June 2005
The European Economic Model: Time for a Facelift?
Travel to Europe these days and you will have to make sure that the transportation systems are not being gripped by strikes. Less productivity, slower growth, and higher unemployment are emblems of Europe's malaise. Morale in continental Western Europe is at record lows. While left-leaning Europeans imagine that they have invented a more humane approach to capitalism, the sustainability of their high-tax, high-regulation, high-welfare economy is in question. Can Europe restore its competitiveness without strong medicine? Have European elites failed to educate their publics about the choices they face? Can Europe gain the international clout it craves without ditching socialism? Sabine Herold, spokeswoman for Liberte, J’écris Ton Nom (Liberty, I Write Your Name) is the French activist who led a student revolt against strikes provoked by French trade unions. She debated Charles Kupchan, associate professor of international affairs at Georgetown University and author of The End of the American Era, at a June 13 NAI conference.
Sabine Herold
Liberte, J’écris Ton Nom (Liberty, I Write Your Name)
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Sabine Herold |
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The European economic model needs a facelift. The economic performance gap between the United States and Europe is widening, not tightening. Under the current model, France suffers from an unemployment rate of over 10 percent. Strikes, declining living standards, and general malaise face French citizens every day. France’s rejection of the proposed European Union Constitutional Treaty is proof that economic problems, including high taxes, complicated labor laws, and an unviable pension system, need to be addressed. A failing economic system, in turn, brings out the worst aspects of human nature, as evidenced by France’s growing struggle with anti-Semitism and the increasing popularity of its extremist presidential candidates. An economically vibrant European Union is in the interest of the United States, because only strong external competition will result in domestic reform.
Charles Kupchan
Georgetown University
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Charles Kupchan |
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The European economic model, though in need of reform, does not need as drastic a facelift as critics suggest. It is incorrect to cast the debate for or against one economic model in hyperbole and claim one brand of capitalism to be superior to another. U.S. economic performance is far from perfect: the U.S. budget deficit of 5 percent of GDP (as compared with the EU’s small budget surplus) is a case in point. Moreover, France’s rejection of the EU Constitutional Treaty was largely based on public opinion about EU enlargement and immigrant integration, not economic performance. The EU has become a scapegoat for economic failure in particular member states (e.g. France and Germany) because political elites have not addressed underlying economic problems. A strong EU does not mean a counterweight to American power. Rather, a strong EU is in fact in U.S. interest because, as the war in Iraq has demonstrated, the United States cannot do everything alone, and only a stronger Europe can provide ample foreign support for the United States.
