Last week, some American minor leaguers whipped the Cuban baseball titans, underdog Norway beat the favored American women in soccer, and little Denmark rebuffed the mighty European central planners.
This last event was not an Olympic result. It was much more important than that. It was the outcome of a referendum in Denmark (total population 5 million) on whether that country should give up its own currency and fold its economy (and much of its politics and social life) into the more-than-300-million-person European Union.
For some time now, European agglomeration has looked inevitable. Beginning with the idea that war would be less likely if Europe's national boundaries faded away, the pan-European crusade has more recently garnered enthusiasm from centralizers who see the big planning bureaucracies based in Brussels and Strasbourg as handy tools for government manipulation of economic and social policy.
As the unification bandwagon rolled through the 1990s, only some British and Scandinavian skeptics were left resisting the euro and arguing for national sovereignty. In Denmark, the government was vigorously in favor of conglomeration. But the bigger-is-better idea made some people wary, and a coalition of Danes ranging from conservative free-marketers to liberal Greens lashed back in defense of self-determination. In a countrywide vote, a clear majority of the public turned down the euro.
This defeat may have something to do with the way the euro has performed since it was launched. In January 1999, 11 European nations centralized their economic policies and began the process of retiring their francs, deutsche marks, lira, etc., in favor of the euro. Since then, the new currency has tumbled, so far losing a quarter of its value.
That is a reflection of economic problems in the countries now under the sway of the European Central Bank. Long accustomed to political direction of their economies, Europe's politicians have merely dabbled at economic deregulation over the last decade. Unemployment remains stuck above 9 percent in the 11-nation euro zone (vs. 4 percent in the U.S.). Growth chronically lags U.S. levels by a couple of percentage points.
Two percent less annual growth than America may not sound like so much. But consider: If that differential continues for just 20 more years, instead of the European Union being roughly the same size as the U.S. economically (as measured in gross domestic product), the U.S. will be 60 percent richer. Having resisted the free market gospel much more than their trans-Atlantic partners, Europeans now find themselves stuck in the slow lane.
One exception to Europe's tepid economic performance has been the Irish. Ireland -- which I visit regularly, including this summer -- is an economy on fire. As recently as the late 1970s, when I attended college in Dublin, the country was still a kind of developing nation. Today, after two decades of red-hot growth, the Irish, stunningly, enjoy a per capita income higher than the Germans.
How has Ireland become a "Celtic tiger" (a la Hong Kong, Taiwan and Singapore, the earlier "tiger" economies in Asia)? Simple: By clinging for dear life to the coattails of the American economy. The Irish have basically set themselves up as a free enterprise zone for U.S. companies wanting a base in Europe, rolling out a business-friendly red carpet.
The government also mimicked American growth policies in some important areas - chopping taxes and reducing regulations. More than in other parts of Europe, Irish entrepreneurs studied and then cloned some of America's hypercapitalist airlines, energy companies, communications businesses and computer firms. Ireland's smashingly successful Ryanair, for instance, is a direct knock-off of Dallas-based Southwest Airlines.
Ireland has done this while proclaiming its fealty to the European Union (which admittedly made many Irish farmers wealthy with its lavish agricultural subsidies). The real engine of Ireland's economic advance, though, has been its warm embrace of lean and super-competitive American high-tech, manufacturing and service businesses.
Across the rest of Europe, meanwhile, older formulas of government planning, subsidies and controls (they now call it "rationalization" or "market unification") persist stubbornly. Germany still indulges its creaky labor unions, the French still insist on propping up nationalized industries, and bureaucrats in E.U. headquarters now dictate everything from the temperatures at which beer may be sold to the hours that businesses can stay open.
If they are smart, more Europeans will rebel against this economic finagling, which is stifling their economic vigor. They can do that by sneaking more American-style capitalism into their economy as the Irish have. And they can do that by saying "No" to further centralization of Europe's economies through the European Union, as the Danes did. A couple years ago, the British and the Swedes were in a lonely position as the sole holdouts against surrendering their monetary and cultural independence to the bureaucrats of the European Union.
Increasingly, they look rather wise.
Karl Zinsmeister is editor-in-chief of The American Enterprise and is the J.B. Fuqua Fellow at the American Enterprise Institute.
