Monday, October 08, 2007

5 Myths About Sick Old Europe

By Steven Hill

In the global economy, today's winners can become tomorrow's losers in a twinkling, and vice versa. Not so long ago, American pundits and economic analysts were snidely touting U.S. economic superiority to the "sick old man" of Europe. What a difference a few months can make. Today, with the stock market jittery over Iraq, the mortgage crisis, huge budget and trade deficits, and declining growth in productivity, investors are wringing their hands about the U.S. economy. Meanwhile, analysts point to the roaring economies of China and India as the only bright spots on the global horizon.

But what about Europe? You may be surprised to learn how our estranged transatlantic partner has been faring during these roller-coaster times -- and how successfully it has been knocking down the Europessimist myths about it.

1. The sclerotic European economy is incapable of leading the world.

2. Nobody wants to invest in European companies and economies because lack of competitiveness makes them a poor bet.

3. Europe is the land of double-digit unemployment.

4. The European "welfare state" hamstrings businesses and hurts the economy.

5. Europe is likely to be held hostage to its dependence on Russia and the Middle East for most of its energy needs.

Full article here from the Washington Post

To me, the most compelling quotes from the above article:
Beware of stereotypes based on ideological assumptions. As Europe's economy has surged, it has maintained fairness and equality. Unlike in the United States, with its rampant inequality and lack of universal access to affordable health care and higher education, Europeans have harnessed their economic engine to create wealth that is broadly distributed.

Properly understood, Europe's economy and social system are two halves of a well-designed "social capitalism" -- an ingenious framework in which the economy finances the social system to support families and employees in an age of globalized capitalism that threatens to turn us all into internationally disposable workers. Europeans' social system contributes to their prosperity, rather than detracting from it, and even the continent's conservative political leaders agree that it is the best way.

Am I saying, therefore, that Europe = good and USA = bad? Hardly. I'm just exploring the possibility that perhaps the US and our leaders can learn a thing or two from our European friends about how to maintain an economy that functions to serve the needs of average citizens.

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