP. Its dwindling defense spending weakens its ability to be a military partner of the United States, 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.

One mild rebuttal -- Europe's decline does not mean it's influence in international institutions will automatically fall. International organizations have notoriously sticky rules, and those rules benefit those who were powerful in the past. By any measure of power, Britain and France have no business being permanent members of any Security Council that keeps India or even Japan out. Yet there they stay, for two reasons: 1) It's costly to change the rules; and 2) The U.S. doesn't want to change them.

For all of the guff about transatlantic tensions, the U.S. is still keenly aware that it has more shared prferences with Europe than with other regions of the globe. Until that changes, European countries may decline, but they won't fall.

posted by Dan on 02.14.06 at 10:53 PM


For the sake of humanity I certainly hope Europe can save itself.

But these articles don't give me much reason to hope...

"...not with a bang, but with a whimper..."

posted by: John Kneeland on 02.14.06 at 10:53 PM [permalink]

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.

posted by: John Kneeland on 02.14.06 at 10:53 PM [permalink]

Does the decline ("widening gap between the U.S. and EU") in EU GDP per capita over the last 15 years take into account the induction of a large number of relatively poorer Eastern/Central European states into the EU? If so, does this statistic have much meaning as a predictor of future trends in the EU's GDP per capita?

posted by: Drew W. on 02.14.06 at 10:53 PM [permalink]


The GDP gap is roughly 20 years old, and none of the 'new' states (excepting East Germany) have been members of the E.U. for that long.

posted by: Jean on 02.14.06 at 10:53 PM [permalink]

The current UNSC is the US, Russia, France, Britain and China. What would it be or should it be?

My suggestion? US, EU, India, China, Russia if we stick to the 5 country rule.

posted by: Klug on 02.14.06 at 10:53 PM [permalink]

By 2030 the Islamists will have started civil wars in much of western Europe, western Europe is a fading anachronism.

posted by: save_the_rustbelt on 02.14.06 at 10:53 PM [permalink]


Thanks. The existance of the gap isn't the issue. It is the statement that it is "widening" and the methodology used to come to this conclusion. It simply isn't clear in the posting how this conclusion was arrived at and, depending on how it is measured, the conclusion could be misleading. If you measured 20 years ago and then measured today, you'd likely see a greater gap now. The question is the cause of that gap -- lower productivity of existing EU members or lower rate of increase relative to the U.S. or induction of new members with lower GDP per capita or what. I guess my question is whether Dan or other readers can provide more complete data, or a source for the data, that sheds more light than this rather opaque statement that the gap is "widening."

posted by: Drew W. on 02.14.06 at 10:53 PM [permalink]


The answer is productivity, pure and simple. Just plug in productivity gap, Europe and US into Google and surf around. Here's a good place to start


Dan is, of course, correct in supposing that the US does not (or ought not to, anyway) wish to hasten Europe's decline and eclipse. Yet it is difficult to see just how we prevent it, since the blinkered worldview of most Europeans has it that our unbridled capitalism is the dark counterpart to their "enlightened" socialist nirvana. It is a ferociously held dogma on the continent, and it is easier to foresee a wholesale relaxation of Muslim attitudes toward the depiction of Muhammad than of this.

Rich old people are not at the forefront of the entrepreneurial talent pool anywhere--why should Europe be any different? The wealth accumulated by many generations of Europeans will be squandered by the next one or two. This bodes well neither for Europeans yet to come nor for the world as a whole. But there it is.

posted by: Kelli on 02.14.06 at 10:53 PM [permalink]


Yup, productivity's very important. Add in the declining population and Europe's facing serious problems. What is even scarier about the productivity gap is that so many 'workers' considered marginally productive are already out of the workforce in much of Europe, e.g., retiring at 58 or 60, youth unemployment and so on.
Verdi (Germany's services union) has just started a strike - because the workers are being asked to increase their working hours w/o an increase in pay - to a 40 hour work-week. All because of an extra 18 minutes/day, trash isn't being collected and some hospitals are only seeing emergency patients.

posted by: Kelli on 02.14.06 at 10:53 PM [permalink]

Gah!!!! The post above, refering to striking Germans, is from me, Jean. Sorry Kelli! It's six in the evening here and I'm tired - I meant to start my post to reply to you, but put your name in the wrong place! Dinner, then bed for me!

posted by: Jean on 02.14.06 at 10:53 PM [permalink]

1. The US is behind several European countries on the Freedom House Economic Freedom Index. So less of the Europe = Socialism.
It is also, of course, well behind most of them in crime, health and other 'quality of life' issues. Worth noting, too, that the US government spends as much per head as the UK government on health care, for considerably less result.
As for ferociously-held dogmas - some European countries have slightly different views from the US on the role of the state in the market. Both, however, operate a regulated market economy with a
fair amount of preference and underhand help given to their own national champions. This is not Capitalism V Communism here.

2. Zakaria is confusing relative with absolute decline. Europe in 2030 will be richer and more powerful than it has ever been in history. As, of course, will the US, India, China...

3. Per capita GDP is all very interesting, but utterly irrelevant if we are talking about Europe's status as a power player. The figures happen to suit Zakaria, so he uses them, flipping between overall GDP comparisons and per-cap comparisons as it pleases him.
But for Europe to be 'eclipsed' in any meaningful sense of the word its overall GDP would have to be significantly smaller than that of the real powers - say, Japan, China, India and the US. This is a very long way from happening and it is rather silly of him to suggest that it is imminent.

4. The Security Council was set up to maintain peace and security between nations. In terms of ability to perform peacekeeping missions, power projection and so forth, I can't see an argument for replacing Britain or France with India or China. India and China have large but immobile and inefficient armies. Japan (were it not for its constitutional restraints on troops going overseas) might be a better bet.

5. The idea of Muslim-Christian civil wars in western Europe is frankly delusional. But the perception that Europe is 'soft on Islam' leads to this sort of fever dream.

posted by: ajay on 02.14.06 at 10:53 PM [permalink]

Europe does need to get its indigenous population growth up -- and there are ways of doing that.

Other than that, I was an am really puzzled by all this. Why should the 'rise' of Asia hurt Europe? Isn't Dan telling us how wonderful trade is all the time? So why would having more rich Asians to trade with be bad? Moreover, I tend to feel that this comparisons of 'richer' vs. 'poorer' between advanced industrial companies are meaningless. Sure GDP might be lower in Germany -- on paper. But, pace these economists with their bizarre measures of leisure, the German gets to take a month of each year.

posted by: Mitchell Young on 02.14.06 at 10:53 PM [permalink]

Correct in theme but overstated. Factor in leisure, the effeciency of big box retailers. People in the North America are much more dependent on the auto, heat and a/c production all of which boost NA gdp v. Europe superficially.
Those factors aside, the trends outside the uk are not good. This could be quite bullish for the dollar. But in the end Dans point about the US gaining more from a strong Europe than a weak one is correct!

posted by: centrist on 02.14.06 at 10:53 PM [permalink]

the double GDP per capita figure seems to depend on including the poorer members. We certainly dont have twice the GDP per capita of Germany.

posted by: liberalhawk on 02.14.06 at 10:53 PM [permalink]

the trends outside the uk are not good

Statements like this are why I really take these international comparisons with a grain of salt. I have lived in Germany and Spain and the UK on a permanent basis. I have had extended business stays in France, Bosnia, and Greece.

There is nowhere that I have lived, other than Bosnia, that is as uspleasant as the UK. Its GDP growth is propped up by its position as a financial center. If you ever want to see the kind of hollowed out society basing your economy on a service sector creates, just come on over.

Sure there are a few 'creative industries' that the UK does well in, and it is still a publishing powerhouse. But that is about it. It produces nothing, most of its popular culture is naff. It doesn't even produce good music anymore. I remember a few months ago I went to Barcelona, and got on the metro, and thought, man, this is clean. I am no longer in the third world.

Statistics bear me out. The UK's indigenous population is voting with its feet. And it aint just the whether. Life here is really really brutal.

Give me Munich, Strassbourg, or Madrid any day.

posted by: Mitchell Young on 02.14.06 at 10:53 PM [permalink]

The economist ran an article within the last year that the UK was on the verge of exceeding its record year of auto production.
Having spent time in the UK, I wonder to what extent the natives are simply being displaced. The workingclass by east european and south asian immigrants and the upper crust by Russian and Middle eastern oligrachs who also voting with their feet. The south east of england is so costly to live in is hard for an american to grasp. It reminds me of a qoute by a great american baseball player (regarding a great restaurant or england) "Nobody goes their anymore...it is too crowded" or expensive.

posted by: centrist on 02.14.06 at 10:53 PM [permalink]

I want to challenge Dan's argument that a declining Europe will remain strong in international institutions. There is little doubt that the EU 15 have tightened their grip over the UN in the past decade by dint of their permanent seats on the Security Council and the sheer number of votes they can raise. Every other major power gets a single vote but the EU now has 25 after the expansion.

I wonder whether that tight grip has nto actually weakened the UN even as European influence strengthens. The US is the obvious case often working on bilateral or multilateral grounds with other nations and not using the UN, particularly on matters not concerning Europe overmuch. But I suspect that countries like Japan, India, and Brazil may find working through the UN almost as tiresome as the US does. The more the UN is controlled by Europeans, the more European concerns dominate the agenda - and the less attention the interests of other large powers will get at the UN.

Notice how Europe impacted the proposed expansion of the Security Council last year? The new nations were to be Japan, India, Brazil --- and Germany. Germany? There are currently 5 permanent members of the Security Council, China, the US, the UK, France, and Russia. Three European powers out of 5. There is merit to adding Japan, India, and Brazil to the SC because they are of growing consequence in the world - more consequence than France and arguably the UK looking into the future.

What place does Germany have on the Security Council with it's social problems, shrinking economic influence, and no military power of consequence? If you add Germany why not also add South Korea, Argentina, South Africa, Australia, Italy, and Spain?

Germany was there for two reasons I think. To assert it's 'right' to be equal to France and the UK, and also to be able to interpose it's veto on anything the German Greens don't like. Primarily on the US but vetos on other counties are easily visualized. The Germans disapprove of many things & this would give their anger a lot of bite.

posted by: Don S on 02.14.06 at 10:53 PM [permalink]

Before condemning Germany, you might want to take a look at who is providing the ISAF troops currently clearing up the mess in Afghanistan.
And, however much you dislike their environmentalists, it's worth remembering that Germany is still the fifth largest economy in the world. Bigger than South Korea, Argentina, Spain, and all the other candidates you suggest.
If you really think that Brazil - Brazil! - is going to be more influential in international affairs than the UK in the near future, then either you are expecting some sort of major nuclear conflict in Europe or you are off your chump.
And finally, Mitchell, I would say that an American who suggests that dirty public transport equals third world status is standing on very thin ice indeed.

posted by: ajay on 02.14.06 at 10:53 PM [permalink]

Maybe, the United States, Britain, Canada, Australia, and smaller English-speaking nations, like Ireland, the Bahamas, New Zealand, Jamaica, Trinidad, Barbados etc., could form a Federation that would work well for the World's future

posted by: John D. Froelich on 02.14.06 at 10:53 PM [permalink]

Post a Comment:


Email Address:



Remember your info?