[Paleopsych] WP: Robert J. Samuelson: The End of Europe

[Premise Checker]

Robert J. Samuelson: The End of Europe
http://www.washingtonpost.com/wp-dyn/content/article/2005/06/14/AR2005061401340_pf.html

    Wednesday, June 15, 2005; A25

    Europe as we know it is slowly going out of business. Since French and
    Dutch voters rejected the proposed constitution of the European Union,
    we've heard countless theories as to why: the unreality of trying to
    forge 25 E.U. countries into a United States of Europe; fear of ceding
    excessive power to Brussels, the E.U. capital; and an irrational
    backlash against globalization. Whatever their truth, these theories
    miss a larger reality: Unless Europe reverses two trends -- low
    birthrates and meager economic growth -- it faces a bleak future of
    rising domestic discontent and falling global power. Actually, that
    future has already arrived.

    Ever since 1498, after Vasco da Gama rounded the Cape of Good Hope and
    opened trade to the Far East, Europe has shaped global history, for
    good and ill. It settled North and South America, invented modern
    science, led the Industrial Revolution, oversaw the slave trade,
    created huge colonial empires, and unleashed the world's two most
    destructive wars. This pivotal Europe is now vanishing -- and not
    merely because it's overshadowed by Asia and the United States.

    It's hard to be a great power if your population is shriveling.
    Europe's birthrates have dropped well below the replacement rate of
    2.1 children for each woman of childbearing age. For Western Europe as
    a whole, the rate is 1.5. It's 1.4 in Germany and 1.3 in Italy. In a
    century -- if these rates continue -- there won't be many Germans in
    Germany or Italians in Italy. Even assuming some increase in
    birthrates and continued immigration, Western Europe's population
    grows dramatically grayer, projects the U.S. Census Bureau. Now about
    one-sixth of the population is 65 and older. By 2030 that would be
    one-fourth, and by 2050 almost one-third.

    No one knows how well modern economies will perform with so many
    elderly people, heavily dependent on government benefits (read: higher
    taxes). But Europe's economy is already faltering. In the 1970s annual
    growth for the 12 countries now using the euro averaged almost 3
    percent; from 2001 to 2004 the annual average was 1.2 percent. In 1974
    those countries had unemployment of 2.4 percent; in 2004 the rate was
    8.9 percent.

    Wherever they look, Western Europeans feel their way of life
    threatened. One solution to low birthrates is higher immigration. But
    many Europeans don't like the immigrants they have -- often Muslim
    from North Africa -- and don't want more. One way to revive economic
    growth would be to reduce social benefits, taxes and regulations. But
    that would imperil Europe's "social model," which supposedly blends
    capitalism's efficiency and socialism's compassion.

    Consider some contrasts with the United States, as reported by the
    Organization for Economic Cooperation and Development. With high
    unemployment benefits, almost half of Western Europe's jobless have
    been out of work a year or more; the U.S. figure is about 12 percent.
    Or take early retirement. In 2003 about 60 percent of Americans ages
    55 to 64 had jobs. The comparable figures for France, Italy and
    Germany were 37 percent, 30 percent and 39 percent. The truth is that
    Europeans like early retirement, high jobless benefits and long
    vacations.

    The trouble is that so much benevolence requires a strong economy,
    while the sources of all this benevolence -- high taxes, stiff
    regulations -- weaken the economy. With aging populations, the
    contradictions will only thicken. Indeed, some scholarly research
    suggests that high old-age benefits partly explain low birthrates.
    With the state paying for old age, who needs children as caregivers?
    High taxes may also deter young couples from assuming the added costs
    of children.

    You can raise two objections to this sort of analysis. First, other
    countries are also aging and face problems similar to Europe's. True.
    But the aging is more pronounced in Europe and a few other nations
    (Japan, for instance), precisely because birthrates are so low. The
    U.S. birthrate, for example, is 2.1; even removing births to Hispanic
    Americans, it's about 1.9, reports Nicholas Eberstadt of the American
    Enterprise Institute. Second, Europeans could do something about their
    predicament. Also, true -- they could, but they're not.

    A few countries (Britain, Ireland, the Netherlands) have acted, and
    there are differences between Eastern and Western Europe. But in
    general Europe is immobilized by its problems. This is the classic
    dilemma of democracy: Too many people benefit from the status quo to
    change it; but the status quo isn't sustainable. Even modest efforts
    in France and Germany to curb social benefits have triggered
    backlashes. Many Europeans -- maybe most -- live in a state of
    delusion. Believing things should continue as before, they see almost
    any change as menacing. In reality, the new E.U. constitution wasn't
    radical; neither adoption nor rejection would much alter everyday
    life. But it symbolized change and thereby became a lightning rod for
    many sources of discontent (over immigration in Holland, poor economic
    growth in France).

    All this is bad for Europe -- and the United States. A weak European
    economy is one reason that the world economy is shaky and so dependent
    on American growth. Preoccupied with divisions at home, Europe is
    history's has-been. It isn't a strong American ally, not simply
    because it disagrees with some U.S. policies but also because it
    doesn't want to make the commitments required of a strong ally.
    Unwilling to address their genuine problems, Europeans become more
    reflexively critical of America. This gives the impression that
    they're active on the world stage, even as they're quietly acquiescing
    in their own decline.