Becoming like Europe

David Brooks makes an argument in today's column that I've been thinking for a long time. The American left wants to turn the U.S. into a European-style welfare state. Only problem is, Europe's a mess.

Forgive me for making a blunt and obvious point, but events in Western Europe are slowly discrediting large swaths of American liberalism.

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Most of the policy ideas advocated by American liberals have already been enacted in Europe: generous welfare measures, ample labor protections, highly progressive tax rates, single-payer health care systems, zoning restrictions to limit big retailers, and cradle-to-grave middle-class subsidies supporting everything from child care to pension security. And yet far from thriving, continental Europe has endured a lost decade of relative decline.

Europeans are perfectly aware of these shortcomings. Indeed, at the same time that the left continues to push the U.S. to become more like Europe, Europeans are realizing that they need to become more like the U.S.:

The widespread application of new information technologies is regarded as the main driving force behind the unprecedented sustained expansion of the U.S. economy. Many economists believe that the productivity gains resulting from the spread of these technologies have shifted the U.S. on to a higher growth trajectory without fuelling inflation. EU growth rates, on the other hand, have consistently failed to match those of the U.S. in the last ten years and, for every percentage point of growth, Europe creates fewer jobs.

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The technology gap only partly explains Europe's under-performance. Many believe that America's flexible and competitive markets give it the edge, allowing it to seize the opportunities created by the rise of new technologies. The EU's performance in this area is mixed.

To boost their economic growth the Europeans at the 2000 Lisbon summit proposed a number of steps to be taken such as deregulation and lower taxes to improve their competitive position. Thus far, however, they appear to be all hat and no cattle:

...Reforms designed to make labour markets more flexible, cut red tape for businesses and to encourage cutting edge research have in many cases fallen by the wayside.

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"Unfortunately progress to date has been inadequate, largely due to a lack of commitment and political will," concluded the report, which also called for performance updates for each country to be published.