Inside Washington's Headlines

by Ken Feltman
International Edition

Five hundred good years may be ending

Deep inside, in the backs of their minds, many thoughtful Europeans are scared. Immigrants frighten them. Terrorism haunts them. They are losing patience with their political leaders. Amidst a general malaise, they sense that the good times may be eroding.

A Norwegian summed it up: ‘We have the best life in the world here. Can we sustain it? I want my grandchildren to have the kind of life that I have, but I wonder if my grandchildren will have a more difficult life, like my grandparents had.’ That fear of slipping back is echoed, to a greater or lesser degree, country by country, in the prosperous and established social democracies of Western Europe. Europe has been the world leader in so many ways for so long. Is that leadership now in danger of fading away?

Discovery and domination

Early in the fifteenth century, China was the most powerful civilization in the world and seemed on the verge of discovering Europe. Admiral Zheng He’s ships were up to five times the size of anything known in Europe or elsewhere. His ships explored both coasts of India and much of Africa’s east coast. But before Zheng could round the Cape of Good Hope, the emperor ordered a halt to his voyages of exploration. Zheng’s navy was dismantled in 1433 and China embarked on a long period of isolation and decline. China’s chance to dominate the world passed, at least for the time being.

Then, at the end of the fifteenth century, two European sea captains set off in different directions seeking the same thing: the East. Christopher Columbus discovered the New World while searching for the East by sailing west. Vasco da Gama opened the East to trade by sailing south around the tip of Africa and on to the Indian sub-continent. These two Europeans launched the greatest period of discovery and technological advancement in history. In almost every sense, all of us all around the world have lived under European dominance ever since those voyages in the 1490s.

For the last 500 years, Europeans have explored and colonized virtually everywhere. They settled the New World, created and refined complex military, political, mercantile and trading systems. They developed modern science and created systems of law and government that today are in operation around the world. Now, these five centuries of leadership may end in a period of introspection because Europe can no longer sustain the burden that leadership requires. The recent rejections by French and Dutch voters of the European Union constitution may come, centuries from now, to symbolize the end of European dominance, just as the voyages of Columbus and da Gama came to symbolize the beginning.

Strangely, this is happening after the best half century in European history: The standard of living and the state of care - medical care, child care, elder care, education - is higher today in much of Europe than anywhere else in the world, ever before. But the Europeans who created this lifestyle are vanishing in low birthrates and aging pensioners. The continued graying of Europe seems inexorable.

The birthrate in Western Europe is 1.5 children for each woman of childbearing age, well below the 2.1 rate required for replacement. One in six Western Europeans is now 65 or older. In mid-century, one in three will be at least 65 and many will be much older, requiring more care and more resources, leaving less for the young. Some social scientists even suggest that Europe’s low birthrate is a result of the social welfare system itself: Because the state pays for the elderly, the infirm and the unemployed, the need for children as caregivers does not exist.

Age wave

Europe is headed for uncharted territory: More and more elderly people, dependent on government social benefits that are not adequately funded, will surely cause the economy to sputter merely because there are so many and they are living so much longer. Modern medical science saves and lengthens lives but also creates the public financial burden of an aging population.

One solution, of course, seems easy enough: Immigration. Europeans, however, are increasingly less tolerant of immigrants. They do not like the immigrants that they have now and can be expected to be hostile to sufficient numbers of newcomers to reverse the downward population trend.

An alternative solution is also unpalatable: Reverse the welfare state and its taxes, regulations and red tape. That, of course, would require more pain than Europeans seem likely to accept, even though Europe’s generous welfare systems are a magnet for the very type of immigrants that Europe does not want. The current benefits are just too good to give up.

Beside attracting unwanted immigrants, the generous benefits seem to produce long-term unemployment. Consider three facts:

• Nearly half of Western Europe’s jobless have been out of work for over a year (compared with 12 percent in the U.S., for example).
   
• Europeans retire early. Only about 35 percent of Western Europeans between ages 55 and 65 hold jobs (compared with 60 percent of Americans).
   
• Europeans want long holidays. Month-long vacations are normal. Vacations of two or three weeks, often broken up to accommodate the work schedule, are the norm in the U.S., for example, and many other countries have even less holiday time.

Have Europeans become addicted to high and lengthy unemployment allowances, generous early retirement benefits and long holidays? Simply stated, today’s Europeans do not work as long or as hard as people elsewhere - and they want to keep it that way. Who can blame them? Still, while Europeans enjoy their lifestyle, people in other parts of the world are working harder to catch up and pass the leaders.

A million little fears

Today, quietly, millions of Europeans express millions of little fears: This may be as good as it gets; this may not last. Maybe, some think, the post-World War II generation was Europe’s fortunate cohort. ‘Possibly we will fail to pass it on,’ said a German. ‘We have come to prize the long holidays and social benefits. All this prosperity, possibly gained and gone in my lifetime.’

This is difficult for Americans to comprehend. Europeans have suffered through decades of war and turmoil, with the first half of the 20th century being especially bloody and brutal. The boom in social and democratic progress beginning a half century ago was welcomed with relief and enthusiasm. So many new things were happening all at once. Americans have come to expect stable progress, from one generation to the next. Americans still think that their children will have a better life, more prosperity, more leisure, better medical treatment, greater opportunity. The American dream is very much alive.

Indeed, Americans see a picture of this dream in their newspapers on a regular basis as immigrants go through the ceremony that makes them citizens. They all hold a small American flag and, while the faces are more likely to be Asian and Hispanic today, they still beam with hope and pride. Typically, these new citizens do not threaten Americans because everyone knows that they worked hard to become citizens. Beside, they have paid their new countrymen the highest of compliments: They want to be Americans. Very often, Europe’s immigrants want to have the benefits of their new land without the obligations. They want to cluster in isolation.

Immigrants who want to work are not always welcomed in the United States and in many parts of the world, of course. But as a multi-ethnic nation of long standing, the U.S. has an easier time in this age of worldwide migration. The newcomers are what the United States is and has been. Because of this multi-ethnic tradition, Americans do not understand what the average European is going through. Europe’s cultural divide has no counterpart in the U.S. - and no easy solution. Some nations, like some Americans, fearful of the differences and not seeing the potential, want to limit change, to revert to their ethnic or religious roots. They rally against not just the immigrants or foreigners in general but against such concepts as globalization.

King Canute and the contrary tide

While some European politicians try to hold back globalization - just as 11th century English King Canute tried to hold back the tide - the truth is that individual nations still control their own destiny. (Canute would have been a good American: his father was Danish, his mother was Polish, he married a woman from Normandy and he migrated to England.) No one in Brussels, nor anyone in Vienna, Helsinki or any other European capital, forced debilitating choices upon the Germans, the French or the Dutch. They made the choices themselves. Now some political leaders blame globalization. Globalization is not the cause of stagnating economies in some European nations. Globalization has become an excuse for bad decisions left in place too long.

If globalization had any cause-and-effect relationship, then we would expect the effect among nations to be more uniform. Not so: Economic growth in the past decade in Japan averaged 1.3 percent; in Europe, 2 percent; in the United States, 3.3. Within Europe, Ireland averaged 7.9 percent and Germany, 1.3. Why such differences?

Some suggest that high taxes and smothering regulations are to blame. Others say that because European and Japanese consumers fear the future more, they save more. Meanwhile, clueless and debt-ridden Americans just keep spending - and spurring their economy. That raises a good point: Attitudes matter.

Take Ireland and Germany again: In 1990 Ireland’s per capita income was more than a quarter lower than Germany’s; today it is the German’s who are about 25 percent lower than the Irish. Many factors account for this burst of Irish income. But one may be most important. Ireland hung out a 'welcome' sign and attracted foreign investment. Even today, influential German politicians warn against the dangers of foreign investment. Attitudes matter.

All politics is local

Tip O’Neill, former speaker of the U.S. House of Representatives, used to say that 'all politics is local.' That suggests that geographic boundaries and borders matter. Most markets are local. Local markets respond less to global and more to national and regional policies - and to politics. In Europe, increasingly, the local folks are casting glances at their neighbors, perhaps almost hoping that the neighbors have worse troubles. When things are on the upswing, folks hope the neighbors notice them: 'Look at us in our new car.' 'Look at what we just got.' Now, some Europeans are hoping that no one notices - a sure sign of lowered expectations.

That is also a sign of trouble for everyone, everywhere. Lowered expectations often forecast lower results - for everybody. We are all affected. The question is not whether to have a global economy. That choice has been made.

The threat is that individual nations will be so burdened by their particular national or ethnic jealousies that politicians will make bad decisions, as some nations have done and as others are threatening to do. Blaming others will not help. The global economy works best only when all the individual economies work.

Take Ireland and Germany one last time: Ireland cannot be smug. As part of the European Union, Ireland needs a strong German economy. The U.S. cannot be smug. As part of the world economy, the U.S. needs a strong European economy, which depends in part on a strong German economy. Fortunately for all of us today, Europe and Germany have a relatively strong U.S. economy to rely on for help through the current stagnation - but only if those nations in the doldrums understand what got them in a mess in the first place. Meantime, the U.S. must do everything possible to assist the weaker European economies while strengthening our own. Like it or not, we are linked and the weak links weaken us all.

Last of the best days

Some are calling this the end of Europe as we know it. They may be the same people who, 15 years ago, forecast the end of the U.S. This is not the end of Europe’s leadership. But it is a time for older Western Europeans to be thankful that they lived in Europe’s best of times. Their children and grandchildren will live in better times only because non-Europeans take the lead and export their advances to Europe.

A continent in decline needs scapegoats. European leaders continue to shift attention from the huge financial burden facing the next generations. They criticize others, especially the U.S., while giving recognition to our detractors, as French President Chirac did recently when he commended Venezuelan President Chavez and gave Chavez a European platform. This gives the current European leaders an illusion of greater importance than they actually command. The idea is to seem to be still important in the world scheme of things - even as these leaders cannot correct their countries’ problems. This is the end game for Europe’s social democracies: Pretend to be important by calling attention to problems outside Europe.

Many in the United States have been disappointed with the European response to our pressing problems. Americans have been confused and even hurt by European reactions to our needs. A realistic analysis leads to the conclusion that, rather than choosing not to help, Europe cannot afford to help. Europe has not made the investment necessary to be able to help us. My advice to Americans is simple and direct: Get over it. Europe is just beginning to confront her own very real problems. Be patient.

These are the last of Western Europe’s best days.

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