Europe: Dispelling the Myth
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- Published on Monday, 13 September 2010 18:03
- Written by Nick Scott
Individualism, the belief in the primary importance of the individual and in the virtues of self-reliance and personal independence, has been at the heart of American culture since the days of its founding. What began as an exodus of European defectors, fleeing from restraints of monarchy and a church orthodoxy, quickly flowered into a renewed emphasis on the necessity of hard work, private ownership, and independence; a novel concoction of organizing principles, guiding the vision of America’s founding fathers towards the drafting of the constitution. Through the prism of individualism, America became a beacon of freedom, democracy, and economic might, culminating in the 20th century as a global power and model of Western democracy.
Tragically, the cultural and demographic fissure of 18th century American-European relations sowed a seed of mistrust and an aura of exceptionalism among American patriots. Today, the salient truism is evinced by a faction of the United States bound by a rather parochial, hubristic belief in the cultural, economic, and military supremacy of country; a belief that has unwittingly deprived all of political insight beyond the nation’s borders. Business groups, free market ideologues, media pundits, and politicians have made a concerted and largely effective effort in co-opting these sentiments; concealing and promulgating misinformation regarding Europe for the benefit of their interests. As a result, numerous myths and half-truths about Europe now masquerade as conventional wisdom and have clouded Americans’ perceptions and understanding as they pertain to economy and social life.
A common canard heard within the clamor of the business media is that: as a whole Europe is a sclerotic, noncompetitive economy debilitated by regressive policies of state socialism! Such statements are outright false. Not only has Europe harnessed the capitalist engine, it has structurally changed the business system through innovations in economic democracy known as “codetermination,” “works councils” and “flexicurity.” Imagine having an opportunity -via codetermination- that allows workers to elect representatives to corporate boards of directors. In Germany, half of the board members of the largest corporations (Siemens, Daimler) are elected by the workers. In Sweden, one-third of a company’s directors are worker-elected. Works councils operate seamlessly in tandem with codetermination. Elected works councils at individual companies allow workers to gain significant input into their working conditions. Works councils, which are separate from the labor union entity, possess enormous clout. They have “co-decision rights” to meet with management to discuss the firm’s finances, daily work schedules, scheduling of holidays, work organization and other operating procedures; and “consultation rights” for the introduction of new technologies, mergers and layoffs. Implementation of these workplace democratic reforms has been nearly universal in Europe as well as immensely rewarding for workers, fostering a healthy degree of consultation and cooperation between management and workers, while promoting a more egalitarian distribution of income compared to the gross inequalities seen in the U.S.
Representing the largest economy in the world, nearly a third of the world’s economy is produced in Europe; almost as large as the United States and China combined. According to the World Economic Forum, from 1998 through 2008, Europe had a higher per capita GDP growth rate than the U.S., while boasting a lower unemployment rate (U.S. 10%, European Union, 9.5%). Inconvenient truths such as these upend the claim that Europe is plagued by legions of unemployed workers.
One must ponder the mechanism by which such an anemic “socialist” economy arose to become the largest trading partner of both the United States and China. Europe is the international hub for business investment, out-performing the U.S. in both stock and investment returns. In fact, Europe is corporate America’s biggest target for foreign investment, U.S. businesses make far more profits there than anywhere else in the world, over twenty times more than they have made in China.
Dismissing Europe’s economy as an entirely planned one is mistaken. The social system is designed to support the health and productivity of families and individuals through a “social capitalist” amalgam of “workfare” supports combined with the driver of a market-based economy. Protecting against the whims of unpredictable market forces, European workfare provides high quality health care, education, child care, maternity care, retirement pensions, reductions in crime and incarceration, and higher literacy rates. In the United States nearly 14% of Americans live in poverty – about 40 million people -- compared to 6% in France, 8% in Britain, and 5% or less in Germany, Sweden and Belgium. One of the more striking facts is that the U.S. is ranked 29th in infant mortality, tied with Poland and Slovakia and 37th in health care (France is ranked first). Moreover, the richest 10 percent of Americans hold 70 percent of the country’s wealth, while in Germany the top 10 percent owns 44 percent. Twenty percent of American children live below the poverty line, as do nearly 23% of the elderly; a score which ranks below all developed countries with the exception of Russia and Mexico.
Compared to other countries, the U.S. boasts the highest GDP per capita score. However, one should not equate ‘average income’ to ‘median income’, nor assume a distribution of income that is largely egalitarian. If Warren Buffet stepped into a McDonald’s, the ‘average income’ of everyone in the restaurant would be raised above a billion dollars! The greater concentration of wealth at the top and inexplicably high number of those living in poverty or unable to afford basic necessities places the U.S. as the most unequal society among developed nations. In addition to taxes paid to the government, Americans pay a ‘private’ tax, out-of-pocket, via higher health care premiums, deductibles, 401k fees, college tuition, transportation, and child care. Regardless, Europe’s higher per capita savings rate demonstrates that demands can be met with less income. Europeans receive an efficiently greater number of benefits and services, while devoting less income than the American system. For example, Americans pay nearly twice as much per capita on health care, while performing worse than Europe as measured by the World Health Organization’s Social Index score. American parents allocate tens of thousands of dollars per child towards college education, yet European children attend for free or at very minimal cost. The generous European retirement system reduces the need to invest in a 401k or other savings accounts. Little do Americans realize that Social Security’s operating overhead is around 1%, while private accounts operate around 15%, which is subtracted from earnings. Many Americans self-finance the costs of their own sick and parental leave, along with the costs of child care, but Europeans, in return for paying their taxes, receive all of these services. Unsurprisingly, the total cost, when comparing the two systems, reveals that many Americans pay out as much as or more than Europeans while receiving fewer goods and services.
Europe’s energy efficiency is the best in the world. As a result of widespread implementation of conservation and renewable technologies, Europe’s ecological “footprint” (the amount of the earth’s capacity that a population consumes) is about half that of the United States for the same standard of living. The European landscape is being transformed slowly by giant high-tech windmills, vast solar arrays, underwater seamills, hydrogen-powered vehicles, “sea snakes,” and other renewable energy technologies. Europe is implementing conservation and “green” design in everything from skyscrapers to homes to fuel-efficient automobiles, high speed trains, low wattage light bulbs, and low flush toilets. Europe has gone both high- and low-tech: it has also developed thousands of kilometers of bicycle and pedestrian paths that are used by people of all ages. In the process, Europeans are creating entirely new industries and hundreds of thousands of new jobs.
Europe has achieved some impressive foreign policy accomplishments that force us to reevaluate how we define “power” in the 21st century. America’s aggressive brand of unilateralism and military “hard power” has suffered unexpected setbacks in recent years. But Europe’s “smart power,” which is based on multilateral diplomacy and regional networks of investment, trade, and Marshall Plan–like foreign aid, has produced more concrete results than its critics will admit. For starters, this velvet diplomacy has been instrumental in bringing greater peace, democracy, and prosperity to the former communist dictatorships of eastern and central Europe, as well as to neighbors such as Turkey, Ukraine, and others in its periphery. All told, this “Eurosphere” links two billion people -- one-third of the world, including many Arab countries -- to the European Union and its way of doing things. Europe’s smart power also shows the right temperament for slowly nudging Russia, China, the Middle East, and other hot spots toward rapprochement with the West.
While Americans witness the expansion of the defense budget, proposals to ‘reform’ Social Security, an accelerated rise in healthcare and tuition costs, and stagnant economic sector, it may be wise to look to Europe, as an alternative model, to addressing the needs of its people. No model is perfect. Europe is confronted with real challenges in regards to decoupling from an unsustainable growth-based economic model, managing the cultural tensions of African and Middle Eastern migration, and coordinating global efforts to combat escalating climate change. America certainly has its fair share of problems, more so than most European nations, and its traditions, demographic composition, and current financial circumstances will render the transition into a European style model much more difficult. Change will depend on American citizens’ willingness to question the conventional wisdom, educate others, and politically mobilize to facilitate a more prosperous, sustainable, and pragmatic approach to a less volatile economy and more representative democratic government.
