The problem is Europe, the solution … is Europe

Europe is a generalization. As recent events have demonstrated yet again, sharing a continent with someone doesn’t necessarily make you their countryman … or even capable of cooperating with them when it is in your mutual self-interest. Yet, despite all evidence to the contrary, when we talk about the crisis in Europe, we talk about it as if it were a Europe-wide crisis. Worse, recently, political opportunists on the right have begun to argue that the problems in Greece, Italy, and Spain are an indictment of Europe as a whole and of "European" ideas like the welfare state.

But of course, the economic mess in which the Greeks, the Italians and others find themselves has nothing to do with their being European. It has to do with them being financially irresponsible. It has to do with them being baited into reckless practices by bankers with whom they were too cozy … and who themselves were so eager to lend that they suspended sensible risk assessment practices. Admittedly, the problems within these states have pan-European consequences and they have revealed serious shortcomings both within European Union institutions and among EU leaders. But it would not only be misleading to lump all the countries of Europe into one basket in terms of the issues that have been raised, it would also obscure the fact that within Europe itself exist superb examples of what these floundering countries might aspire to. (And the contrast between the success stories and the failures needs to be understood to begin to grapple with the real problems of economic and political integration that have not been sufficiently addressed to date in the context of the European Union.)

What’s more, Europe’s success stories not only quash absurd assertions that having a state with a strong social safety net is the problem, they offer examples that might be well followed outside Europe; say, in the United States, home to another broken, corrupted version of capitalism.

It is a point that Jeffrey Sachs absolutely correctly noted on "Morning Joe" this morning and that needs to be better understood. Not only is the "European model" or "Eurocapitalism" not dead — it, to the extent it is defined by Europe’s best performing countries, may well be the solution to balancing every state’s desire for growth, their need for fiscal responsibility and the obligations of a moral, equitable, empowering social contract.

So, to begin where much of today’s discussion stops, there are a group of high-performing northern European countries that rate higher than the United States or Southern Europe on the "Sovereign Fiscal Responsibility Index." Estonia ranks number 3 after Australia and New Zealand. Sweden is 4. Luxembourg is 6. Denmark and Britain are 8 and 9. Poland, the Netherlands, Norway and Slovakia are 13, 14, 15, and 16. Austria is 21, Finland is 22, Germany is 25, Italy is 27, and the United States is 28. Iceland, Greece, and Portugal are 32, 33, and 34. The SFRI report notes that in terms of "fiscal space" the amount of additional debt a country could add before getting into trouble "Scandinavian countries as well former British colonies appear well positioned with fiscal space in excess of 100 percent of GDP." They add that "Central and Northern European powers are currently in decent shape" but that "the PIIIGS" are already close to their debt limits and that the United States in the space just above that but at risk of deteriorating.

But these countries are not fiscally responsible at the extent of promoting either growth or providing social services. For example, Finland, Luxembourg, Germany, and Sweden all grew substantially faster than the United States in 2010. The United States ranks worse than Norway, Belgium, the Netherlands, and Finland in the OECD education rankings with countries like Germany, Estonia, Switzerland, Poland, and others finishing ahead of the United States in math scores. Virtually all northern European countries, plus Germany and Britain, have lower unemployment than the United States. Further, Europe’s composite GINI (inequality) score is better than the United States with both northern and southern countries finishing well ahead of the United States, which ranks between Jamaica and Cameroon. And whereas the U.S. only invests 2.4 percent of GDP in infrastructure, Europe on the whole invests 5 percent.

And as I pointed out in the New York Times piece I did a couple weeks ago "Redefining the Meaning of Number 1" most of these countries in the northern and central parts of Europe finish well ahead of their struggling neighbors and the United States in terms of quality of life rankings. They achieve success and a balance between growth and fulfilling the terms of a robust social contract by performing neat tricks like guaranteeing health care to all and still spending a smaller percentage of their GDP on health than the U.S. and by relying on collective security to allow them to spend less on defense.

The point is that some parts of Europe are not only working well, but can be examples worth emulating — both by the continent’s more reckless debtors and the United States itself.