Beyond Euro-Trashing

Clive Crook is justified in reminding us of Europe’s many ills: a failure to reform its welfare states at the cost of structural unemployment; the sluggish economic performance of several countries; its failure to integrate many of its Muslim immigrants, even into the second and third generations; and the arrogance of its moralizing on the international stage while still relying on the American security umbrella ("Think Again: Europe," July/August 2007). He even forgot to mention Europe’s lag in research and world-class university education.

But Crook overshoots the mark on at least two counts. First, he needlessly eulogizes the United States in order to bring the European Union (EU) back down to Earth. All developed democracies, including the United States, fail to deliver greater social cohesion alongside economic growth. All face exponential increases in healthcare costs and a widening gap between the haves and the have-nots. We are all challenged by the lack of accountability on the part of our economic and political elites, and a growing global resistance to our shared insistence on promoting what economist William Easterly recently called in these pages the "developmentalist ideology."

Second, Crook falsely characterizes anti-Americanism as the "animating spirit" of the EU. Perhaps he mistakes the rhetoric of a few (say, former French President Jacques Chirac) with the motivation of the many. Who exactly is Crook referring to when he argues that "the EU" is primarily concerned with establishing itself as a counterweight to the United States? Surely, recent trends point in the opposite direction. Consider the replacement of Chirac by the far more conservative (and less anti-American) Nicolas Sarkozy, or the moderate Angela Merkel’s succeeding Gerhard Schröder in Germany; the progress on trans-Atlantic economic and regulatory cooperation; and the growing self-assertion of the new member states. Talk of the EU as a rival to the United States is receding, not intensifying.

The EU has attempted, albeit clumsily, to invent a new form of transformative power, and it deserves more daring analysis than Crook offers. Given all the challenges the United States and Europe face together, it would be a shame if a slightly more subtle version of the "cheese-eating surrender monkeys" rhetoric once again dominates discourse on Europe.

 — Kalypso Nicolaïdis
Director
European Studies Centre
St Antony’s College
University of Oxford
Oxford, England

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Crook is correct to assert that Europe fancies itself a kinder, gentler alternative to the United States — and that the price to pay for its "gentle" policies has been Euro-sclerosis. However, Crook fails to mention the winds of change that are in the European air. The adoption of the euro and a push for a flatter tax were just the ingredients that Europe needed to recover. Economically, Europe is becoming more like the United States.

Europe’s economy is growing at a higher rate than both the United States’ and Japan’s. Europe’s national economies are learning from each other’s experiences, applying what works and dropping what doesn’t. For example, when Ireland adopted a 12.5 percent business tax — about a third of the rate of its neighboring economies — it attracted hundreds of multinational corporations and its unemployment rate dramatically declined.

Ireland’s success did not go unnoticed by other Europeans. Estonia, Latvia, and Slovakia are now growing at rates comparable to those of the fastest-growing emerging markets in the world.

Whether these policies spread to the other economies remains to be seen. But there are encouraging signs. France now seems to be moving in a pro-growth direction. President Nicolas Sarkozy campaigned on an economic platform intent on loosening France’s 35-hour work week and lowering the maximum overall income tax rate from 60 percent to 50 percent. And Germany is seeing heated debates on the adoption of a minimum wage, with many in opposition.

It is reassuring that many Europeans are recognizing that higher taxes and regulations ultimately produce a lower tax rate and, in some cases, lower revenues. If policymakers continue to heed their calls for economic reform, Europe will continue moving in the right direction.

 — Victor Canto
Chairman and Founder
La Jolla Economics
La Jolla, Calif.

Crook ranges far and wide in his amusing and provocative analysis of developments in Europe. The downside is a superficiality that, in places, can be positively misleading. It is especially apparent in his assessment of healthcare. He is correct that Europe has not one but a multitude of health systems, each involving a particular combination of financing and delivery mechanisms. But the same is true of the United States. The term "bewildering array" might be more appropriately applied to the myriad of health plans offered in the United States, and where — unlike in Europe — a wrong choice can leave one destitute.

Crook’s suggestion that Americans rely on private insurance is also questionable. Almost half the population depends on government-funded programs, such as Medicare and Medicaid, which support the many individuals who fall through the gaps in the private system. So ultimately it is on these programs that the U.S. system relies. Despite their diversity, Europe’s health systems have more in common than not, and they are united by their shared commitment to universal coverage. Although the United States spends vastly greater sums on healthcare than Europe, it makes little difference on the ground. Indeed, many thousands of lives would be saved each year if the United States could emulate any Western European health system. The United States’ high cancer survival rate is inflated by an underrepresentation of minorities. In the area of chronic diseases, the weaknesses of the U.S. system are even starker, to the point where a doctor’s best advice would be for the patient to immigrate to Europe.

Crook ignores evidence demonstrating how the U.S. health system often fails even those who have insurance, and he willfully ignores the plight of the uninsured and underinsured. Crook is correct when he notes that French doctors are paid less than American doctors. But he fails to add that they do not have to spend enormous amounts of money paying back the cost of their training, or buying malpractice insurance. In the end, it’s what’s left in one’s pocket that matters.

 — Martin McKee
Professor of European Public Health

 — Ellen Nolte
Senior Lecturer
London School of Hygiene & Tropical Medicine
London, England

Clive Crook replies:
My intention was not to eulogize the United States, as Kalypso Nicolaïdis complains. The United States has its problems, to be sure. But I stand by the claim that American democracy has greater vitality than European democracy — or what passes for it. The steady disdain that Europe’s leaders express for their own voters, especially concerning efforts "to invent a new form of transformative power," as Nicolaïdis puts it, would be simply unthinkable in the United States.

I will reserve judgment as to whether anti-Americanism will remain the animating spirit of the EU. Agreed, Angela Merkel and Nicolas Sarkozy are great improvements over their predecessors. But it is incontrovertible that, up to now, the desire to challenge American hegemony and "punch its weight in the world" has been a chief reason why European governments have sought ever closer union. Why else seek it now?

Among the United States’ biggest problems is its broken healthcare system. Contrary to Martin McKee and Ellen Nolte’s suggestion, I sought not to praise that system (or "systems" if they insist), but merely to refute the idea that Europe offers a single plainly preferable alternative. I disagree, moreover, with their view that Europe’s many systems have more in common with each other than with the United States’. The French system, which has much to recommend it, is more like America’s than Britain’s or Germany’s. It could not be adopted wholesale — American doctors would never consent to the pay cut — but it does show that a system like the United States’ can achieve universal coverage.

I hope Victor Canto is right that Europe has embarked on a phase of faster growth and economic liberalization. But if I were making that argument, I would not base it on the arrival of Sarkozy. The new eu treaty, which was revised at his insistence, marked "the end of competition as an ideology and dogma," according to Sarkozy. If he is the EU’s exemplary new liberalizer, good luck.