5 Myths About Sick Old Europe [View All]

WP op-ed: 5 Myths About Sick Old Europe
5 Myths About Sick Old Europe
By Steven Hill
Sunday, October 7, 2007; B03

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.

Who're you calling sclerotic? 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). Despite all the hype, China is still an economic dwarf, accounting for less than 6 percent of the world's economy. India is smaller still....

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.

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....

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

Crystal-ball gazing on this front is risky. 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....

(Steven Hill, director of the New America Foundation's political reform program, is writing a book comparing Europe and the United States.)

http://www.washingtonpost.com/wp-dyn/content/article/2007/10/05/AR2007100501041_pf.html