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The Good Vs. the Bad Europe

What are the possible scenario's for Europe's future?

May 6, 2004

What are the possible scenario's for Europe's future?

The good Europe is a free trade zone, a vast open space without border controls and passports. People can live and work wherever they choose, from Finland’s Arctic Circle to Malta’s Mediterranean beaches — or the Aegean coastline of Greece.

It is a gigantic space of boundless opportunity, where Europeans can move and settle freely, buy property and start businesses, take their pensions, bank accounts — and phone numbers with them.

It is a form of society that offers choices and liberates potential and understands that the true role of the state is to subordinate itself to the dreams of its individual members.

It is a Europe that seeks to unleash the creativity of millions of gifted and well-educated people — and see what they can do through free cooperation.

It is the Europe that produces the Airbus jets that left America’s Boeing trailing in their wake — and the Europe that developed the GSM system of mobile phones, far superior to the obsolete U.S. cell phone system.

It is the Europe of the Erasmus program, that sends university students off to another European country for a year of their studies so they can learn languages, broaden their minds enrich their social life and widen their personal networks.

The bad Europe is a vast bureaucracy, where the state sees itself as far more important than its individual citizens. It is the old intrusive, nosy and authoritarian European nation state writ large — a place where officials decide who can start new businesses and where and on what terms.

It is an economic system where taxes are high so that the state can redistribute money to more and more people, turning citizens into clients who become increasingly dependent on the dole the state distributes.

And they thus become increasingly docile, and reluctant to resist the state’s intrusions.

This is the bad old Europe of the Common Agricultural Program. This is a system that spends $40 billion a year — not counting the estimated $150 billion extra a year that Europe’s consumers pay through higher prices — regulating agriculture in a way that impoverishes the developing world by closing the European market to their food exports.

And then in a second blow to the developing world, it subsidizes European food exports so they can undercut the prices that local farmers in Africa and elsewhere can get for their food.

This is the bad old Europe that tries to bully Germany into scrapping its 500-year old purity law for making excellent beer, so that big brewers can sell their beer-flavored chemical products to Germans who would really rather not drink the stuff.

The same bad old Europe of the bureaucracy wants to ban British sausages and stop French peasants making their foie gras and cheese in the way their ancestors have done for generations.

It tries to stop poorer members from cutting corporate taxes, so they can attract new industry. It sets up a Europe-wide tax inspectorate that requires all banks to report the bank accounts of non-nationals — and is now bullying the Swiss (who are not members of the EU) into joining the same system.

It insists on telling elected government how much money it is allowed to spend and borrow and invest — all based on the principle that the unelected Euro-bureaucracy knows best.

Its new “constitution” introduces a series of “social rights” that were drawn wholesale from the old East German constitution and that prescribes a right to work — but only for as many hours a week as the bureaucrats decree.

It establishes a right to housing and to education and health care, which all sounds splendid until one asks who will pay and who will choose — and why did this produce such a rotten system in the old Eastern Europe of the unlamented past.

This is the bad Europe that has almost destroyed one of the world’s greatest systems of higher education. The European Commission in Brussels last year asked a Singapore-based consulting firm to draw up a list of the world’s 100 best universities.

At any time in the last 500 years — at least until the second half of the 20th century — German and French and Italian and Czech and Polish and Swedish universities would have been high on the list.

Not any more. Only three European universities made it into the top 40 and they were Oxford, Cambridge and London — all in the global top ten and all from Britain, the EU member that has proved most resistant to the bad old Europe.

All the other best universities were American. The Sorbonne in Paris made it to number 43 and the grand old German universities of Heidelberg and Tübingen crept into the 50s.

But through under-funding and state control, the bad old Europe of the bureaucracy has enfeebled one of the most important investments in the future that any society can make.

The best hope of the new Europe is that the eight new members who came from the Warsaw Pact and the grim old Soviet empire have good reason to be suspicious of regulations and red tape and bureaucrats who claim to know best.

With any luck, the Slovaks with their new flat tax system — and the Estonians who were so committed to free trade that they had to raise their tariffs when they joined the European Union — will help the good new Europe beat the bad old bureaucracy.

The prospects are not exactly promising. The Irish, who have grown rich by slashing corporate tax rates and bringing in foreign investors, are under pressure to “harmonize” their tax rates.

The British — whose once-sluggish economy has now soared past the Italians and French and produces more wealth per head than the Germans — are faced with a new constitution that will undo most of the free labor market reforms that Margaret Thatcher introduced and which paved the way for the British recovery.

The coming tussle between the bad old Europe and the promising new one has a far wider importance that the fate of Europe itself — that small peninsula of Asia that thrusts into the Atlantic Ocean.

The bad old Europe will do nothing for the developing world — except try to export its stifling statism and instill welfare dependency through aid programs.

It will do little for the Americans as they try to bring order and modernization to Europe’s unruly neighbors in the Middle East, while expecting the Americans to continue taking responsibility for the defense of a Europe that refuses to pay for its own.

A lot of people have a stake in the way this European choice unfolds.

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