Until 2007, the Europeans were able to enjoy an enviable standard of living for two reasons: The first was the existence of a political consensus, the first in history, for the redistribution of produced wealth via social programs; the second was that enough wealth was produced to sustain this model. We may disagree as to whether the former still holds. But as far as the latter is concerned, there are strong signs that it will soon disappear. In other words, the stagnation of Europe’s economies over the past two years, at a much lower level compared to the years before the crisis, may not be a coincidence.
Let’s take a look at the factors that have historically contributed to the economic well-being of nations and empires: a rising birthrate, access to natural resources, education, technological progress and military power. The last has usually, but not always, directly relied on the others. Which of these conditions are in place today? Europe’s access to natural resources is limited. Whereas the US has fully exploited the shale gas revolution in a bid to strengthen its energy independence – thereby changing the geopolitical equilibrium – Europe is in terms of energy still largely dependent on Russia. In terms of defense, things are even worse as Europe has neither the ability nor the ambition to project its power on a global scale and is fully dependent on Washington. More worrying, if the current demographic trend continues, then in just a few decades almost a third of Europeans will be over 65.
Furthermore, according to the World Bank’s recent Golden Growth report, Europe is a laggard in terms of R&D even compared to states like India. “What has been more perplexing is Europe’s generally poor performance in the most technology-intensive sectors – the Internet, biotechnology, computer software, healthcare equipment, and semiconductors,” the report says.
The same report emphasizes that European productivity is on the wane. Meanwhile, the global ranking of European universities is getting worse compared to those in the US as well as in Asia. OECD studies on schoolchildren’s performance in reading, math and the natural sciences show students in most European countries lagging behind those in Korea, Japan, Canada and elsewhere.
Because of policy mistakes in dealing with the crisis, confidence has been tarnished in Europe’s financial system, the safety of transactions and the abilities of its economies. Unless the trends are reversed, our continent – whose geopolitical role is in decline – will be further downgraded economically. Soon it will resemble little more than a romantic tourism destination for the people of emerging economies who will visit us to admire the great monuments of our glorious past and observe the senile inhabitants of our tiny states (smaller than some Beijing districts) scuffling, wanting to break up into even smaller statelets. It’s a dark forest that we can’t see.
Turning away from the facts, eurozone leaders are appointing second-rate politicians to the senior posts of European institutions in order to cling on to their powers. They are cultivating the impression that dealing with the crisis means having the virtuous North rescuing the South, as if the former has not benefited by the single currency, as if it would escape unscathed from a breakup of the common market. North and South are both conjuring up imaginary enemies, engaging in moralizing and doing everything they can to awaken ghosts of the past. Soon it will be too late to change the game.