TCS Daily

Kissing Cousins No More

By Christian D. de Fouloy - July 10, 2003 12:00 AM

In a great variety of areas -- foreign policy, demography, religion, economics -- Americans and Europeans are growing apart.

Some Europeans complain that the U.S. is increasingly heading off on its own without them. They are right. America's psychic link with Europe is dissolving rapidly. There are 32 million people living in the U.S. who were born abroad, and very few of these new Americans are from Europe. They come from Asia, Central and South America, the Near East and the Caribbean. America is becoming a cosmic nation comprised of all peoples rather than just an offshoot of Europe.

Since the end of the Cold War, Americans have felt less intertwined with Europeans, and at least as interested in China, Mexico, India and the Middle East as in Europe. Americans believe that those relationships will grow in importance while Europe will slowly fade in the rear-view mirror, its greatest accomplishments behind it.

The U.S. will never be hostile to Europe: there are too many links of kinship and shared purpose for that. But commonalities between America and Europe are disappearing and the feelings of solidarity that were so strong during World War II and the Cold War are now fading.

In the U.S., the main focus has been to reduce centralism and the size of government. In the 1980s, U.S. federal spending was 24 percent of GDP. Today, it is 19 percent. That is only half or two-thirds the level in most EU states, where levels have been rising not falling.

The U.S. has undergone an even more profound decentralizing revolution outside of government. Many private corporations and organizations have broken themselves into smaller governing units to avoid stultification. Firms such as Cisco, Southwest Airlines, Amgen, Microsoft, Nucor -- most of them beginning as tiny businesses unconstrained by bureaucracy -- have used their decision-making freedom to outflank older champions. Sitting high on current lists of the richest Americans are at least a couple dozen billionaires who made their fortunes in companies that didn't even exist 25 years ago. In Europe, hardly any of the top companies are recent start-ups.

It isn't just differing policies that are splitting the EU from the U.S. It is also sheer competition. The very idea of forming a United States of Europe comes in large measure to keep up with America. Today, much of the psychological drive for Euro-nationalism is provided by anti-Americanism. The view of many European leaders is that whatever diminishes the stature of the U.S. is of benefit to Europe. Europe is not begging to differ in particulars but beginning to diverge in fundamentals.

Conventionally, we have thought of Europeans as having about the same standard of living as Americans. This is less and less true. For the EU as a whole, GDP per capita is presently less than two-thirds of U.S. levels. America's poorest sub-groups now have higher average income levels than the typical European.

What's behind this? For one thing, Americans work harder. Some 72 percent of the U.S. population is at work compared to only 58 percent in the EU. And U.S. workers are more productive: An EU worker currently produces 73 cents worth of output for every dollar produced by an American.

The locomotive of Europe is the German economy, which has been in a serious mess for more than a decade. Germany's annual growth rate over the past 10 years has been a limp 1.4 percent. Among the major industrial nations, only Japan has done worse. The German labor market has become one of the most inflexible and uncompetitive in the world, which is why unemployment has been stuck at 9-10 percent for years.

German sclerosis is one reason the collective European economy is growing at 1 percent, while the U.S. -- despite the blows it has absorbed over the last two years -- is close to 3 percent.

Over the long haul, these sorts of disparities add up to crunching economic divergences. Since 1970, America has produced 57 million new jobs. The EU nations, with an even bigger combined population, have produced 5 million (most of them with government). A startling 40 percent of the unemployed in Europe have been out of work for more than a year compared to only 6 percent in the US.

Indeed, it is clear that the U.S. makes very different economic choices with different results. Michael Gove in the Times of London noted last year that the "anti-American alliance" resents U.S. economic success because it reminds them that their preferred cocktails of protectionism, state regulation, subsidy and intervention constrict growth. America's practical success is a standing rebuke to their abstract beliefs.

Just 100 years ago, the U.S. was a modest nation of 76 million people. Germany and Poland combined had more citizens than America. Europe was the undeniable world centre of science, military power, arts and intellectual innovation of all sorts.

Today the respective positions are very different. The U.S. now produces 30 percent of global GDP; as recently as the late 1980s, the figure was just 22 percent. Fully half of all Internet traffic takes place in America. Three quarters of all Nobel laureates in science, medicine and economics have lived and worked in the U.S. in recent decades.
Given the very different population trends on either side of the Atlantic, America's lead will only widen.

It's quite possible that in coming decades, the EU could simply lock up. Pressures toward centralization and state bureaucracy, the sheer cumbersomeness of its political mechanisms, the wide cultural gaps papered over by the Union could eventually lead to a meltdown.

To American eyes, the most striking aspect of the EU is its undemocratic nature. Relatively few of the EU's important decisions are currently made by democratically accountable officials. On front after front, bureaucrats are deciding how everyday Europeans will live. Many Europeans, in a way Americans find impossible to understand, are willing to let their elites lead them by the nose. There is a kind of mentality under which the elites are allowed to make important national judgments for them. In France, Germany and the institutions of the EU, elites take major political decisions and impose them on the voters without consulting them.

What happens to such a system of governance if things go wrong and popular unrest bubbles up is not clear. Among other effects a weakened Europe is likely to grow more resentful toward America. In the years to come, it will be China, India, Mexico, Indonesia, Brazil, Vietnam, the Arab World and Turkey that the U.S. will have to huddle with most earnestly at international conclaves, not Europe.

Frankly, those are not the circumstances most Americans would prefer. By rights, Europe and America ought to remain close cousins. But Europe's current choices in political, economics, social and family life and moral reasoning unmistakably suggest that a less familial relationship is emerging.

Christian D. de Fouloy is a Senior Research Fellow at the European Enterprise Institute (EEI)

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