Les Jones: The Future of Europe

June 14, 2004

Economics > The Future of Europe

Tyler Cowen looks at economic hope and despair in Europe.

3. A recent survey in France suggests that 70 percent of French schoolchildren aspire to become bureaucrats rather than captains of industry. (See the IHT, June 9, "Divided We Graumble," by Roger Cohen, p.2.)
4. The beauty of European cities typically stems from 1920 or earlier, when much of Europe was economically freer than the United States. How would U.S./Europe comparisons feel to us if all of Europe had been built after the second World War? How many people would then think that the "European way of life" is superior.

So we can now prove empirically that communism doesn't work. History gave us controlled experiments. Two countries - Germany and Korea - were divided by war. One side was left communits, one side capitalist.

Forty years later we saw the difference. South Korea produces cars, ships, computers and cell phones. North Korea can't even feed itself. East Germany turned into a poor, polluted nation that could barely crank out Trebants. West Germany became prosperous and produced Volkswagens, BMWs, and Mercedes.

Europe has largely gone socialist - communism lite. It may take another forty years to fully see the results, but things don't look good. Birth rates are below replacement levels. A smaller and smaller population will have to pay for social programs to support an aging population. The militaries are is serious decline, as money is diverted to prop up social programs. Labor unions in some countries can call general strikes that shut down the economy. It's hard to imagine a European Union-era Europe competing with North America and Asia.

Posted by lesjones

Comments

Unfortunately you are looking at Europe from the wrong perspective, they do not wish to compete with the states or the world. They are building a large market block, protected from internal and external competion that will allow them to wallow in their own misery.

All they want is to cut themselves off from the world behind another iron curtain - sound familiar??

Posted by: steve shackleton at June 15, 2004

Sounds about right. On some level I think they imagine they'll put a sign on the trade door that says "Europeans Only" and everyone will be so desparate to get in that they'll do whatever the EU wants. Nothing could be further from the truth, but that's what they imagine.

At some point an EU country is going to want to secede, and things could get ugly (see: War Between the States).

Posted by: Les Jones at June 15, 2004

Except East Germany and North Korea were never really communist to begin with...

Posted by: Well, maybe at March 11, 2005

It is incorrect to claim that these were controlled experiments. East Germany experienced a vicious land war between the Nazis and Soviets as well as horrific Western bombing campaigns such as over Dresden (I do not mean to attack the motive of the bombing, only to say it was extremely destructive). Western Germany did not experience similar conflict. Then the USSR extracted massive reparations from the East which forced them to be very poor and live on rations for a long time (this was understandable due to the extreme losses the Soviets sustained on their own soil). Nonetheless, the DDR bounced back, evidenced by the fact that the per capita GDP in 1980 was higher than in Italy and Britain (though 15-20% lower than in BRD). I know the Trabbi is the butt of many jokes, but the average working-class family in DDR lived better than that in much to most of West Europe.
I do not know the history of Korean economic development so well, and I think the South was hurt almost as much as the North in the war, plus the standards of living are far enough apart, I won't try to explain it. I do think the standards of life in the two Koreas in the 1960s were not so far apart but undoubtedly they are now.
Look, there is a lot of variety within capitalist and communist systems as to how they are governed. DDR and Czechoslovakia had pretty strong economies overall, while Poland and Romania were not managed so well. What about comparing say, USSR, with Brazil? They had similar standards of living after WW2 and probably their GDPs per capita in 1990 were not too far off (I think Soviets were a bit higher), but Brazil is such an oligarchic society that their average citizen lived much worse than the Soviet worker.

Posted by: Thomas at April 15, 2008