The Washington Post shows us that Europe is not as bad as it is sometimes presented, when compared to the USA.
Some myths:
1. The sclerotic European economy is incapable of leading the world.
The European Union’s $16 trillion economy has been quietly surging for some time and has emerged as the largest trading bloc in the world, producing nearly a third of the global economy. That’s more than the U.S. economy (27 percent) or Japan’s (9 percent).2. Nobody wants to invest in European companies and economies because lack of competitiveness makes them a poor bet.
Wrong again. Between 2000 and 2005, foreign direct investment in the E.U. 15 was almost half the global total, and investment returns in Europe outperformed those in the United States. “Old Europe is an investment magnet because it is the most lucrative market in the world in which to operate,” says Dan O’Brien of the Economist.3. Europe is the land of double-digit unemployment.
Not anymore. Half of the E.U. 15 nations have experienced effective full employment during this decade, and unemployment rates have been the same as or lower than the rate in the United States. Unemployment for the entire European Union, including the still-emerging nations of Central and Eastern Europe, stands at a historic low of 6.7 percent. Even France, at 8 percent, is at its lowest rate in 25 years.That’s still higher than U.S. unemployment, which is 4.6 percent, but let’s not forget that many of the jobs created here pay low wages and include no benefits. In Europe, the jobless still have access to health care, generous replacement wages, job-retraining programs, housing subsidies and other benefits. In the United States, by contrast, the unemployed can end up destitute and marginalized.
4. The European “welfare state” hamstrings businesses and hurts the economy.
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.5. Europe is likely to be held hostage to its dependence on Russia and the Middle East for most of its energy needs.
Europe may rely on energy from Russia and the Middle East for some time, but it is also leading the world in reducing its energy dependence and in taking action to counteract global climate change. In March, the heads of all 27 E.U. nations agreed to make renewable energy sources 20 percent of the union’s energy mix by 2020 and to cut carbon emissions by 20 percent.In pursuit of these goals, the continent’s landscape is slowly being transformed by high-tech windmills, massive solar arrays, tidal power stations, hydrogen fuel cells and energy-saving “green” buildings. Europe has gone high- and low-tech: It’s developing not only mass public transit and fuel-efficient vehicles but also thousands of kilometers of bicycle and pedestrian paths to be used by people of all ages. Europe’s ecological “footprint,” the amount of the Earth’s capacity that a population consumes, is about half that of the United States.
And now my own opinion relating to these myths.
1. The sclerotic European economy is incapable of leading the world.
The current decline of the US Dollar in comparision to the Euro has shown that the world opinion is turning. Why does the Euro rise that much? The reason is probably that the European Economy is assumed to be a bit more stable than the US economy. The current credit crisis has shown a big bubble exists, and investors are looking for safe ways out. The fact that Iran is setting up an Euro based oil trading system is also something to recon with. When oil has to be bought in Euro’s this will create a vast run on the Euro, probably pushing it even higher than the current conversion rate.
Even though Europeans as such may not really be that Europe minded, the total impact of the Euro and the vast import export in this currency may well dominate other countries in the years to come. The anti-US ideas arising more and more over the past few years because of the Iraqi war, may help this along as countries switch to Euro’s for their export and import business.
2. Nobody wants to invest in European companies and economies because lack of competitiveness makes them a poor bet.
Not much to add here, except that the current decline of the dollar, and the very strong Euro may help the investments along. Even if the competitiveness is lower (?) there will be no chance of getting your investments results undermined by the dollar exchange. So Euro is quite a safe bet for now.
3. Europe is the land of double-digit unemployment.
As noted, this is dropping in a vast tempo. And also in relation to point 4. The Europeans unemployed still have a basic social security backup, which means that they will still be able to partake in the economy. The question to ask is: is unemployment with basis social security worse than employed on a minimum income and no social security at all as in the US. The total difference in partaking in the economy may be the same, or even in favor of the unemployment. I have not seen any real studies who compare these effects.
5. Europe is likely to be held hostage to its dependence on Russia and the Middle East for most of its energy needs.
Europe is working on making this dependence smaller. For example, the use of less gas guzzling cars is being promoted through tax cuts. Also “green” sources of energy are getting promoted. While the US seems to be hanging on to it’s right for cheap oil, Europe is working on lessening this dependence. When the oil really runs out.. we’ll have to see who’ll be ready the most.
In conclusion you can say that the EU has really made steps in the last years, and has now become the economic force which was planned when it was conceived. How the US will react in changing world economics is the big question. That changes are needed, is something most people agree on.
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