Geopolitical reality tends to change far more slowly than perceptions of it. To take a geophysical analogy: Underlying trends are like plate tectonics, slow to develop but irresistible over time; perceptions are like the weather, sometimes dramatic, often unpredictable and hardly irrelevant, but of lesser impact all the same. Perceptions of Europe have shifted markedly
in just the past few years. Where once stood an attractive post-nationalist model of peace, prosperity, social justice and ecological virtue now stumbles a larger but seemingly aimless and far more ungainly project. Europe today seems apathetic about its achievements, confused about its future and largely ignored by those not directly affected by it. Thanks to the financial crisis and its meandering aftermath, Europe’s problems and limits seem lately to have accumulated into a genuine crisis. To understand how read Walter Russell Mead brilliant April 27 post on the economic origins of the “Greek” dimension of the crisis.
But is it really a major crisis we hear thundering toward us, or just the cacophony of nervous nellies? Is the promise of the once-vaunted European model now revealed as just a passing breeze, or is it our current dour attitudes that will dissipate once the economy stabilizes? The American Interest put the question to eight observers, four European and four American, for our July/August issue.
Since Barack Obama came to power, many Republicans have been busy painting him as a socialist and decrying his Administration for attempting to turn America into a European social welfare state. They seem, at least, to have a point. The United States has been adopting policies (or trying to) that look suspiciously European: nationalization of key industries, comprehensive health care reform, enhancements to the social safety net, state-directed investments, and a foreign policy based on arms reduction and consensus. Just how far will America travel down this path?
Don’t worry: Washington, DC will not look like Stockholm any time soon. America’s Europeanization, while it may proceed further than Republicans would like, will never be complete, and there is no evidence that Barack Obama is really a closet socialist after all. You can reject the conservative refrain that “government is the problem” without being a wannabe totalitarian. America’s recent supposed Europeanization in fact has little to do with a vision of the European “good life.” It has been driven more by necessity than desire. The financial crisis revealed lax or mis-regulation, an insufficient social safety net and poor public investment strategies. Reactions to the crisis, both from the Bush and Obama Administrations, necessarily pushed in the direction of a more activist state as the reaction to the Great Depression did in its time as well.
America’s political culture is too inherently individualist, pro-mobility and entrepreneurial to ever become truly European. A variety of specific reasons work against that grain, too: higher immigration levels, greater racial and ethnic diversity, the lack of a homogenous working class, social conservatism, sheer size and, perhaps, its sometimes latent, sometimes not, imperial ambitions. As Jim Manzi recently argued in National Affairs, fully 12.7 percent of Americans are foreign born compared to less than half that number, on average, in European countries. Strong immigration and higher birth rates mean that the United States has to create more jobs just to keep the unemployment rate steady. It invites the creative destruction of entrepreneurship to an extent Europe still does not. Europe, by contrast, now protects its world-leading standard of living in part by keeping immigrants out. Yet without dynamic population growth, Europe’s relative share of the world economy is shrinking, endangering its ability to compete for influence with rising Asian powers. For Europeans, the seats may be comfortable, but the ship may be sinking.
Some Europeans agree not only that their social welfare model isn’t fit for America; they also say it’s not working all that well in Europe. Since the 1980s, European governments have been retreating gradually but consistently from once-sacrosanct social guarantees. Britain has privatized much of its social housing. France abandoned the 35-hour workweek. Germany cut its generous pension system. Across Europe, governments have increased labor-market flexibility to allow enterprises to hire and fire more easily. Interestingly, the leaders of the big three European economies at the time of the financial meltdown—Nicholas Sarkozy of France, Gordon Brown of the United Kingdom, Angela Merkel of Germany—all made their careers as free-market reformers of the European social model. Sarkozy campaigned against the 35-hour workweek and told France to “work more to earn more.” Brown made his name as a fiscal conservative in the New Labour government of Tony Blair. Merkel took on the mantle of a free-market reformer from the ex-communist east.
Oddly enough, just as many Europeans have been trying to make their economic models more American, many Americans have wanted to make the U.S. economic model more European—and this was true long before the Obama presidency. This case has now been revived in the wake of financial crisis and economic uncertainty by Steven Hill. His new book, Europe’s Promise, argues that the old world today is more innovative, forward-looking, and successful in its policies than the new. He praises the uniqueness of the European Union experiment, the innovative social features that support both market economies and families, greater environmental protections and a more enlightened approach to foreign policy. In Hill’s view, Europe has been busy building a new civilization based on market economics and complex institutions that secure a higher standard of living for most people. By contrast, the United States is beset by intractable social problems, creaky political institutions and an overactive, militaristic foreign policy that crowds out social spending at home.1
Hill is on to something. European cities typically make up the bulk of the “most livable” cities in the world. Europeans are on average healthier than Americans, work fewer hours and enjoy a higher standard of living. They are also as productive on a per-hour basis as Americans. The main reason Europeans earn less is because they spend more of their hours in leisure activities with family and friends, reaping significant health and quality-of-life benefits. Conservatives often complain that Europeans pay absurdly high taxes; Hill shows this to be a myth. When one factors in the exorbitant fees Americans pay for health care and education, the tax rates paid by Europeans for the same services are fairly equivalent to what Americans pay, only the services are more evenly distributed.
So the picture on both sides of the pond is mixed. Many Americans, avowed conservatives and not, are still wary of the European social model. They continue to argue that it would stifle American innovation, dynamism and growth. Old habits of conservative Eurobashing have been fortified by overwrought fears about the ultimate purposes of the Obama presidency. On the other hand, Europhiles have shown renewed enthusiasm for the social achievements of the old continent and, since the global financial crisis, European leaders have tempered their enthusiasm for Americanizing reforms and renewed their devotion to the European social model.
This discussion, however, is in danger of being overshadowed by a new narrative originating in Asia. Most Europeans remain worried that the social protections they enjoy are under fire from globalization, demographic changes and, above all, fierce competition from Asia. Americans suffered acutely from the financial crisis, and it now looks as though Europeans will soon suffer as much or more. China, on the other hand, looks to have weathered the storm quite well, serving to remind us that beyond American and European models there is a third choice that may appeal to non-Western elites most of all. Perhaps the real drama of our age is the rise of authoritarian state capitalism in Asia and the inability of the developed West to match its achievements without abandoning democracy. Dubai can build mammoth skyscrapers in the sand thanks to indentured labor from South Asia and a flexible workforce that can be summarily expelled thirty days after employment contracts end. China can invest 50 percent of its GDP thanks to a government that stifles consumption and political participation and provides only minimal social guarantees.
In the West and in the Americas we thus seem to face a choice between a flawed free-market American model and a good old European one, warts and all. Today, Europe looks a bit more attractive to many. But to many more around the world, authoritarian statism looks ever more appealing. That, not Obama’s purported socialism, is the real threat.