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Friday, July 08, 2005

Does Europe Want to Change?

I do not have a problem with the idea that government can be too large and that government is less efficient than the private sector in the provision of goods.  I have no problem with the idea that taxation should be done wisely so as to produce maximum growth and minimal distortions.  But as I read this indictment of European economic systems a question comes to mind, one I’m not sure I know the answer to.  Is the typical worker in Europe less happy, less secure, less well taken care of, have less access to education, less leisure, etc., than the typical worker in the United States?  Do the Europeans want to change to become more like the United States?  Are they simply unaware of what is best for their own welfare or, if they would like to change, unable to get there due to past decisions that predetermined the set of feasible paths as the article suggests (it actually says the elites know they need to change, but are not ready to do so)?  Much of what I read seems to presume that Europe wants to become like the United States.  Is that true?  I am not endorsing the European system, just wondering if our indictments are consistent with their goals:

Western Europe Is Cursed By Philosophy of Economy, By Steven Pearlstein, Washington Post:  … The economies of Western Europe are cursed by self-defeating public attitudes about markets, wealth and work.  After a two-week tour, what sticks is my mind is a meeting with union workers in Lyon who believe that despite rising unemployment, the new 35-hour workweek has created jobs and that a 20-hour workweek (with no cut in pay) would create even more.  I recall the bright and articulate students at the University of Cologne who said they'd probably go to a talk by Bill Gates -- only to understand better how the capitalist "enemy" thinks. …  I heard of the dozens of workers that Alitalia airlines must fly in from Rome each day because seniority rules prevent hiring local replacements. … I heard executive after executive complain of the chasm between university and corporate research because of the refusal of academics to get their hands sullied by commerce and corporate support. The … gap between every euro a company spends to employ a worker and the 40 cents that the worker actually takes home. The rest goes for taxes and social charges that pay for health care, pensions and unemployment insurance, along with an overstaffed public sector that justifies itself by perpetrating regulations that stifle competition, entrepreneurship and innovation.  It is untrue that most Europeans are overpaid. What is true is that they've allowed the public sector to get so large, and government-dependent workers so numerous, that it is now politically impossible to reverse course. … [T]he widespread belief that the best way to "fix" the economy is for government to do it directly rather than create the right environment for a robust private sector. … The problem with that approach is not only that government-directed efforts are prone to failure. More significantly, by diverting so much money, energy and attention, the initiatives make it unlikely that the private sector will ever develop those capabilities on its own.  It is these issues that Blair is determined to put on Europe's agenda, despite reluctance from Italy and Germany and the outright opposition of France. The reality in those countries is that while the economic crisis is real and acknowledged among the elites, things are not desperate enough to prompt a fundamental shift in attitudes and policies…

    Posted by on Friday, July 8, 2005 at 04:11 PM in Economics | Permalink  TrackBack (0)  Comments (7)

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