The Future of the EU: Putting Things in Perspective
The European Way has great potential to nudge the world forward.
October 28, 2017
About a year ago, France’s then-Prime Minister Manuel Valls solemnly declared that Europe could “fall apart within months.”
Except, it didn’t. In fact, just recently the European Commission has boasted that “the European economy has entered its fifth year of recovery” and that growth in the eurozone will be even stronger than previously forecast.
Indeed, growth in the European Union has outstripped that of the United States over the last two years, now standing above 2% for the EU as a whole and at 2.2% for the euro area. Unemploy¬ment is at a nine-year low, as a result of a net creation of nearly eight million new jobs and more employed people (235 million) in the EU than ever before.
The European Central Bank says the eurozone’s recovery is expected to continue at a steady pace, and Germany’s federal statistics office says the economic engine of the EU is in the middle of a broad-based expansion.
The truth is, things were never as bad in Europe as some have consistently liked to portray it. Prior to the economic crisis of 2008, the European economy (and especially Germany’s) was written off by most analysts, both in Europe and in the United States, as a “sick old man” condemned to decline. Here’s a small sample of inflammatory headlines from leading media outlets:
The EU has been the favorite punching bag of many political leaders, serving as a convenient scapegoat to blame for the shortcomings of one’s own country.
Better yet: Unlike the United States, which appears to be falling off a dangerous cliff into the abyss of Trumplandia, most EU member states have so far rejected the populist option. Accordingly, the average EU citizen should be congratulated for having coped in a mostly dignified and sober way with the ups and downs of the last decade.
Indeed, if we pull back and look from the 10,000 meter level it becomes clear that an economic and politically vibrant Europe is needed now more than ever. In the aftermath of Donald Trump’s controversial election, Brexit, the rise of China’s “enlightened dictatorship,” and the resurgence of the Russian bear, the world is in great need of a leadership based on the principles of humanitarianism, robust democracy and a free market with a human face.
The United States, though always long on ambition, is clearly struggling in that regard, with little relief in sight until the next election, four years away – if change occurs then.
Better than the alternatives
Europe is far from perfect, and should be held accountable for its shortcomings. But compared to the alternatives, it doesn’t look so bad.
By the year 2100 – which, at this juncture, is no further into the future than the Great Depression and the rise of the Nazis resides in the past – the world is going to look very different.
The advent of new digital technologies – robotics, artificial intelligence, “smart” machines and the “future of work” – will change our civilization in dramatic ways.
How the digital economy develops in Europe is key to the global future, especially whether it will rest on the values of humanism, equality and a broadly shared prosperity, or will become the newest and most powerful means for exploitation and abuse of human and labor rights.
The struggle over the shape of the new age has already begun. I firmly believe that Europe must assume leadership and not just leave it to Silicon Valley, Wall Street and Washington, D.C. to determine it for everyone else.
We face multiple forks in the road, and an uncertain path forward. The EU must rise to the occasion. As Voltaire once said, “Every man is guilty of all the good he did not do.” What then must Europe do?
Renewal of social capitalism
Europe must revitalize its unique brand of “social capitalism,” and modernize it for the digital age. It has to ensure that a more tech-driven future doesn’t increase authoritarianism, Big Brother surveillance and further widen the gap between the “haves” and the “have nots.”
As the United States in general and its elite-driven “Wall Street-Silicon Valley capitalism” in particular shows, this won’t be easy. What is currently missing are the right regulations that recognize the virtues of an inclusive economy and broadly shared prosperity.
If Silicon Valley and Wall Street have their way, “The factory of the future may be 1,000 robots and one worker manning them,” as economist Nouriel Roubini puts it.
In this battle, Europe has a number of assets that can propel it forward. Despite its chronic disunity, it is powered by one of the world’s great economic engines. The EU-Plus (EU28 + Norway and Switzerland, and eventually the UK) chugs along with one of the top three largest economies in the world (the United States and China being the other two).
The EU has as many Fortune 500 companies as the United States, India and Russia combined (140 total), more small and medium-sized businesses, and 11 out of 20 of the world’s most competitive national economies, according to the World Economic Forum. Even Brexit does not change this fundamental reality.
Beyond its capitalist engine, many EU member states also have been leaders in providing greater economic democracy and power-sharing between management and labor. This includes practices like co-determination (worker-elected boards of directors), works councils and effective labor unions.
That, in turn, has fostered a “culture of consultation,” and a more broadly shared prosperity with social supports like universal health care, child care, affordable higher education, senior care, retirement, paid sick leave and vacations, workplace protections and more. This is stuff most Americans – the presumed vanguard of modernity – can only dream of.
While inequality has also grown in Europe, and there are clear difference between member states, most EU member states still exhibit the smallest income gaps in the world. They have set a standard that must be carried forward into the digital age.
The EU also has been the world’s leader in reaching another crucial goal – environmental sustainability. Led by Germany and its ‘Energiewende’ (energy transformation) initiative, Europe has moved forward ambitiously with renewable energy technologies like solar and wind, as well as efficient mass transit.
Europe has tried to incorporate “green design” into everything from public buildings, homes and automobiles to low wattage light bulbs, motion sensor lights and low flush toilets. And these efforts have not hurt the economy, as hundreds of thousands of new green jobs have been created.
Creating economic as well as ecological sustainability – preserving what I call our “EconoEcoSphere” – is one of the defining challenges of our time.
Productivity in an age of limits
The key factor in achieving this unprecedented goal is what is known as “productivity.” In this “age of limits,” all our institutions and practices must become as efficient and cost-effective as possible in order to allow each national/member-state economy to generate and distribute the wealth needed to take care of its population.
That means getting more energy with less fuel, more health care with less public funding, more economic production with less labor, and realizing greater service sector efficiencies. The EU has been a world leader in this crucial endeavor.
It also means having robust political systems, and vibrant media and online worlds, that not only connect diverse communities but translate popular consensus into the right policies.
It means having better ways of measuring and mobilizing the “wisdom of crowds,” as well as assessing the efficiencies of our various institutions and practices and figuring out best practices. And it means harnessing the new digital technology so that it works for us, not against us and creates jobs instead of destroying them.
When you read the next “Europe is dying” headline, remember that “old Europe” actually is quite young. The expanded EU and the eurozone were launched barely ten years ago.
That is why I am convinced that the EU can survive the UK’s folly, Poland’s retrenchment and Viktor Orbán’s audacity, and a few million refugees plus radical Islamic terrorism – as long as the European appetite for union remains steadfast, and the heart of the enterprise remains beating.
Watching the EU is like observing a planet in formation – a work in progress, on a decades-long trajectory. In this make-or-break century, the future is up for grabs and the European Way still has great potential to nudge the world forward.
At this point, the EU can be said to have reached “the end of the beginning,” to borrow Winston Churchill’s useful phrasing.
The EU has been a punching bag of many political leaders, serving as a convenient scapegoat for the shortcomings of one’s own country.
Watching the EU is like observing a planet in formation – on a decades-long trajectory.
Europe is far from perfect. But compared to the alternatives, it doesn’t look so bad.
Unlike the US, the large EU states have so far rejected the populist option.
How the digital economy develops in Europe is key to the global future.