www.fareedzakaria.com/articles/articles.html

This is bad news for everone, I would rather see a strong Europe than a strong China. Is Western dominance on the way out?

I'd like to hear from our European bros on this.




The Decline and Fall of Europe
Talk to top-level scientists and educators about the future of scientific research and they will rarely even mention Europe.
By Fareed Zakaria

For more articles by Fareed Zakaria, visit the archive.  
Cartoons and riots made the headlines in Europe last week, but a far less fiery event, the publication of an academic study, might shed greater light on the future of the Continent. The Organization for Economic Co-operation and Development, 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 might 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 EU has 170 million more people. Its per capita GDP is 25 percent lower than that of the U.S. 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. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the U.S.)

People have argued that Europeans simply value leisure more and, as a result, are poorer but have a better quality of life. That's fine if you're taking a 10 percent pay cut and choosing to have longer lunches and vacations. But if you're only half as well off as the U.S., that will translate into poorer health care and education, diminished access to all kinds of goods and services, and a lower quality of life. Two Swedish researchers, Frederik Bergstrom and Robert Gidehag, note in a monograph published last year that "40 percent of Swedish households would rank as low-income households in the U.S." In many European countries, the percentage would be even greater.

In March 2000, the EU's heads of state agreed to make the EU "the most competitive and dynamic knowledge-driven economy by 2010." Today this looks like a joke. The OECD report goes through the status of reforms country by country, and all the major continental economies get a B-minus. Whenever some politician makes tiny, halting efforts at reform, strikes and protests paralyze the country. In recent months, reformers like Nicolas Sarkozy in France, Jose Manuel Barroso in Brussels and Angela Merkel in Germany have been backtracking on their proposals and instead mouthing pious rhetoric about the need to "manage" globalization. EU Trade Commissioner Peter Mandelson's efforts to liberalize trade have been consistently undercut. As a result of the EU's unwillingness to reduce its massive farm subsidies, the Doha trade-expansion round is dead.

Talk to top-level scientists and educators about the future of scientific research, and they will rarely even mention Europe. There are areas in which it is world-class, but they are fewer than they once were. In the biomedical sciences, for example, Europe is not on the map, and it might well be surpassed by much poorer Asian countries. The CEO of a large pharmaceutical company told me that in 10 years, the three most important countries for his industry would be the United States, China and India.

And I haven't even gotten to the demographics. In 25 years, the number of working-age Europeans will decline by 7 percent, while those over 65 will increase by 50 percent. One solution: let older people work. But Europe's employment rate for people over 60 is low: 7 percent in France and 12 percent in Germany (compared with 27 percent in the U.S.). Modest efforts to allow people to retire later have been met with the usual avalanche of protests. And while economists and the European Commission keep proposing that Europe take in more immigrants to expand its labor force, it won't. The cartoon controversy has powerfully highlighted the difficulties Europe is having with its existing immigrants.

What does all this add up to? Less European influence in the world. Europe's position in institutions like the World Bank and the IMF relates to its share of world GDP. Its dwindling defense spending weakens its ability to be a military partner of the U.S., 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.

 

Totally true. China and India are the future.

It's a convoluted problem, dealing with political systems, immigration, beliefs, and anomie.

The USA has many of the same problems and will follow Europe in its fall.

You know what?


Who cares anymore.

Other then worrying about ourselves there is no way we can influence things to go the other way.

socialism killed europe, and they embraced it. just have to make sure it does not get more a foot hold here. socialism, thy name is liberal.

Quoted: It's a convoluted problem, dealing with political systems, immigration, beliefs, and anomie. The USA has many of the same problems and will follow Europe in its fall.

Another issue is that the 15-year trend is tricky to interpret, because as former Eastern Bloc countries have been joining the EU, those countries are completely impovrished, and require massive investment in infrastructure to just make it up to a reasonable level.  The unification of Germany, for instance, has compeltely stalled the W. German economy, as they try to drag the East into the mainstream European economy.  

As more and former East countries join, the growth rates will probably remain stagnant for a while, but that stagnation is probably masking healthy economies in the West, and restructuring economies in the East. Once those economies get going, there's going to be a lot of growth.  There are many U.S. companies that are outsourcing stuff like accounting and other functional roles to Eastern Europe now, for instance.  Thus, I think it is important to be wary of assuming that Europe is in decline because of those overall growth trends, because there is a lot of heterogenity within those data.  

I've also heard U.S. excutives express that Europe is a whole new ballgame now, and that European comanies and executives are hardnosed and competitive now - but were "at the brink" about 15 years ago.  I think a quote from Jack Welch was "doing business is Europe is no longer a three-hour lunch with a fat baron"

I know that there is also a clear attempt to restructure and revistalize universities in Europe, which - if successful - could also contribute to a revistalization of Europe.


Who knows?  I'm certainly not an expert.  

At some point, is Europe going to go to hell?  Sure - I just don't think it's necessarily going to be very soon.

Quoted: socialism killed europe, and they embraced it. just have to make sure it does not get more a foot hold here. socialism, thy name is liberal.

Where exactly in Europe do you currently see any country "embracing" socialism?  

Quoted: Quoted: It's a convoluted problem, dealing with political systems, immigration, beliefs, and anomie. The USA has many of the same problems and will follow Europe in its fall. Another issue is that the 15-year trend is tricky to interpret, because as former Eastern Bloc countries have been joining the EU, those countries are completely impovrished, and require massive investment in infrastructure to just make it up to a reasonable level.  The unification of Germany, for instance, has compeltely stalled the W. German economy, as they try to drag the East into the mainstream European economy.   As more and former East countries join, the growth rates will probably remain stagnant for a while, but that stagnation is probably masking healthy economies in the West, and restructuring economies in the East. Once those economies get going, there's going to be a lot of growth.  There are many U.S. companies that are outsourcing stuff like accounting and other functional roles to Eastern Europe now, for instance.  Thus, I think it is important to be wary of assuming that Europe is in decline because of those overall growth trends, because there is a lot of heterogenity within those data.   I've also heard U.S. excutives express that Europe is a whole new ballgame now, and that European comanies and executives are hardnosed and competitive now - but were "at the brink" about 15 years ago.  I think a quote from Jack Welch was "doing business is Europe is no longer a three-hour lunch with a fat baron" I know that there is also a clear attempt to restructure and revistalize universities in Europe, which - if successful - could also contribute to a revistalization of Europe. Who knows?  I'm certainly not an expert.   At some point, is Europe going to go to hell?  Sure - I just don't think it's necessarily going to be very soon.

DK-Prof: I hope you're right, and although it may be temping to gloat over European decline predictions it would certainly be a disaster for us as well if Europe were to go down. At the risk of sounding racist, I believe that Western Culture and values are mankind's best hope for the future. A Sino-centric world would certainly suck to say the least.

Quoted: Quoted: socialism killed europe, and they embraced it. just have to make sure it does not get more a foot hold here. socialism, thy name is liberal. Where exactly in Europe do you currently see any country "embracing" socialism?

In France most large businesses are government owned.  Airbus, government owned.  Means of production from food to airplanes controlled by the government.  Socializm isn't always a form of government but a type of economy where there is central control of the means of production.

Shok

Quoted: Quoted: socialism killed europe, and they embraced it. just have to make sure it does not get more a foot hold here. socialism, thy name is liberal. Where exactly in Europe do you currently see any country "embracing" socialism?

Sweden, ja?

I wouldn't worry too much about declining European birth rates.  Right now here in the US, there are people who take fertility drugs - the woman ends up with a litter (5 or 6 kids) at a time.  

If Europe really needs more kids, their goverments will begin offering incentive programs for people to have a larger number of children.

Eastern Europe is doing pretty doggone well in my book.  My regional mutual funds there were up something like 33% last year IIRC.  EUROX is one, I forget the other.

Just looked it up:
http://finance.yahoo.com/q/bc?s=EUROX&t=2y

Up 15% in January 2006 alone.  Well, that's a little deceiving because of an end-of-year dip.  But compared to January 1, 2005, the fund is up about 50% at this point, after a mere 13+1/2 months.  I'll take it.

Quoted: Where exactly in Europe do you currently see any country "embracing" socialism?  hr

Take a look at how "capitalism" (especially of the American sort) is portrayed in European media. Generally, it is derided as "Anglo-Saxon" capitalism and compared unfavourably to a jungle or Dodge City (which is also used to describe US gun laws). Reforms can be stalled or shot down entirely if the opposition declare it "American-style." The recent German election demonstrates that- the SPD (Schroeder's party) was massively unpopular and it looked as if Angela Merkel's CDU/CSU would win by a large majority. In the run-up to the election, Schroeder and his SPD party decried Merkel as a "pro-American" candidate, politically and economically. Merkel's party had a 21% lead over Schroeder's party, but the rhetoric worked, and the election results had Merkel's party ahead of Schroeder's by one percent. This was after Schroeder had presided over an unemployment rate that exceeded 12% in the first part of 2005!
Anti-capitalist rhetoric works, especially in France and Germany, though less so in Britain. In any case, the "Social System" is viewed as non-negotiable, and it's one reason why European economies are choking.

About ten years ago, a nice old fellow who was a real oddball -- a conservative State Department lifer -- said something to me that seems to be making more and more sense.  He said the following:

"The EU will last as long as the Germans don't mind paying for the Belgians to build a world class non-functional beaurocracy that exists to glorify the French state."

Well, the Germans are pretty skint right now, the French aren't very popular with one another, and the Belgians have rather publicly populated the EU beaurocracy with coke-snorting, child-molesting, whore-mongering embezzlers and show no sign whatsoever that they see this as a problem.

Tick tock, tick tock.

As a customs union, the EU is a fine idea.  What they have now (and what the Euro-crats are pushing for) will be an unmitigated disaster.

So, I am thinking (kind of like I am thinking about Canada, after the Harper elections) -- who will be the first to leave?

DK Prof?  Can we count on your countrymen finally snapping and leaving the EU for good?  Or will it be the UK?

EDIT:

I keep thinking to myself -- how can we get the people in Alberta to finally take their registered gun and rise up!  We have faith in them!  We know that they have it in them!  Similarly, how could we finally drive the Danes off the deep end so that they seal the borders, deport everyone who doesn't want to be Danish, and repeatedly threaten the Germans over quince size regulations as a prelude to war?  I think that we have a duty to help reinforce these peoples' clarity!

Quoted: I wouldn't worry too much about declining European birth rates.  Right now here in the US, there are people who take fertility drugs - the woman ends up with a litter (5 or 6 kids) at a time.   If Europe really needs more kids, their goverments will begin offering incentive programs for people to have a larger number of children.

The problem isn't the birth rate itself, its what is done to mask the problem.  Instead of the countries adapting or finding ways to mechanize they bring in immigrants.

Europe is taking loads of immigrants, mainly Muslims, to keep a labor segment of their population.  This brings many other problems when the Muslim culture clashes with the culture currently there (look at the riots, cartoon problems, etc).

The US is similiar in that we have been accepting, against the general populations will, Mexican illegal aliens who perform a lot of the labor portions of our workforce.  Loads of problems are associated with this.

The trend of destroying the family unit needs to be reversed in Europe and here or our society needs to adapt rather then bringing in cheap labor at the expense of the rest of society.

The Timbro folks in Sweden produced a rather a distressing report last year noting that almost half of all Swedes have an income below that of "black Americans" that the Swedes were so fixated on for so many years.

Will Europe & Japan be the canary in the coal mine for the US? Too many retirees per worker? Europe has many more immigrants, both from the third World & Eastern Europe. Will those immigrants assimilate and support the old, white pensioners. Japan is less accepting of guest workers.

Europe is having their problems with Muslims, but does anyone else notice that the French rioters were more for economic reasons than religious?

These next 15 years will be very interesting, but I am reluctant to give much credence to studies this far in the future. Who guessed six years ago that we would be occupying Iraq & Afghanistan?

Quoted: Will Europe & Japan be the canary in the coal mine for the US? Too many retirees per worker? Europe has many more immigrants, both from the third World & Eastern Europe. Will those immigrants assimilate and support the old, white pensioners. Japan is less accepting of guest workers. Europe is having their problems with Muslims, but does anyone else notice that the French rioters were more for economic reasons than religious? These next 15 years will be very interesting, but I am reluctant to give much credence to studies this far in the future. Who guessed six years ago that we would be occupying Iraq & Afghanistan?

I probably shouldn't be starting another thread here, but I would say who seriously thought that we would walk away from Afghanistan after driving the Soviets out (hint -- it wasn't the folks in Langley)?  Who thought that we would be stopped a few dozen miles outside of Baghdad and be told to turn back without removing Saddam and settling the Iraq issue right then and there (hint -- it wasn't the Joint Chiefs)?  Who seriously thought that we would encourage the Ukranians to not revolt against their Soviet masters (hint -- it wasn't the US State Department, in fact it was an assertion so unamerican that it actually appalled the US State Department)?  Who seriously would have thought that we would shut down defense manufacturers, outsource key parts of the military to private parties, decide that the National Guard was actually full time military (hint -- it wasn't war planners, people who worked at US ball bearing or machine tool plants, or people joining the National Guard) in search of some "peace dividend" because "we had no more threats left in the world"?  Who would have thought that a president elected based on his pledge to never raise taxes (in fact, the exact phrase was "read my lips; no new taxes!") would actually raise taxes (hint -- not the taxpayers)?

There is a name here that I am searching for ... I just can't seem to find it ... shrub? Plant? Tree?  Something ... right on the tip of my tongue ...

You can never underestimate stupidity.

So, I am wondering when some member of a EU royal family will very publicly convert to Islam ...

Wow - some people in this thread should really look up terms like "socialism" before they use them in conversation.  Socialism is an economic system with no private property or personal capital, in addition to centrally planned economies.

There is no country in Western Europe that could by any stretch of the imagination be called "socialist"



Does France have government-owned industry?  Sure.  So what?  The entire U.S. airline industry would be unable to survive without constant government protection, and U.S. companies like Chrysler or Boeing wouldn't exist without government bailouts or contracts.  While the european subsidies of Airbus are direct and obvious, the U.S. subsidies of Boeing are more indirect and subtle - but both exist, don't kid yourself about that.  Not really that different - just a matter of degree.

Does Sweden have massive social programs?  Sure.  So what?  The U.S. has socialized medical care for the poor and for the elderly, has social security, has massive welfare programs, food stamps, income redistribution (the EIC "tax credit").  The fact that scandinavian coutnries might have MORE of such stuff is just a matter of degree, not a different in principle.


It's a bit of a pet peeve of mine when people call countries like the scandinavian ones "socialist" (which are common examples) because it demonstrates a surprising ignorance.  The scandinavian countries all have capitalist free-market economies and are free representative democratic societies - BOTH concepts that are 100% incompatible with socialism.  They might have more goodies in their social programs than the U.S, but the U.S. has the exact same kinds of social programs.  

If people define scandinavian countries as "socialist" then by definition, they must define the U.S. as "socialist" as well.  

Quoted: About ten years ago, a nice old fellow who was a real oddball -- a conservative State Department lifer -- said something to me that seems to be making more and more sense.  He said the following: "The EU will last as long as the Germans don't mind paying for the Belgians to build a world class non-functional beaurocracy that exists to glorify the French state."

That's awesome!! And in many way, spot-on.

Well, the Germans are pretty skint right now, the French aren't very popular with one another, and the Belgians have rather publicly populated the EU beaurocracy with coke-snorting, child-molesting, whore-mongering embezzlers and show no sign whatsoever that they see this as a problem. Tick tock, tick tock. As a customs union, the EU is a fine idea.  What they have now (and what the Euro-crats are pushing for) will be an unmitigated disaster. So, I am thinking (kind of like I am thinking about Canada, after the Harper elections) -- who will be the first to leave? DK Prof?  Can we count on your countrymen finally snapping and leaving the EU for good?  Or will it be the UK?

Hard to say - I think it depends very much on what the "EU" tries to turn itself into now.  I think more and more people in Denmark are starting to really be opposed to the E.U. - and there is no doubt that the consitution would have been voted down in Denmark last summer (had the vote not been cancelled after it was defeated in Holland and France).  And the Danes did defeat the Masstrict Treaty originally.

If they keep it as the "common market" model it was originally intended to be, then I think the Danes will stay - but the problem is that I think it becomes very hard to leave, once you are hooked into it.

We'll see - I've become more and more opposed to the EU over the past 10 years, and I think a lot of Danes feel the same way.

Quoted: tag for home

tag for what he writes when he gets home.

Quoted: I wouldn't worry too much about declining European birth rates.  Right now here in the US, there are people who take fertility drugs - the woman ends up with a litter (5 or 6 kids) at a time.   If Europe really needs more kids, their goverments will begin offering incentive programs for people to have a larger number of children.

I think you're missing the point.
The whole thing is a catch 22.

If you slow the wheel that is birth rates in a socialist nation, IMO it is the beginning of the slow death of that society.

It's a vicious cycle my friend.

Quoted: Quoted: I wouldn't worry too much about declining European birth rates.  Right now here in the US, there are people who take fertility drugs - the woman ends up with a litter (5 or 6 kids) at a time.   If Europe really needs more kids, their goverments will begin offering incentive programs for people to have a larger number of children. I think you're missing the point. The whole thing is a catch 22. If you slow the wheel that is birth rates in a socialist nation, IMO it is the beginning of the slow death of that society. It's a vicious cycle my friend.

If the tax base continues to shrink, yes, but not if it expands.  Even a strongly socialistic nation does fine as long as the ballance of accounts works in their favor, whether that comes from exports or tax receipts.

EDIT:

I am not trying to beg the obvious.  What I mean is that if the productive part of the population is making more money and spending less, you can support a lot of old people.  Japan, for instance, is not quite as bad as it seems (except for the real estate money sink) because in demographic decline, the individual net worth of the remaining people is likely to rise steeply if the old farts are somewhat frugal.  Now, if you expand entitlements for old people until you go broke (like George Bush is doing now, planning to raise my tax rate to 60% to pay for it), that is another issue.

Quoted: Quoted: About ten years ago, a nice old fellow who was a real oddball -- a conservative State Department lifer -- said something to me that seems to be making more and more sense.  He said the following: "The EU will last as long as the Germans don't mind paying for the Belgians to build a world class non-functional beaurocracy that exists to glorify the French state." That's awesome!! And in many way, spot-on. Well, the Germans are pretty skint right now, the French aren't very popular with one another, and the Belgians have rather publicly populated the EU beaurocracy with coke-snorting, child-molesting, whore-mongering embezzlers and show no sign whatsoever that they see this as a problem. Tick tock, tick tock. As a customs union, the EU is a fine idea.  What they have now (and what the Euro-crats are pushing for) will be an unmitigated disaster. So, I am thinking (kind of like I am thinking about Canada, after the Harper elections) -- who will be the first to leave? DK Prof?  Can we count on your countrymen finally snapping and leaving the EU for good?  Or will it be the UK? Hard to say - I think it depends very much on what the "EU" tries to turn itself into now.  I think more and more people in Denmark are starting to really be opposed to the E.U. - and there is no doubt that the consitution would have been voted down in Denmark last summer (had the vote not been cancelled after it was defeated in Holland and France).  And the Danes did defeat the Masstrict Treaty originally. If they keep it as the "common market" model it was originally intended to be, then I think the Danes will stay - but the problem is that I think it becomes very hard to leave, once you are hooked into it. We'll see - I've become more and more opposed to the EU over the past 10 years, and I think a lot of Danes feel the same way.

Britain is all that stands in the way of the EU seriously trying to sort out their problems. At the moment, the French, Belgians and Germans can point to Britain with their evil Anglo-Saxon economy and ties with America and blame them for every problem that the EU has. They provide a convienient scape-goat. I'm not saying that the EU would actually solve anything if Britain left, but they would loose the excuse.

The EU is all that stands in Britain's way of achieving similar propserity to the US. If Britain's "Anglo-Saxon" economy were freed of the EU's regulatory regieme, it would actually perform the way it is supposed to (provided that the British govt didn't impose an equally draconian set of regulations).

About the best that can be said of the situation is that Britain joining the EU was a marriage of convienience that has outlived its usefulness.

IMHO Britain will walk when it looses its rebate. No amount of spin will be able to cover that up.

Quoted: Quoted: Quoted: I wouldn't worry too much about declining European birth rates.  Right now here in the US, there are people who take fertility drugs - the woman ends up with a litter (5 or 6 kids) at a time.   If Europe really needs more kids, their goverments will begin offering incentive programs for people to have a larger number of children. I think you're missing the point. The whole thing is a catch 22. If you slow the wheel that is birth rates in a socialist nation, IMO it is the beginning of the slow death of that society. It's a vicious cycle my friend. If the tax base continues to shrink, yes, but not if it expands.  Even a strongly socialistic nation does fine as long as the ballance of accounts works in their favor, whether that comes from exports or tax receipts. EDIT: I am not trying to beg the obvious.  What I mean is that if the productive part of the population is making more money and spending less, you can support a lot of old people.  Japan, for instance, is not quite as bad as it seems (except for the real estate money sink) because in demographic decline, the individual net worth of the remaining people is likely to rise steeply if the old farts are somewhat frugal.  Now, if you expand entitlements for old people until you go broke (like George Bush is doing now, planning to raise my tax rate to 60% to pay for it), that is another issue.

True, but your looking AT LEAST 20years before you'd even start seeing any returns.
I guess in the grand scheme of nations, 20 years isn't alot.