TCS Daily


Sick Economy, Sick Society

By James K. Glassman - June 17, 2004 12:00 AM

At a symposium at my college reunion last week, my classmates -- refugees from the '60s, still lefties after all these years -- were complaining that America wasn't enough like Europe. You know, compassionate and unstressed, with free health care, two-month vacations, a lovingly isolationist foreign policy and great food.

Food aside, there's irony here. While many Americans, including the putative Democratic presidential candidate, admire European ways, Europeans themselves aren't so cheery.

In recent years, it's finally dawned on them that they're living in a fool's paradise. So far, however, they lack the will to do anything about it, preferring instead to revel in their sense of moral superiority, looking down on Americans as overweight, gun-toting rubes and mindless workaholics, hooked on commercialism, violence and religion.

Funny thing, though: Americans are happier and more optimistic than Europeans, and we have reason to be.

A giant 2002 Pew Research Center survey found Americans comfortably ahead of Europeans in satisfaction with income, family life and job. More important, when asked how they see the next five years, 61 percent of Americans were optimistic and just 7 percent pessimistic (and this was just 12 months after the attacks of 9/11). By contrast, only 35 percent of Germans were optimistic, 19 percent pessimistic.

Europeans have good reason for gloom. Their economy is sick, and so is their society.

Economy first: Over the past year, the GDP of the Euro Zone countries (the large European nations, except Britain) grew just 1.3 percent, while American GDP grew 4.4 percent. Unemployment in France is 9.8 percent; Germany, 10.5 percent; Spain, 11.4 percent; the United States, 5.7 percent.

None of this is new. Germany, the largest European economy, averaged 1.3 percent annual growth over the past decade; the United States, 3.3 percent. A half-century of increasing prosperity in Europe has come to an end -- and for the obvious reasons. Europe is overtaxed and over-regulated, with a welfare system that discourages work and a guild mentality that deters entrepreneurship.

It was a European, Joseph Schumpeter, who explained that a lust for "creative destruction" makes an economy grow. But risk-taking is not on the menu in Europe; smug entitlement is the house specialty.

As Andrew Grimson wrote in The Spectator, "This civilization has the defects of its virtues. It is peaceful but passive; stable but stagnant; morally concerned but preposterously self-righteous."

Meanwhile, Europe's vaunted state-run retirement and health-care systems are on the verge of collapse. Price controls have chased drug research to the United States, and Europeans wait in line for such common procedures as hip replacements. (The prime minister of Sweden got his after an eight-month wait.) Social sickness? As crime has declined sharply in the United States, it has exploded in Europe. The rate of victimization even in Sweden, that socialist dreamland, is 20 percent higher than ours, and crime has hit new highs in Paris, Madrid, Stockholm and Amsterdam. Plus, how healthy is a society where population is falling because parents don't want to have children? The fertility rate in Italy is just 1.3 births per woman -- far below the replacement rate of 2.1.

But more and more Europeans understand that the jig is up, as German researcher Horst Opaschowski confirms in a new report. "The days of ease and luxurious living are over," he writes. But without strong political leadership -- which Europe (with the notable exception of Britain) has lacked for about 20 years now -- the transition to free markets and self-reliance will be postponed for another decade.

The most hopeful event was the accession of 10 new countries, led by Poland (population 40 million), to the European Union in May.

Defense Secretary Donald Rumsfeld was correct in January 2003 when he characterized Eastern European nations as "new Europe" and France and Germany as "old Europe." I would define a slightly different dichotomy -- between "aspiring Europe" (the outer rim of nations, including Ireland, Portugal, Denmark, the Netherlands, perhaps Britain and Italy and certainly Poland and its cohorts) and "complacent Europe" (France, Germany and Belgium).

The days of complacent Europe are numbered. Its role in world affairs is declining along with its economy. "Learning to Live Without Europe" is the title of a recent appraisal of the continent's value in global security by Thomas Donnelly, my colleague at the American Enterprise Institute.

What's frightening is that the United States could have gone the same way if Ronald Reagan hadn't led us in a new direction 24 years ago. Still, for many American politicians, the European temptation remains dangerously enticing.


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