In light of the growing despondent feeling associated with Europe, Edward Crinion considers the rise of the continent, its success and how to fix its problems
The words used to describe Europe these days read like a thesaurus entry for the symptoms of a nasty sub-tropical disease: rotten, sclerotic, grave, ailing, feeble, terminal. There’s a feeling that the continent is on a one-way trip to hades, demographically doomed to an irrelevant future. Its people are indulged and unproductive, its political machinery rusting. The EU economy has basically stagnated since 2007. And they don’t even shave their armpits. Who on earth would want to live there?
Well, most of northern Africa, it would seem. The Italian navy regularly arrests boats packed with refugees that have been launched unmanned across the Mediterranean at full speed. The financial cost to Italy is high – the human cost to refugees infinitely more. For Europeans, it adds to a long list of problems.
Most of those problems, though, are a consequence of the continents success. The boats fleeing Libya, Tunisia and Eritrea demonstrate the potency of the European brand. The world wants what Europe has: peace, habeas corpus, secularism, relative equality, human rights, universal healthcare, sound money. Europe is arguably one of mankind’s greatest achievements, the most enlightened civilisation in the universe. It has delivered a standard of living unimaginable to any previous society, without resorting to US-style plutocracy or Chinese corporatism. The continent accounts for about 10 per cent of global population, but almost one-third of its wealth.
Glum economists berate its lack of GDP growth, but all that means is Europeans are happy with what they’ve got. They have no need to spend more this year than last. Yes, the US is growing, but the American middle class is straining to stay above the poverty line. If you whip a horse hard enough it will move.
Our prosperity, and lack of theocracy, is why we are a target for Islamist attacks. That the depraved losers in Al-Qaeda and IS think your lifestyle is a threat is a sign that Europe’s ideals are winning, not that we’re at risk unless they change.
So how did a small part of the northern hemisphere become so successful? A combination of factors: the mild climate is good for farming and preventing disease, while our geography meant we could live close to each other, allowing us to mate, fight, compete and trade. This incubated a culture (exemplified by Florence and the city states of renaissance Italy, where the first bonds were issued) that was generally tolerant, individualistic and competitive – the qualities needed to make a civilisation thrive.
Those factors reinforced themselves, as the modern continent has become the densest transport network in the planet. Nowhere is so economically or culturally concentrated. It is the free flow of ideas, the plagiarising of solutions, that makes it – us – so strong. And that ideal is what conceived the early European Union, the founding principal of which is the free movement of people and capital. The EU is a system designed to accelerate the throbbing wealth-creation that happens when two states realise that they can gain more trading together than alone. In business school they call it a win-win.
But Europe is far from perfect.
Unemployment is the continent’s big failure in recent years, mainly in the southern states like Spain and Greece. Basically it’s because debtor countries owe money in a currency controlled de facto by Germany, and get stuck in a reinforcing cycle of austerity and fear, because investors make them pay a lot to borrow money. But it is not inevitable. Indeed, the solution is simple, boring and technical: eurobonds. That is, pool all of Europe’s government deficits together.
It would make Greek debt as safe as German debt, and give huge boosts to the balance sheets of governments (who would pay less debt interest) and banks (who would hold less risk, so be able to lend money instead of hogging it). The hedge fund supremo George Soros wrote “the positive impact would be little short of the miraculous”. Germany doesn’t like the idea because it would in theory be funding other countries’ interest. That’s understandable but misguided; investors would be much keener to buy pan-European debt than, say, British debt.
Eurobonds are a sideshow, though. Thanks to its trade in ideas and goods, Europe has given us Einstein and Newton, Beethoven and Daft Punk, skiing, stock markets, the croissant and Chateau Talbot. The EU is a mechanism for locking down this successful formula, making it easier for good ideas to pollinate. It is emphatically on the right side of history, and has added to the sum of human happiness. We should be louder in defending it.
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