Rethinking Europe, Global Pairings

Europe, the US or China?

Which development model today among the Big Three – Europe, the US or China – best fosters economic and environmental sustainability?

Credit: Efired Shutterstock.com

Takeaways


  • The US has many strengths and admirable qualities, but the nation’s politics is plagued by paralysis and deep partisan polarization.
  • China’s hybrid brand of “communist capitalism” remains an authoritarian puzzle of immense contradictions.
  • Europe’s social capitalism is clearly the global leader in several crucial dimensions.
  • The lack of institutional and ideological support for a currency union has held back the EU during its economic recovery.
  • Once Brexit is completed, the eurozone will represent 85% of the EU's GDP. That makes convergence between the EU and eurozone more doable.

The United States has many strengths and admirable qualities, but the nation’s politics is plagued by paralysis and deep partisan polarization, even though the country has a well-established federal union.

The U.S. economy has benefited in recent years from low energy costs, but it has become bitterly divided into unequal camps of winners and losers. All these tensions have boiled over and resulted in the phenomenon of Donald Trump, whose erratic presidency is stalling badly needed reforms and furthering national division.

Meanwhile, China’s hybrid brand of “communist capitalism” remains an authoritarian puzzle of immense contradictions. While it has moved forward vigorously with renewable energies, a growing middle class is still proportionally small compared to the vast numbers of poor, even as inequality, corruption and cronyism thrive.

Impressive levels of industrial production have resulted in astounding levels of environmental ruin.

It turns out that a domineering executive leadership as in China and the United States is only great when it leads in the right direction. In comparison, the EU doesn’t always look so bad.

Europe’s social capitalism is clearly the global leader in several crucial dimensions, more so than either China’s state capitalism or America’s Wall Street-Silicon Valley capitalism.

The challenges of the European Union

Yet, Europe also is plagued by a number of major challenges. These include:

1. a shortage of economic solidarity between member states,

2. resurgent tribalism and nationalism, and

3. institutional incoherence at the EU level. The three of these are intricately linked.

Solidarity or…austerity?

The lack of institutional and ideological support for a currency union has held back the EU during its economic recovery.

Some of that economic loss has been reversed recently, and some forms of institutional solidarity have been created by the European Commission and member states. This includes the beginnings of a banking union to support the financial infrastructure of Europe.

Resurgent tribalism

In the aftermath of the collapse of Soviet-led communism, the rationale for contesting politics has shifted dramatically over the last two and a half decades. As European societies have become more affluent, many center-right parties, like the Christian Democrats in Germany, have become “social democrats,” even if not Social Democrats.

The European political contest has essentially shifted away from economic issues to a battle over a new kind of tribalism – north-south, east-west, left-right, and especially white Christian vs racial-ized Islam. The Spanish struggle over sovereignty with the region of Catalonia is the latest manifestation, with more such cracks and fissures still ahead.

A number of euroskeptic partisans, both in Europe and the United States, who want nothing more than to see the demise of the European Way, have gleefully predicted the imminent collapse of the EU over these divisions. But they have been predicting this for decades, and have always been wrong.

It is instructive to remind ourselves that various tribal-isms have been a major part of the human experience for thousands of years. The national, ethnic and religious instinct to ensure the success of one’s own tribe at the expense of another is an age-old response. We cannot ban or legislate away this instinctual drive, but can we at least blunt its impact?

I believe we can — by crafting the right institutions that uphold fairness, democracy, a broadly shared prosperity and the rule of law. That’s why the incoherence and disunity of the current EU and eurozone institutions amount to an existential challenge.

Too many presidents = institutional incoherence

The EU is governed by an odd form of “quad-cameralism” (i.e., a four-chamber political system) with multiple governing bodies that all sound alike: the European Commission, the European Council, Council of Ministers and the European Parliament.

Each of these even has its own “president” – who can keep track of four different presidents? Why not call one a premier, and another a prime minister or regent? Even a superpower only gets one president!

This confusion over titles is just the tip of the iceberg, a reflection of deeper institutional incoherence. Divisions of power in this semi-democratic and overly complex bureaucracy leave even the most ardent europhile dissatisfied.

Given the pressures of the new tribalism, ineffective governance in Brussels has contributed to it becoming a target for popular frustration. Partly for this reason, German chancellor Angela Merkel, as the head of the largest member state, has been thrust by recent events into the role as the de facto prime minister of Europe.

Yet, how does a German chancellor rise above domestic passions and politics to do what is best for Europe, in the absence of clear-cut institutional coherence at the EU level?

In her makeshift role, Merkel has done an admirable job in certain respects. But she also has made mistakes, in part because her role as the EU’s prime minister conflicts with her domestic priorities as German chancellor.

Closing the democracy gap

Various scholars, including myself, Thomas Piketty, Jürgen Habermas and others, have proposed more simplified and integrated political structures to close this democracy gap.

In his recent State of the Union speech, entitled “Wind in our Sails,” Commission president Jean-Claude Juncker smartly proposed merging his office with the presidency of the European Council, saying the European ship should be “steered by one and the same captain at the helm.”

Juncker also proposed a European Monetary Fund, the creation of a new EU minister of economy and finance, as well as a European Labour Authority to ensure fairness and workers’ rights across the EU’s single market.

Brexit: Unexpected blessing

Juncker also pointed out that, once Brexit is completed in 2019, the eurozone will represent 85% of the EU’s GDP. That makes convergence between the EU and eurozone much more doable.

In that sense, Brexit should be regarded as an unexpected blessing, since the UK has often played the role of spoiler in developing an EU consensus over these important matters.

Juncker’s proposals were predictably greeted with a mixed response by most member state leaders. It is clear that until more political leaders make the case to their national electorates for “ever closer union,” progress toward a more robust union will remain elusive. Given that factor, for now a multi-speed Europe is a reality.

Other challenges, such as Russian adventurism and a flood of refugees from the near-abroad, will continue to cause alarm due to Europe’s disjointed institutional design and unity.

But as in the past, each crisis will spur further evolution toward union because, more than ever, Europe – and the world – needs a modernized humanism that offers a viable alternative to the return of tribes, scapegoats, bluster and walls.

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About Steven Hill

Steven Hill is a journalist and author of the recently published book Die Startup Illusion: Wie die Internet-Ökonomie unseren Sozialstaat ruiniert (www.Startup-Illusion.com). Find him at www.Steven-Hill.com and @StevenHIll1776

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