SPEAKING FREELY A European future
By Dafydd Taylor
Speaking Freely is an Asia Times Online feature that allows guest writers to have
their say.
Please click hereif you are interested in contributing.
Striking in the discussion of the European sovereign debt crisis has been the
lecturing tone traveling across the Atlantic. The general assumption is that
Europe is uncompetitive, has suffered bad economic management and is
politically paralyzed.
In short, the fashionable view of Europe's future involves decline and
irrelevance. The United States is perceived as losing sole super power status,
yet still able to compete. The BRICs as the
new kids on the block, supplanting decrepit Europe.
While Europe is indeed a long way short of perfect, neither is it doomed. It is
not European social democracy which brought the world to the brink of ruin, but
Anglo Saxon neo liberalism. While scorn is heaped on the idea of curing debt by
more borrowing, the folly of correcting the errors of neo liberalism with a
stronger dose of neo-liberalism is scarcely questioned.
This is an assumption, a conventional wisdom that must be challenged. True,
Greek default is inevitable. There are other European nations that must also
default. Portugal, Ireland, Spain, perhaps Italy. Denial is not useful, neither
is it pretty.
But what about the US? Does anyone believe the US can pay all its debt on time?
It seems to me, while the nations in Europe which have serious problems have
acknowledged them. Cuts and tax rises are underway. In the US, debt is rising
rapidly toward 100% gross domestic product (GDP(.
The fiscal deficit is above 10% GDP. Taken as a whole, the fiscal position of
either EU or eurozone is vastly superior to that of the US. Neither does it end
there. While Eurozone nations are at the door of default, US states are hardly
in better health. Holders of municipal bonds from California to Illinois must
surely be feeling nervous. Total public debt in the US is already out of
control. No numerate being can expect that debt to be repaid in full. The GOP
claims to be 'responsible' and 'conservative' by aiming to close this gap while
refusing any tax rises whatsoever. This is a level of political dysfunction
unknown in Europe since the 1930s.
In fact, the problem in Europe is clear. Diverse nations with divergent
interests are compelled to jointly seek a way forward. No one nation is able,
or allowed, to dominate. Rule must be by consensus. This from the view of the
24 hour news cycle is paralysis. But is this really paralysis compared to the
partisan deadlock we see in Washington?
Much lauded, in recent times, has been the ability of China's command system to
make things happen. What short memories we have. The Chinese communist party
has been in power for about as long as the Soviet communist party had back in
the late 1960s or early 1970s. Back then it was very possible to believe in
ultimate soviet victory in the cold war. Many of the West's greatest thinkers
did.
Decades before then Winston Churchill contemplated Europe's future subjugation
to a 'Slav Empire'. But command systems are rigid and inflexible. If we have
learnt anything from the Arab Spring we should have learnt that a dictatorship
remains as strong, as rigid as iron right up until the moment it is doomed.
Can China retain this dictatorial model while liberalizing the economic lives
of its people? Absolutely not. Can China manage an orderly transition to
greater political freedom? This is not impossible, but I would argue the
Eurozone is more likely to manage orderly sovereign defaults.
Europe has an aging population, but the birthrate is not far below replacement
rate. The distortion of the baby boom is not as great and therefore will not be
as difficult to manage in Europe as in the US. As for China's demographic
profile, the rate of population aging far exceeds anything in the western
world. This is the inevitable result of the enduring one child policy.
In Europe there is German manufacturing. The world's largest food exporter
(France). The world's largest wine exporter (Spain). The home of Ferrari and
Gucci (Italy). And these are all Eurozone nations. In London there is a genuine
world leader in financial services. Growth figures have been consistently lower
than those in the US, but much US growth, we now know, was artificial.
Eastern European nations are capable of higher growth rates. This is largely
because, like BRIC nations, they start from a lower base. Europe will likely,
as other nations move up the income chain, command a lower share of world
output, just as it represents a lower proportion of the world population. This
does not indicate that European pensions are unaffordable, or that the European
social model is fundamentally broken.
Europe will remain a collection of extremely high income nations. As the middle
classes of BRIC nations expand, they will not only compete in the world market
for basic resources, but increasingly the luxury items that nations like France
and Italy can produce like no one else. German manufacturing will remain for
the foreseeable future, and almost certainly beyond, an example of excellence
in a high income nation beyond compare.
And as the competition for world resources hots up, there is no place better
equipped to develop and exploit new green technologies than the manufacturers
of Northern Europe, lead by Germany. Indeed, should global warming accelerate,
Europe, with its temperate weather, is better placed than California, Russia or
China to cope.
For Europe, the future really should be bright. Yet there is one vital
ingredient missing. Many of the prophecies of doom are voiced by Europeans
themselves. What seems missing in Europe, much more than a common identity, is
a sense of self-confidence.
The sort of self-confidence for which the US is renowned, and China seems, in
the last few years, to have rediscovered. Europeans seem only too ready to
accept the inevitability of their own demise. If they cannot shake off that
sort of pessimism, it may well become a self fulfilling prophecy.
Dafydd Taylor is a UK-based political analyst.
(Copyright 2011 Dafydd Taylor.)
Speaking Freely is an Asia Times Online feature that allows guest writers to
have their say.Please click hereif you are interested in contributing. Articles
submitted for this section allow our readers to express their opinions and do
not necessarily meet the same editorial standards of Asia Times Online's
regular contributors.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
